NAMAKWA WATER BOARD PROPOSED WATER TARIFFS 2009/2010 BACKGROUND

| The Namakwa Water Board operates since 1973 in a water scares area, characterized by rural settlements spread over a vast area. | The Water board extract water from the Orange River and distribute it to approximately 55 000 inhabitant | 3,000,000 Kiloliters a year is delivered through 200 km main supply line | The Board sell potable water to Nama Khoi Municipality and De Beers Namaqualand mines. Raw water is provided to Department of Agriculture for a community farming project at Henkries. | The Water Board was assisted by the OCC mine with personnel & equipment up to 2004. In 2004/2005 the OCC closed, which let to a increase in the cost of water delivery, and the quantity of water sold decreased. | This resulted in the Board not being financial viable, as reported in the Independent Auditors report 2006/2007 & 2007/2008 | Board are currently not able to pay creditors as Eskom, DWAF etc. | Urgent replacement of some infrastructure needed to prevent interruption of services SERVICE AREA –NAMA KHOI MUNICIPAL NORTHERN CAPE

ORANGE RIVER PUMPSTATION

STEINKOPF

SPRINGBOK

KLEINZEE VARIOUS TOWNS WATER SUPPLIED TO

STEINKOPF

CONCORDIA

KLEIN ZEE

OKIEP

CAROLUSBERG NABABEEP

SPRINGBOK OVERVIEW OF AREA

| Services are rendered to various rural communities : | Steinkopf – 10 000 inhabitants mostly subsistence farmers and families of migrant mine workers. | Nababeep, Okiep, Carolusberg ‐ 15 000 inhabitants previously mining towns of the Okiep Copper Company which closed in 2004. Little commercial activities. | Concordia –5000 inhabitants, Mostly subsistence faming and families of migrant miners. | Springbok –14 000 inhabitants. Main commercial & institutional centre for region. | Kleinzee, Buffelsrivier, Kommagas – 9000 inhabitants mostly mining and small scale farmers. Hard hit by the downscaling of De Beers Namaqualand mine which shed approximately 2500 jobs in pass 12 months WATER – SUPPLY & FORECAST DEMAND

FINANCIAL PERFORMANCE COMPARABLE OPERATING PERFORMANCE EX DEPRECIATION & REMISSION OF DEBT

Jul 2008 – 2003/04 2004/05 2005/06 2006/07 2007/08 Mch 2009

Including Revenue R 7,487,417 R 7,605,068 R 9,051,121 R 10,225,536 R 9,695,209 R 9,773,610 R 1.75 mil

Admin & Other grant from Fixed Cost R -2,460,281 R -3,566,046 R -3,487,932 R -3,663,017 R -5,014,211 R -3,923,606 DM

% of Total Exp -31% -37% -35% -31% -37% -35% Direct variable cost R -4,069,496 R -4,324,289 R -4,193,688 R -5,111,607 R -5,288,852 R -5,271,282

% of Total Exp -51% -45% -42% -43% -39% -47%

Maintenance R -502,439 R -724,995 R -529,433 R -715,615 R -772,312 R -806,707

% of Total Exp -6% -8% -5% -6% -6% -7%

Interest R -950,049 R -909,785 R -1,799,993 R -2,293,355 R -2,408,082 R -1,224,899

% of Total Exp -12% -10% -18% -19% -18% -11%

Profit(Loss) R -494,847 R -1,920,047 R -959,925 R -1,558,057 R -3,788,247 R -1,452,884 COST OF WATER

2009 YTD 2009/2010 2006/2007 2007/2008 ACTUAL COST Jan09 Budget 0% 10% PER KL SOLD 12% 78% INCREASE INCREASE INCREASE INCREASE COST per Kl SOLD R 3.48 R 4.59 R 5.27 R 6.55 Ex Depreciation

TARIFF R 2.99 R 3.29 R 3.68 R 6.55

SHORTFALL (R 0.49) (R1.30) (R 1.59) (R ‐) ON TARIFFS CONSULTATION PROCESS

INSTITUTION HOW DATE OUTCOME

NAMA KHOI MUNICIPALITY WORKSHOP 11/11/2008 REQUEST & DE BEERS 10% TARIFF NAMAQUALAND MINES ADJUSTMENT NATIONAL TREASURY SUBMISSION 24/11/2008 REQUEST ADJUSTMENT CLOSER TO INFLATION DEPT WATER AFFAIRS SUBMISSION 30/01/2009 TARIFF INCREASE OF 73% APPROVED VIABILITY OF WATER TARIFFS IN GLOBAL RECESSION & IMPACT ON END USERS

| Local mines scale / closed down resulting in major retrenchments | Business, dependent on mining closing down | No alternative job creation opportunities | Large % of consumers qualify as indigent | Increase of tariffs will result in less consumption. | Less consumption will further hamper recovery of cost as 53% of cost is fixed.