Westonaria Regional Bulk Sanitation Scheme Zuurbekom Waste Water Works

Westonaria Regional Bulk Sanitation Scheme Zuurbekom Waste Water works

Ref no: H/ISI 03/RW FINAL DRAFT REPORT: 01/FM/2015 August 2015 TABLE OF CONTENTS

1. Introduction ...... 2 2. Abbreviations...... 3 3. Assumptions...... 4 4. Definitions...... 5 5. Operating costs ...... 10 5.1 Labour costs ...... 10 5.2 Chemical costs...... 10 5.3 Electrical costs...... 11 5.4 Maintenance costs...... 11 5.5 Finance costs...... 11 6. Ratio of use: 81% ...... 12 7. Funding – Funding from reclamation: Option 1 ...... 13 7.1 Assumptions...... 13 7.2 Income statement...... 14 7.3 Cash flow statement ...... 15 7.4 Amortisation schedule ...... 16 8. Option 2 ...... 19 8.1 Scenario 1- Required tariff with no indigent factor (No Grant funding)...... 19 8.2 Scenario 2- Required tariff incl indigent factor (with Grant Funding) ...... 27 8.3 Scenario 3 – 100% Grant funding of construction and subsequent operational costs ...... 36 8.4 Scenario 4 - 100% loan recovered through tariff and grant funding...... 44 8.5 Scenario 5 - Required tariff to compensate indigent factor (No Grant funding)...... 52 8.6 Scenario 6 – 100% Equity Status Quo (NPV = Zero)...... 61 8.7 Scenario 7...... 69 8.7.1 Option 1: Debt/ Equity 50:50 Status Quo ...... 69 8.7.2 Option 2: Debt/ Equity 50:50 Status Quo ...... 77 8.8 Contributions by developers...... 82 9. Conclusion...... 84

1 1. Introduction

Westonaria Local Municipality (WLM) is one of the 5 municipalities found in Gauteng Province and within the West Rand District Municipality. Isiphethu Water Services (Pty) Ltd has been entrusted by Rand Water Ltd to undertake the financial assessment of the construction of Zuurbekom WWTW. The assessment will inform the decision on which financial model is best and the financial viability of the implementation of the Zuurbekom WWTW. Financial modelling is the task of building model of a financial decision making situation. This is a mathematical model designed to represent (a simplified version of) the performance of a project. It is about translating a set of hypotheses about the behavior of markets into a numerical decisions to proceed with a specific project.

The Westonaria municipality researched the option of building a reclamation water plant together with the planned waste water treatment plant for Zuurbekom project. As a result of that research Isiphethu Water Services has been tasked with developing various financial models, determine if the reclamation project is viable and whether it will be able to sustain itself financially. The capital cost for water treatment and reclamation has been determined to be R1 065 896 370.

In the previous financial models the following were assumed. It was only a waste water treatment. With a total capital cost of R751 178 106.98 and the financial analysis and modelling were based on the findings of Social and Economic report that found the indigent ratio to be 81%, which suggest that the grant should be in line with the percentages (81%), R 608 454 266.65 as contribution towards the Capital cost .The 19% R 142 723 840.30 shortfall will have to be sourced from various sources of funds.

2 2. Abbreviations

WACC Weighted average cost of capital

BEE Black Economic Empowerment

BBBEE Broad Based Black Economic Empowerment

DWA Department of Water Affairs

EAP Economically Active Population

IA Implementing Agent

IDP Integrated Development Plan

Kℓ Kilolitre

LED Local Economic Development

LM Local Municipality

Ml/d Mega litres per day

MIG Municipal Infrastructure Grant

RBIG Regional Bulk Infrastructure Grant

SARB South African Reserve Bank

3 3. Assumptions

 Capacity of the plant 40ML/d  Project life span 20 years  Number of months per annum 12  Number of days per annum 365 days  Average number of days per month 30.42  Estimated construction time 18months rounded off to 2 years  Amount of litres per kilo litre 1 000 litres  Amount of kilolitres per mega litre 1 000 litres  Income escalation per annum 8%  Operating costs to escalate by 8%

The financial techniques that should be used for the accuracy of the projections assessments

 Net profit calculations  Full cash flows calculations  Weighted average of cost of capital (WACC)  Discounted cash flows /Internal Rate of return (IRR)

4 4. Definitions

 Water reclamation

The restoration of water to a state that will allow its beneficiaries to reuse.

 NET PROFIT

Net profit the balance on the Statement of Comprehensive Income which calculates the total revenue projected that will be achieved on yearly basis for the next twenty (20) years.

 FULL CASH FLOWS

Full cash flows demonstrates available projected cash for the project on yearly basis after all the expenses have been deducted.

 WACC

WACC is the average of the costs of sources of financing, (debt, equity and grants) each of which is weighted by its respective use in the project

The cost of equity Cost of equity is calculated as follows

 Risk Free Rate – a RFR is the theoretical rate of return of an investment with no risk of financial loss. This rate represents the interest that an investor would expect from an absolutely risk-free investment over a given period of time. The 8% rate used in the model is the R157 government yield bonds. This risk-free interest rate is of significant importance for rational pricing.  Beta – is a number describing the relation of asset returns with the financial markets as a whole, in this model a positive beta of 1.1, depicts that its returns generally follow the markets returns. It basically says to the investor I have an option to invest in the market or in this project and compare the two.

5  Market Risk Premium – is the difference between the risk-free rate and the expected returns on the market.  Company-Specific Risk – is a risk A typical from operations and business environment. During the valuation process this rate is an informed judgement, and or using the projected income, usually on a scale of between 0% to 10%.  Small-Stock Premium – the smaller the company, the higher the returns. This is the highest point of departure rate of any establishment or concern to achieve, is thus calculated as follows  SP = (b x RP) – Rf + RS,  Where:  SP = small-stock premium,  B = beta,  RP =expected return on riskless asset, and cost of equity  However, in this case SP has been equated the company – Specific Risk, Purposely so for the reason that it came below the required threshold.  Cost of Equity – or cost of capital before weighted average adjustments, or a compensation to investors for the risk undertaken.  Pre-TAX Cost of Debt (Pre-tax Kd) – is the prime rate  Post-TAX Cost of Debt (Kd) – is the cost of equity less the prime rate.  Proportion of Equity, Debt, and Grant – this is the various funding mix percentage to ascertain the least cost of capital model, then  DISCOUNTED CASH FLOW / IRR –  Discounted Cash Flow valuation method is an estimate attractiveness of investment opportunity. It uses further free cash flow projections and discounts them using the weighted cost of capital to arrive at a present value to evaluate the potential for investment.

6 Capital costs as per feasibility study

The Westonaria municipality investigated the possibility of building water reclamation and a wastewater treatment plant for Zuurbekom project, which will be done in phases, depending on the demand vs capacity. The initial phase will be a 40Ml/d. The technical team has estimated the total capital cost for both water treatment and water reclamation plant as follows.

Capital value required as per feasibility study

Extension of HvN R 303 701 151.12 New WWTW for eastern areas R 399 151 933.93 R 206 613 998.24 Outfall Sewer: Westonaria South R 7 606 380.19 Outfall Sewer: Zuurbekom) to new WWTWR 15 636 285.38 Outfall Sewer for Syferfontein R 16 409 523.14 Connection: Protea Glen Outfall to New WWTWR 2 573 915.10 Total Construction Cost R 745 079 188.86 R 206 613 998.24 Prof fees and supervision (12% of ConstructionR 89 Cost) 409 502.66 R 24 793 679.79 Total Project Cost R 834 488 691.52 R 231 407 678.03

R 1 065 896 369.55 This table indicate the individual costs to incurred for the water reclamation plant

Water Reclamation

RW P/S 20 000 per kW 60 kW 1 200 000

Inlet Works 415 000 per Ml/d 30 Ml/d 12 450 000

Chem dosing 160 000 per Ml/d 30 Ml/d 4 800 000

DAF 500 000 per Ml/d 30 Ml/d 15 000 000

Clarification 650 000 per Ml/d 0 Ml/d 0

Sand Filters 1 120 000 per Ml/d 30 Ml/d 33 600 000

Service P/S 550 000 per Ml/d 30 Ml/d 16 500 000

Ozone 550 000 per Ml/d 30 Ml/d 16 500 000

GAC 1 220 000 per Ml/d 30 Ml/d 36 600 000

UF 900 000 per Ml/d 30 Ml/d 27 000 000

Sludge dam 250 000 per Ml/d 30 Ml/d 7 500 000

Peripherals 250 000 per Ml/d 30 Ml/d 7 500 000

CWW 1 500 000 per Ml 1.5 Ml 2 250 000

CW P/S 20 000 per kW 540 kW 10 800 000

191 700 000

Water Reclamation RW P/S 20 000 per kW 60 kW 1 200 000 Inlet Works 415 000 per Ml/d 30 Ml/d 12 450 000 Chem dosing 160 000 per Ml/d 30 Ml/d 4 800 000 DAF 500 000 per Ml/d 30 Ml/d 15 000 000 Clarification 650 000 per Ml/d 0 Ml/d 0 Sand Filters 1 120 000 per Ml/d 30 Ml/d 33 600 000 Service P/S 550 000 per Ml/d 30 Ml/d 16 500 000 Ozone 550 000 per Ml/d 30 Ml/d 16 500 000 GAC 1 220 000 per Ml/d 30 Ml/d 36 600 000 UF 900 000 per Ml/d 30 Ml/d 27 000 000 Sludge dam 250 000 per Ml/d 30 Ml/d 7 500 000 Peripherals 250 000 per Ml/d 30 Ml/d 7 500 000 CWW 1 500 000 per Ml 1.5 Ml 2 250 000 CW P/S 20 000 per kW 540 kW 10 800 000 191 700 000

8  The graphs below illustrate the capacity VS demand until the year 2025.

9 5. Operating costs

Cost per unit of a product or service, or annual cost incurred on a continuous basis. Operating costs exclude capital outlays or the costs incurred in design and implementation phases of the reclamation plant. The plant must be operated and maintained in order for it to operate efficiently, the sustainability of the project depend largely on whether the operating costs can be afforded by the owners of the project.

5.1 Labour costs

Operators 9 R 8 000.00 pm R 864 000.00 Superintendent 1 R 45 000.00 pm R 540 000.00 Lab manager 1 R 35 000.00 pm R 420 000.00 Maintenance 4 R 18 000.00 pm R 864 000.00 Overheads 1 R 2 912 000.00 R 5 600 000.00

R 5 600 000.00

5.2 Chemical costs Chemicals Amount Polymer 7 mg/l @ 10 R/kg R 327 678.75 R/a Ozone 8 mg/l @ 10 R/kg R 374 490.00 R/a GAC 3 mg/l @ 5 R/kg regen R 70 216.88 R/a Chlorine 3 mg/l @ 10 R/kg R 140 433.75 R/a UF 0.15 R/kl R 702 168.75 R/a R 1 614 988.13 R/a

R 1 614 988.13

10 5.3 Electrical costs Electrical For WWTW 1400& WTPkW @ 60 c/kwh (20 kW/MLD) R 7 358 400.00 R/a R 7 358 400.00

5.4 Maintenance costs Amount Maintenance 0.005 p/a for civil 3166041.706 0.03 p/a for mech/elec 10228750.13 R 13 394 791.83

R 28 192 179.96

5.5 Finance costs Interest Principal Payment

R 111 137 054.08 R 16 563 285.50 R 127 700 339.64

R 127 700 339.64

Total operating costs + finance costs R 170 465 907.70

The total operating cost and finance costs per year is R 170 465 907.70 which translate into R11.84 per kilo litre (14 400 000kl/R 170 465 907.70). The consulting engineers estimated the selling price of portable water to be R4.04 per kl (R4.04-R11.84), the deficit of R 7.80 means that the net cash flow will be negative. The project is not financially sustainable; other sources of funds will have to be obtained to assist in reducing the capital cost and debt to be obtained. The maintenance/ service of the plant is utmost important, if the plant is not properly

11 maintained, it will cause an early replacement of equipment. And the replacement costs are far more expensive compared to maintenance costs.

6. Ratio of use: 81% The table represents the total consumption of the Westonaria Municipality

Meter Name District CodeApril March May June July Aug Sept Oct Nov Dec Jan Feb March COOKE 3 SHAFT 18 38020 45360 45970 45010 40840 56570 45200 45140 40080 36700 36700 42120 38860 COOKE 2 SHAFT & GDS 18 38780 39200 47330 38260 37750 38200 39280 36020 30460 29850 29850 34020 31320 MINE MANAGER HOUSE 18 2198 2318 2281 1478 949 1888 1744 1716 1175 1209 1209 1341 1292 MINE 18 81970 95120 82830 87850 87170 92960 93950 81550 75090 78970 78970 83770 77220 REM PORTION 2 RIETFONTEIN 18 0 0 0 0 0 0 0 0 0 0 0 0 0 MINE EAST 18 0 0 0 0 0 0 0 0 0 0 0 0 0 WESTERN AREAS MINE 18 348000 343800 370000 375200 350400 328300 318900 322300 305900 332800 332800 414700 383800 KLOOF-A DIVISION OF KLOOF G M CO18 LTD 472200 444500 452800 368200 362400 339900 363400 332900 311200 326200 326200 435100 282100 WESTONARIA NORTH 18 133730 139490 142640 181910 131330 139400 152520 154240 219070 85090 85090 132150 119410 GLENHARVIE TOWNSHIP 18 127300 129340 125920 140390 147510 149300 139030 125680 125800 124060 124060 121790 109340 WESTONARIA SOUTH 18 121830 125020 125770 171780 144250 151840 175730 76280 133140 200740 200740 152450 139110 WEST RAND SMALL HOLDINGS 18 40040 39790 44240 41830 46710 45890 49340 54750 48900 38880 38880 46980 42500 KLOOF DRIVE IN THEATRE 18 144 146 159 145 154 138 168 168 218 183 183 132 117 WATERPAN SMALL HOLDINGS 18 15763 15518 8428 5701 6348 5088 5794 5995 4711 4458 4458 5082 4168 WAAGTESKOP EXT 1 18 2410 2481 2755 2677 3371 3151 2924 2693 2608 2162 2162 2819 4103 PLOT 15 ZUURBEKOM 24 3427 2818 3538 3110 3125 2547 1732 3436 3688 3927 3927 3633 3842 BEKKERSDAL TOWNSHIP 18 101310 101550 108510 101470 112580 105130 108720 105670 102140 108960 108960 113950 107840 1527122 1526451 1563171 1565011 1474887 1460302 1498432 1348538 1404180 1374189 1374189 1590037 1345022

 Total consumption of water for the Westonaria Municipality is estimated at 19 051 531 kilo litres per annum, it has been broken down to a total of 52 195.98 kilo litres per day (19051531/365days),The water charge by the municipality is R1.70

 The reported indigent ratio of 81% for the Westonaria municipality can be translated into the ratio of use by using the total consumption of the area and multiplying it by the water charge per kilo litre (19051531*R1.70) = R32 387 602.70.

12  The Westonaria municipality spend about R 26 233 958.19 (R32 387 602.70*81%) on the indigent population.  Therefore the ratio of use for the indigent population is estimated at 15 317 740 kilo litres per annum, which translate into R 26 233 958 .19 per annum.

7. Funding – Funding from reclamation: Option 1

7.1 Assumptions

If it is assumed that Westonaria municipality will not obtain a grant or financial assistance from the government, capital cost of the Zuurbekom project will have to be financed by debt.

 Selling price R 4.04 per kl  Operating + finance cost per kl R 11.84 per kl  Finance costs R8.87 per kl  Total capital cost R 1 065 896 370.00

This option assumes a 100% debt of the total capital cost R1 065 896 370.00. For both reclamation and wastewater treatment plant for Zuurbekom project. The income statement will further illustrate the income and expenses projections over 20years.

13 7.2 Income statement

Description Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Capital Outlay Income R 29 088 000.00 R 62 830 080.00 R 67 856 486.40 R 73 285 005.31 R 79 147 805.74 R 85 479 630.20 R 92 318 000.61 R 99 703 440.66 R 107 679 715.91

Operating and Maintenance costs R -42 765 568.09 R -46 186 813.54 R -49 881 758.62 R -53 872 299.31 R -58 182 083.25 R -62 836 649.91 R -67 863 581.91 R -73 292 668.46 R -79 156 081.94 Operating costs R -14 573 388.13 R -15 739 259.18 R -16 998 399.91 R -18 358 271.91 R -19 826 933.66 R -21 413 088.35 R -23 126 135.42 R -24 976 226.26 R -26 974 324.36 Maintenace costs R -28 192 179.96 R -30 447 554.36 R -32 883 358.71 R -35 514 027.40 R -38 355 149.59 R -41 423 561.56 R -44 737 446.49 R -48 316 442.21 R -52 181 757.58

Net profit before Interest R -56 443 136.18 R -29 543 547.07 R -31 907 030.84 R -34 459 593.31 R -37 216 360.77 R -40 193 669.63 R -43 409 163.20 R -46 881 896.26 R -50 632 447.96 Finance costs R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 NET PROFIT/LOSS R -184 143 475.82 R -157 243 886.71 R -159 607 370.48 R -162 159 932.95 R -164 916 700.41 R -167 894 009.27 R -171 109 502.84 R -174 582 235.90 R -178 332 787.60

Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

R 116 294 093.19 R 125 597 620.64 R 135 645 430.29 R 146 497 064.72 R 158 216 829.89 R 170 874 176.28 R 184 544 110.39 R 199 307 639.22 R 215 252 250.36 R 232 472 430.38

R -85 488 568.49 R -92 327 653.97 R -99 713 866.29 R -107 690 975.59 R -116 306 253.64 R -125 610 753.93 R -135 659 614.25 R -146 512 383.39 R -158 233 374.06 R -170 892 043.98 R -29 132 270.30 R -31 462 851.93 R -33 979 880.08 R -36 698 270.49 R -39 634 132.13 R -42 804 862.70 R -46 229 251.72 R -49 927 591.85 R -53 921 799.20 R -58 235 543.14 R -56 356 298.19 R -60 864 802.04 R -65 733 986.21 R -70 992 705.10 R -76 672 121.51 R -82 805 891.23 R -89 430 362.53 R -96 584 791.53 R -104 311 574.86 R -112 656 500.84

R -54 683 043.80 R -59 057 687.30 R -63 782 302.29 R -68 884 886.47 R -74 395 677.39 R -80 347 331.58 R -86 775 118.10 R -93 717 127.55 R -101 214 497.76 R -109 311 657.58 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -127 700 339.64 R -182 383 383.44 R -186 758 026.94 R -191 482 641.93 R -196 585 226.11 R -202 096 017.03 R -208 047 671.22 R -214 475 457.74 R -221 417 467.19 R -228 914 837.40 R -237 011 997.22

14 We have net loss before the finance costs that is 50% less than the net loss for the year, this is the results of the high borrowing costs (Interest + principal) which equals to R 127 700 339.64.If the Westonaria municipality can obtain other source of income to decrease the capital cost, the result of that will be less borrowing costs that needs to be serviced. The net loss for the year is R 184 143 475.82 with an annual increase of 8% , it will keep on increasing as the years progresses. The income statement demonstrates the constant loss that will realised each year.

7.3 Cash flow statement This table illustrate the negative cash flow over the 20 years. Essentially there will be no positive inflow of cash if the situation stays the same for the 20 years.

Description Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Capital Outlay R 532 948 185.00 R 532 948 185.00 Income R 29 088 000.00 R 62 830 080.00 R 67 856 486.40 R 73 285 005.31 R 79 147 805.74 R 85 479 630.20 R 92 318 000.61 R 99 703 440.66 R 107 679 715.91

Operating and Maintenance costs -R 170 465 907.73 -R 173 887 153.18 -R 177 582 098.26 -R 181 572 638.95 -R 185 882 422.89 -R 190 536 989.55 -R 195 563 921.55 -R 200 993 008.10 -R 206 856 421.58 Operating costs -R 14 573 388.13 -R 15 739 259.18 -R 16 998 399.91 -R 18 358 271.91 -R 19 826 933.66 -R 21 413 088.35 -R 23 126 135.42 -R 24 976 226.26 -R 26 974 324.36 Maintenace costs -R 28 192 179.96 -R 30 447 554.36 -R 32 883 358.71 -R 35 514 027.40 -R 38 355 149.59 -R 41 423 561.56 -R 44 737 446.49 -R 48 316 442.21 -R 52 181 757.58 Interest -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 NET CASH FLOWS R 532 948 185.00 R 532 948 185.00 -R 141 377 907.73 -R 111 057 073.18 -R 109 725 611.86 -R 108 287 633.64 -R 106 734 617.16 -R 105 057 359.36 -R 103 245 920.94 -R 101 289 567.44 -R 99 176 705.66

15 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

R 116 294 093.19 R 125 597 620.64 R 135 645 430.29 R 146 497 064.72 R 158 216 829.89 R 170 874 176.28 R 184 544 110.39 R 199 307 639.22 R 215 252 250.36 R 232 472 430.38

-R 213 188 908.13 -R 220 027 993.61 -R 227 414 205.93 -R 235 391 315.23 -R 244 006 593.28 -R 253 311 093.57 -R 263 359 953.89 -R 274 212 723.03 -R 285 933 713.70 -R 298 592 383.62 -R 29 132 270.30 -R 31 462 851.93 -R 33 979 880.08 -R 36 698 270.49 -R 39 634 132.13 -R 42 804 862.70 -R 46 229 251.72 -R 49 927 591.85 -R 53 921 799.20 -R 58 235 543.14 -R 56 356 298.19 -R 60 864 802.04 -R 65 733 986.21 -R 70 992 705.10 -R 76 672 121.51 -R 82 805 891.23 -R 89 430 362.53 -R 96 584 791.53 -R 104 311 574.86 -R 112 656 500.84 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 127 700 339.64 -R 96 894 814.95 -R 94 430 372.97 -R 91 768 775.64 -R 88 894 250.52 -R 85 789 763.39 -R 82 436 917.29 -R 78 815 843.50 -R 74 905 083.81 -R 70 681 463.34 -R 66 119 953.24

7.4 Amortisation schedule

Loan Amortization Schedule

Loan Information Summary Loan Amount R 1 065 896 370.00 Rate (per period) 0.875% Annual Interest Rate 10.50% Number of Payments 240 Term of Loan in Years 20 years Total Payments R 2 554 006 795.99 First Payment Date 2013/01/01 Total Interest R 1 488 110 425.99 Payment Frequency Monthly Est. Interest Savings (2.23) Compound Period Monthly Payment Type End of Period

This table illustrate the repayment of loan, it includes the total payment (interest and principal) and lastly the remaining balance.

16 Interest principal payment Balance year 1 R 111 137 054.08 R 16 563 285.50 R 127 700 339.64 R 1 049 333 084.48 year 2 R 109 311 722.86 R 18 388 616.70 R 127 700 339.64 R 1 030 944 467.66 year 3 R 107 285 233.83 R 20 415 105.80 R 127 700 339.64 R 1 010 529 361.85 year 4 R 105 035 418.73 R 22 664 920.90 R 127 700 339.64 R 987 864 440.94 year 5 R 102 537 666.27 R 25 162 673.30 R 127 700 339.64 R 962 701 767.57 year 6 R 99 764 652.83 R 27 935 686.77 R 127 700 339.64 R 964 766 080.76 year 7 R 96 686 043.75 R 31 014 295.85 R 127 700 339.64 R 903 751 784.87 year 8 R 93 268 161.47 R 34 432 178.13 R 127 700 339.64 R 869 319 606.56 year 9 R 89 473 616.47 R 38 226 723.13 R 127 700 339.64 R 831 092 883.39 year 10 R 85 260 899.68 R 42 439 439.92 R 127 700 339.64 R 788 653 443.43 year 11 R 80 583 926.97 R 47 116 412.63 R 127 700 339.64 R 741 537 030.76 year 12 R 75 391 535.71 R 52 308 803.89 R 127 700 339.64 R 689 228 226.83 year 13 R 69 626 925.04 R 58 073 141.56 R 127 700 339.64 R 631 154 812.23 year 14 R 63 227 034.38 R 50 456 694.78 R 127 700 339.64 R 566 681 506.97 year 15 R 56 121 853.68 R 71 578 485.92 R 127 700 339.64 R 495 103 021.01 year 16 R 48 233 657.55 R 79 466 682.05 R 127 700 339.64 R 415 636 338.92 year 17 R 38 476 154.97 R 89 224 184.63 R 127 700 339.64 R 327 412 154.25 year 18 R 29 753 545.40 R 97 946 794.20 R 127 700 339.64 R 229 465 360.01 year 19 R 18 959 470.72 R 108 740 868.90 R 127 700 339.64 R 120 724 491.04 year 20 R 6 975 851.74 R 120 724 490.50 R 127 700 342.23 R 0.00

17 18 8. Option 2

8.1 Scenario 1- Required tariff with no indigent factor (No Grant funding)  This scenario considers the investment as though there is no indigent factor neither grant funding required and sets the tariff at the appropriate rate to achieve a NPV = 0 in year 20

 The capital costs is assumed to be R 665 348 755.00

 The Tariff is increased to R7.65 in order to give a Net present value of 0 (NPV=O)

Income Statement

Net Revenue 4 587 416 322 - - 131 084 704 138 687 617 146 454 123 154 509 100 163 007 100 171 972 491 181 430 978 191 409 682 201 937 214

Cos 2 252 249 374 - - 41 583 753 46 899 803 52 896 217 59 710 487 64 355 726 68 308 807 75 042 686 82 368 799 90 997 443 Energy 1 086 769 148 - - 20 305 072 23 553 883 27 322 504 31 694 105 33 660 896 34 676 800 38 189 574 41 982 988 46 736 955 Chemicals 1 001 701 940 - - 17 489 340 19 238 274 21 162 101 23 278 312 25 606 143 28 166 757 30 983 433 34 081 776 37 489 954 Labour 163 778 287 - - 3 789 341 4 107 645 4 411 611 4 738 070 5 088 688 5 465 251 5 869 679 6 304 035 6 770 534

GP 2 335 166 947 - - 89 500 951 91 787 814 93 557 906 94 798 613 98 651 374 103 663 684 106 388 292 109 040 883 110 939 771

Maintenance 172 224 656 - - 4 921 293 5 206 728 5 498 304 5 800 711 6 119 750 6 456 336 6 811 435 7 186 064 7 581 297 Overheads 121223701.5 2 325 252 2 605 327 2 919 726 3 275 560 3 523 774 3 738 257 4 092 706 4 477 743 4 928 937 Depreciation 665348754.8 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438

Interest 1 574 416 172 36 963 820 78 034 730 78 034 730 78 314 440 77 950 099 77 733 452 77 490 526 77 151 471 76 672 467 76 109 291 75 471 663

Grants ------

Net profit (198 046 338) (36 963 820) (78 034 730) (29 047 762) (27 606 118) (26 077 661) (25 278 548) (21 750 114) (16 949 818) (14 455 753) (11 999 653) (10 309 564)

19 Income Statement 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 213 043 761 224 761 168 237 123 032 250 164 799 263 923 863 278 439 675 293 753 857 309 910 319 326 955 387 344 937 933 363 909 520 Revenue ------(Less) Indigent 213 043 761 224 761 168 237 123 032 250 164 799 263 923 863 278 439 675 293 753 857 309 910 319 326 955 387 344 937 933 363 909 520 Net Revenue 99 282 545 108 620 458 118 223 947 126 904 404 135 935 848 148 401 829 159 455 360 171 996 801 185 588 398 200 018 307 215 657 757 Cos 50 772 043 55 447 966 59 937 256 63 007 121 65 883 051 71 595 298 75 238 338 79 648 228 84 316 592 88 954 004 93 846 474 Energy Chemicals 41 238 949 45 362 844 49 899 128 54 889 041 60 377 945 66 415 740 73 057 313 80 363 045 88 399 349 97 239 284 106 963 213 Labour 7 271 553 7 809 648 8 387 562 9 008 242 9 674 852 10 390 791 11 159 709 11 985 528 12 872 457 13 825 019 14 848 070

GP 113 761 216 116 140 710 118 899 085 123 260 395 127 988 014 130 037 846 134 298 497 137 913 519 141 366 989 144 919 626 148 251 762

Maintenance 7 998 269 8 438 174 8 902 273 9 391 898 9 908 452 10 453 417 11 028 355 11 634 915 12 274 835 12 949 951 13 662 198 Overheads 5 364 041 5 852 932 6 356 311 6 814 815 7 292 215 7 942 762 8 524 186 9 181 586 9 893 162 10 648 413 11 465 998 Depreciation 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438

Interest 74 779 892 74 011 330 73 173 907 72 258 510 71 218 856 70 036 767 68 782 497 67 405 332 65 913 052 64 311 519 62 597 819

Grants ------

Net profit (7 648 424) (5 429 163) (2 800 844) 1 527 734 6 301 054 8 337 462 12 696 021 16 424 249 20 018 502 23 742 305 27 258 309

The net loss for the year is R29 047 762. With an annual increase on income of 5.5% the loss will keep decreasing as the years progress. A profit will be obtained over the last 9 years although the net loss over the 20 year period will result in a loss amounted R198 046 338. This will therefore not be a viable option.

20 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 5.34 5.36 5.34 5.32 5.31 5.28 5.25 5.21 5.17 5.12 Total Unit cost /kl 10.97 11.39 11.82 12.31 12.65 12.94 13.42 13.93 14.54 15.12

Total Selling Price /kl 8.98 9.50 10.03 10.58 11.16 11.78 12.43 13.11 13.83 14.59 Surplus/ (Deficit) (1.99) (1.89) (1.79) (1.73) (1.49) (1.16) (0.99) (0.82) (0.71) (0.52)

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 5.07 5.01 4.95 4.88 4.80 4.71 4.62 4.51 4.40 4.29 Total Unit cost /kl 15.77 16.43 17.03 17.65 18.50 19.25 20.10 21.02 22.00 23.06

Total Selling Price /kl 15.39 16.24 17.13 18.08 19.07 20.12 21.23 22.39 23.63 24.93 Surplus/ (Deficit) (0.37) (0.19) 0.10 0.43 0.57 0.87 1.12 1.37 1.63 1.87

21 Balance Sheet

Balance sheet 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 PPE 332 674 377 665 348 755 632 081 317 598 813 879 565 546 442 532 279 004 499 011 566 465 744 128 432 476 691 399 209 253 365 941 815 332 674 377

- 0 12 569 766 16 119 871 24 086 166 32 956 076 45 072 809 61 899 309 81 578 815 103 789 926 127 858 446 154 542 192 Debtors - - 12 569 766 13 298 813 14 043 546 14 815 941 15 630 818 16 490 513 17 397 491 18 354 353 19 363 842 20 428 854 Bank - 0 - 2 821 058 10 042 620 18 140 135 29 441 991 45 408 796 64 181 324 85 435 573 108 494 604 134 113 338

Total Assets 332 674 377 665 348 755 644 651 083 614 933 750 589 632 608 565 235 080 544 084 375 527 643 437 514 055 506 502 999 179 493 800 261 487 216 569

Equity (36 963 820) (114 998 550) (144 046 312) (171 652 430) (197 730 091) (223 008 639) (244 758 753) (261 708 571) (276 164 324) (288 163 977) (298 473 541) (306 121 965) Reserves (36 963 820) (114 998 550) (144 046 312) (171 652 430) (197 730 091) (223 008 639) (244 758 753) (261 708 571) (276 164 324) (288 163 977) (298 473 541) (306 121 965)

LTL Borrowings 369 638 197 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305

- (0) 8 350 090 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Creditors - - 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Bank - (0) 2 797 096 ------

Total Equity & Liabilities 332 674 377 665 348 755 644 651 083 614 933 750 589 632 608 565 235 080 544 084 375 527 643 437 514 055 506 502 999 179 493 800 261 487 216 569

22 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

183 579 884 215 278 499 251 184 234 291 906 548 335 107 475 382 481 465 433 773 373 488 792 265 547 639 945 34 895 433 Debtors 21 552 441 22 737 825 23 988 405 25 307 768 26 699 695 28 168 178 29 717 428 31 351 886 33 076 240 34 895 433 Bank 162 027 444 192 540 674 227 195 828 266 598 781 308 407 780 354 313 286 404 055 945 457 440 378 514 563 705 -

Total Assets 482 986 824 481 418 000 484 056 298 491 511 175 501 444 664 515 551 215 533 575 686 555 327 140 580 907 383 34 895 433

Equity (311 551 128) (314 351 972) (312 824 238) (306 523 185) (298 185 723) (285 489 702) (269 065 454) (249 046 951) (225 304 646) (198 046 338) Reserves (311 551 128) (314 351 972) (312 824 238) (306 523 185) (298 185 723) (285 489 702) (269 065 454) (249 046 951) (225 304 646) (198 046 338)

LTL Borrowings 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 -

14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 232 941 771 Creditors 14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 27 855 355 Bank ------205 086 415

Total Equity & Liabilities 482 986 824 481 418 000 484 056 298 491 511 175 501 444 664 515 551 215 533 575 686 555 327 140 580 907 383 34 895 433

23 Cash Flow Statement

Cashflow Statement Operating Acitvities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cash receipts from customers - - 118 514 938 137 958 570 145 709 390 153 736 705 162 192 224 171 112 796 180 524 000 190 452 820 200 927 725 211 978 750 Cash payments to employees and suppliers - 43 277 303 54 025 976 60 537 729 67 905 738 73 399 841 77 994 520 85 079 005 93 089 280 102 397 031 111 580 123 Interest 36 963 820 78 034 730 78 034 730 78 314 440 77 950 099 77 733 452 77 490 526 77 151 471 76 672 467 76 109 291 75 471 663 74 779 892

Cash generated from operations (36 963 820) (78 034 730) (2 797 096) 5 618 154 7 221 562 8 097 515 11 301 856 15 966 805 18 772 528 21 254 249 23 059 030 25 618 734

Investing activities PPE (332 674 377) (332 674 377) ------

Financing activities 369 638 197 410 709 108 ------Grants ------Equity/Loans 369 638 197 410 709 108 ------

Cash at the beg 0 - - (2 797 096) 2 821 058 10 042 620 18 140 135 29 441 991 45 408 796 64 181 324 85 435 573 108 494 604 Cash at end - - (2 797 096) 2 821 058 10 042 620 18 140 135 29 441 991 45 408 796 64 181 324 85 435 573 108 494 604 134 113 338

24 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 223 637 581 235 937 648 248 914 218 262 604 500 277 047 748 292 285 374 308 361 070 325 320 928 343 213 579 362 090 326 Cash payments to employees and suppliers 121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 Interest 74 011 330 73 173 907 72 258 510 71 218 856 70 036 767 68 782 497 67 405 332 65 913 052 64 311 519 62 597 819

Cash generated from operations 27 914 106 30 513 230 34 655 155 39 402 952 41 808 999 45 905 506 49 742 659 53 384 433 57 123 326 60 697 185

Investing activities PPE ------

Financing activities ------(780 347 305) Grants ------Equity/Loans ------(780 347 305)

Cash at the beg 134 113 338 162 027 444 192 540 674 227 195 828 266 598 781 308 407 780 354 313 286 404 055 945 457 440 378 514 563 705 Cash at end 162 027 444 192 540 674 227 195 828 266 598 781 308 407 780 354 313 286 404 055 945 457 440 378 514 563 705 (205 086 415)

25 Ratios

Ratios 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Gross Profit % ( Excl Indigent #DIV/0! #DIV/0! 68% 66% 64% 61% 61% 60% 59% 57% 55% 53% Gross Profit % ( Incl Indigent) #DIV/0! #DIV/0! 68% 66% 64% 61% 61% 60% 59% 57% 55% 53%

Grant funding include in the ratios below Net Profit % #DIV/0! #DIV/0! -22% -20% -18% -16% -13% -10% -8% -6% -5% -4% Current ratio #DIV/0! -1.00 1.51 2.58 3.43 4.17 5.31 6.87 8.26 9.60 10.72 11.90 Debt /Equity -1000% -679% -542% -455% -395% -350% -319% -298% -283% -271% -261% -255% ROA -11% -12% -5% -5% -5% -5% -4% -4% -3% -3% -3% -2% Interest cover ratio 0% 0% 63% 65% 67% 67% 72% 78% 81% 84% 86% 90%

Ratios 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Gross Profit % ( Excl Indigent 52% 50% 49% 48% 47% 46% 45% 43% 42% 41% Gross Profit % ( Incl Indigent) 52% 50% 49% 48% 47% 46% 45% 43% 42% 41%

Grant funding include in the ratios below Net Profit % -2% -1% 1% 2% 3% 4% 5% 6% 7% 7% Current ratio 12.94 13.96 15.19 16.50 17.38 18.48 19.46 20.34 21.17 0.15 Debt /Equity -250% -248% -249% -255% -262% -273% -290% -313% -346% 0% ROA -2% -1% 1% 3% 5% 10% 16% 30% 71% Interest cover ratio 93% 96% 102% 109% 112% 118% 124% 130% 137% 144%

26 8.2 Scenario 2- Required tariff incl indigent factor (with Grant Funding)  This scenario considers the investment as though there is an indigent factor with grant funding required and sets the tariff at the appropriate rate to achieve an NPV= 0 in year 20

 The Indigent ratio has been determined to be 70%

 The tariff had to be increased to R7.90 in order to get a NPV =0

 The grant needed from the Government in relation to the social component is determined at R2 306 882 065, which represents the 70% indigent ratio for this model to be viable.

27 Income Statement

Total 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Revenue 4 587 416 322 - - 131 084 704 138 687 617 146 454 123 154 509 100 163 007 100 171 972 491 181 430 978 191 409 682 201 937 214 (Less) Indigent (3 211 191 425) - - (91 759 293) (97 081 332) (102 517 886) (108 156 370) (114 104 970) (120 380 744) (127 001 684) (133 986 777) (141 356 050)

Net Revenue 1 376 224 896 - - 39 325 411 41 606 285 43 936 237 46 352 730 48 902 130 51 591 747 54 429 293 57 422 904 60 581 164

GP (876 024 478) - - (2 258 341) (5 293 518) (8 959 980) (13 357 757) (15 453 596) (16 717 060) (20 613 392) (24 945 894) (30 416 279)

Interest (459 427 782) - - - (2 448 717) (4 857 988) (7 269 836) (9 684 571) (12 090 475) (14 493 260) (16 906 387) (19 321 330)

Grants 2 306 882 065 - - 89 346 737 90 498 705 92 361 873 95 006 042 95 254 399 94 663 029 96 866 124 99 545 165 103 447 033

Net profit 931 488 257 - - 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413

28 Income Statement 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Revenue 213 043 761 224 761 168 237 123 032 250 164 799 263 923 863 278 439 675 293 753 857 309 910 319 326 955 387 344 937 933 363 909 520 (Less) Indigent (149 130 633) (157 332 817) (165 986 122) (175 115 359) (184 746 704) (194 907 773) (205 627 700) (216 937 224) (228 868 771) (241 456 553) (254 736 664)

Net Revenue 63 913 128 67 428 350 71 136 910 75 049 440 79 177 159 83 531 903 88 126 157 92 973 096 98 086 616 103 481 380 109 172 856

Cos 99 282 545 108 620 458 118 223 947 126 904 404 135 935 848 148 401 829 159 455 360 171 996 801 185 588 398 200 018 307 215 657 757 Energy 50 772 043 55 447 966 59 937 256 63 007 121 65 883 051 71 595 298 75 238 338 79 648 228 84 316 592 88 954 004 93 846 474 Chemicals 41 238 949 45 362 844 49 899 128 54 889 041 60 377 945 66 415 740 73 057 313 80 363 045 88 399 349 97 239 284 106 963 213 Labour 7 271 553 7 809 648 8 387 562 9 008 242 9 674 852 10 390 791 11 159 709 11 985 528 12 872 457 13 825 019 14 848 070

GP (35 369 417) (41 192 107) (47 087 037) (51 854 964) (56 758 689) (64 869 926) (71 329 203) (79 023 705) (87 501 782) (96 536 927) (106 484 902)

Interest (21 740 820) (24 158 432) (26 579 558) (29 001 106) (31 418 423) (33 836 419) (36 267 028) (38 691 383) (41 120 702) (43 553 236) (45 988 110)

Grants 106 832 757 111 166 631 115 607 914 118 902 422 122 382 784 129 271 538 134 456 567 140 990 673 148 390 927 156 423 906 165 466 838

Net profit 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413 46 574 413

29 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest - (0.17) (0.33) (0.50) (0.66) (0.83) (0.99) (1.16) (1.32) (1.49) Total Unit cost /kl 5.62 5.86 6.15 6.49 6.68 6.83 7.17 7.56 8.04 8.50

Total Selling Price /kl 8.98 9.50 10.03 10.58 11.16 11.78 12.43 13.11 13.83 14.59 Surplus/ (Deficit) 3.36 3.64 3.89 4.09 4.48 4.95 5.25 5.55 5.79 6.09

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest (1.65) (1.82) (1.99) (2.15) (2.32) (2.48) (2.65) (2.82) (2.98) (3.15) Total Unit cost /kl 9.04 9.60 10.09 10.62 11.39 12.06 12.83 13.69 14.61 15.62

Total Selling Price /kl 15.39 16.24 17.13 18.08 19.07 20.12 21.23 22.39 23.63 24.93 Surplus/ (Deficit) 6.35 6.64 7.04 7.46 7.69 8.06 8.39 8.70 9.01 9.30

30 Balance Sheet

- - 85 394 845 165 922 577 246 540 945 327 263 816 407 705 076 488 055 807 568 765 479 649 550 656 730 503 152 811 409 735 Debtors - - 3 770 930 3 989 644 4 213 064 4 444 782 4 689 245 4 947 154 5 219 247 5 506 306 5 809 153 6 128 656 Bank - - 81 623 915 161 932 933 242 327 881 322 819 034 403 015 830 483 108 653 563 546 232 644 044 350 724 694 000 805 281 078

Total Assets 332 674 377 665 348 755 717 476 162 764 736 456 812 087 387 859 542 820 906 716 642 953 799 935 1 001 242 170 1 048 759 909 1 096 444 967 1 144 084 112

Equity 332 674 377 665 348 755 711 923 168 758 497 580 805 071 993 851 646 406 898 220 819 944 795 232 991 369 645 1 037 944 057 1 084 518 470 1 131 092 883 Reserves 332 674 377 665 348 755 711 923 168 758 497 580 805 071 993 851 646 406 898 220 819 944 795 232 991 369 645 1 037 944 057 1 084 518 470 1 131 092 883

LTL Borrowings ------

- - 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Creditors - - 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Bank ------

Total Equity & Liabilities 332 674 377 665 348 755 717 476 162 764 736 456 812 087 387 859 542 820 906 716 642 953 799 935 1 001 242 170 1 048 759 909 1 096 444 967 1 144 084 112

31 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

892 451 003 973 524 874 1 054 477 289 1 135 472 962 1 216 910 840 1 298 163 222 1 379 605 295 1 461 180 097 1 542 859 885 1 624 692 367 Debtors 6 465 732 6 821 347 7 196 522 7 592 330 8 009 908 8 450 453 8 915 228 9 405 566 9 922 872 10 468 630 Bank 885 985 271 966 703 527 1 047 280 767 1 127 880 632 1 208 900 932 1 289 712 768 1 370 690 066 1 451 774 531 1 532 937 013 1 614 223 736.90

Total Assets 1 191 857 943 1 239 664 376 1 287 349 353 1 335 077 589 1 383 248 029 1 431 232 973 1 479 407 608 1 527 714 973 1 576 127 323 1 624 692 367

Equity 1 177 667 296 1 224 241 709 1 270 816 122 1 317 390 534 1 363 964 947 1 410 539 360 1 457 113 773 1 503 688 186 1 550 262 599 1 596 837 011 Reserves 1 177 667 296 1 224 241 709 1 270 816 122 1 317 390 534 1 363 964 947 1 410 539 360 1 457 113 773 1 503 688 186 1 550 262 599 1 596 837 011

LTL Borrowings ------

14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 27 855 355 Creditors 14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 27 855 355 Bank ------

Total Equity & Liabilities 1 191 857 943 1 239 664 376 1 287 349 353 1 335 077 589 1 383 248 029 1 431 232 973 1 479 407 608 1 527 714 973 1 576 127 323 1 624 692 367

32 Cash Flow Statement

Cashflow Statement Operating Acitvities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cash receipts from customers - - 35 554 481 41 387 571 43 712 817 46 121 011 48 657 667 51 333 839 54 157 200 57 135 846 60 278 317 63 593 625 Cash payments to employees and suppliers - 43 277 303 54 025 976 60 537 729 67 905 738 73 399 841 77 994 520 85 079 005 93 089 280 102 397 031 111 580 123 I n ter es t - - - (2 448 717) (4 857 988) (7 269 836) (9 684 571) (12 090 475) (14 493 260) (16 906 387) (19 321 330) (21 740 820)

Cash generated from operations - - (7 722 821) (10 189 687) (11 966 924) (14 514 890) (15 057 603) (14 570 206) (16 428 546) (19 047 047) (22 797 383) (26 245 678)

Investing activities PPE (332 674 377) (332 674 377) ------

Financing activities 332 674 377 332 674 377 89 346 737 90 498 705 92 361 873 95 006 042 95 254 399 94 663 029 96 866 124 99 545 165 103 447 033 106 832 757 G r a n ts - - 89 346 737 90 498 705 92 361 873 95 006 042 95 254 399 94 663 029 96 866 124 99 545 165 103 447 033 106 832 757 Eq u i ty 332 674 377 332 674 377 Lo a n s ------

Cash at the beg 0 - - 81 623 915 161 932 933 242 327 881 322 819 034 403 015 830 483 108 653 563 546 232 644 044 350 724 694 000 Cash at end - - 81 623 915 161 932 933 242 327 881 322 819 034 403 015 830 483 108 653 563 546 232 644 044 350 724 694 000 805 281 078

33 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 67 091 274 70 781 294 74 674 266 78 781 350 83 114 324 87 685 612 92 508 321 97 596 279 102 964 074 108 627 098 Cash payments to employees and suppliers121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 I n ter es t (24 158 432) (26 579 558) (29 001 106) (31 418 423) (33 836 419) (36 267 028) (38 691 383) (41 120 702) (43 553 236) (45 988 110)

Cash generated from operations (30 462 438) (34 889 658) (38 325 182) (41 782 919) (48 251 238) (53 644 730) (60 013 375) (67 306 463) (75 261 424) (84 180 114)

Investing activities PPE ------

Financing activities 111 166 631 115 607 914 118 902 422 122 382 784 129 271 538 134 456 567 140 990 673 148 390 927 156 423 906 165 466 838 G r a n ts 111 166 631 115 607 914 118 902 422 122 382 784 129 271 538 134 456 567 140 990 673 148 390 927 156 423 906 165 466 838 Eq u i ty Lo a n s ------

Cash at the beg 805 281 078 885 985 271 966 703 527 1 047 280 767 1 127 880 632 1 208 900 932 1 289 712 768 1 370 690 066 1 451 774 531 1 532 937 013 Cash at end 885 985 271 966 703 527 1 047 280 767 1 127 880 632 1 208 900 932 1 289 712 768 1 370 690 066 1 451 774 531 1 532 937 013 1 614 223 737

34 Ratios

Grant funding include in the ratios below Net Profit % #DIV/0! #DIV/0! 36% 34% 32% 30% 29% 27% 26% 24% 23% 22% Current ratio #DIV/0! #DIV/0! 15.38 26.59 35.14 41.44 47.99 54.20 57.61 60.06 61.25 62.46 Debt /Equity 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% ROA 0% 0% 7% 8% 8% 9% 9% 10% 11% 12% 13% 14% Interest cover ratio #DIV/0! #DIV/0! #DIV/0! -1802% -859% -541% -381% -285% -221% -175% -141% -114%

Ratios 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Gross Profit % ( Excl Indigent 52% 50% 49% 48% 47% 46% 45% 43% 42% 41% Gross Profit % ( Incl Indigent) -61% -66% -69% -72% -78% -81% -85% -89% -93% -98%

Grant funding include in the ratios below Net Profit % 21% 20% 19% 18% 17% 16% 15% 14% 14% 13% Current ratio 62.89 63.12 63.78 64.20 63.11 62.73 61.88 60.81 59.65 58.33 Debt /Equity 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% ROA 16% 18% 20% 23% 28% 35% 47% 70% 140% Interest cover ratio -93% -75% -61% -48% -38% -28% -20% -13% -7% -1%

35 8.3 Scenario 3 – 100% Grant funding of construction and subsequent operational costs

 -This scenario considers the investment "Status Quo" with a set tariff of R1.7 kl and an indigent factor of 70%, the resultant grant funding is aimed at achieving a NPV = 0 in year 20

 -With the Tariff at R1.70 and Indigent ratio of 70%, this model is almost perfect, if we assume that the Government will finance the social component

Income Statement

Total 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Revenue 1 018 997 022 - - 29 117 680 30 806 506 32 531 670 34 320 912 36 208 562 38 200 033 40 301 035 42 517 592 44 856 060 (Less) Indigent (713 297 915) - - (20 382 376) (21 564 554) (22 772 169) (24 024 639) (25 345 994) (26 740 023) (28 210 725) (29 762 314) (31 399 242)

Net Revenue 305 699 107 - - 8 735 304 9 241 952 9 759 501 10 296 274 10 862 569 11 460 010 12 090 311 12 755 278 13 456 818

GP (1 946 550 268) - - (32 848 448) (37 657 851) (43 136 716) (49 414 214) (53 493 157) (56 848 797) (62 952 375) (69 613 521) (77 540 625)

Interest (651 887 475) - - - (3 534 740) (6 947 137) (10 362 222) (13 780 388) (17 190 019) (20 596 846) (24 014 346) (27 434 011)

Grants 3 850 296 917 - - 153 204 282 155 044 454 157 716 898 161 237 550 162 465 582 162 962 660 166 368 959 170 372 271 175 726 136

Net profit 1 596 837 011 - - 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851

36 Income Statement

2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Revenue 47 323 143 49 925 916 52 671 841 55 568 792 58 625 076 61 849 455 65 251 175 68 839 990 72 626 189 76 620 630 80 834 764 (Less) Indigent (33 126 200) (34 948 141) (36 870 289) (38 898 155) (41 037 553) (43 294 619) (45 675 823) (48 187 993) (50 838 332) (53 634 441) (56 584 335) Net Revenue 14 196 943 14 977 775 15 801 552 16 670 638 17 587 523 18 554 837 19 575 353 20 651 997 21 787 857 22 986 189 24 250 429

GP (85 085 602) (93 642 683) (102 422 395) (110 233 766) (118 348 325) (129 846 992) (139 880 008) (151 344 804) (163 800 541) (177 032 118) (191 407 328)

Interest (30 858 591) (34 281 683) (37 708 698) (41 136 567) (44 560 663) (47 985 918) (51 424 295) (54 856 954) (58 295 142) (61 737 142) (65 182 111)

Grants 180 698 609 186 761 394 193 081 569 198 413 200 204 097 619 213 366 542 221 117 542 230 413 638 240 782 684 252 002 629 264 462 701

Net profit 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851

37 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest - (0.24) (0.48) (0.71) (0.94) (1.18) (1.41) (1.64) (1.88) (2.11) Total Unit cost /kl 5.62 5.78 6.00 6.28 6.40 6.48 6.75 7.07 7.49 7.88

Total Selling Price /kl 1.99 2.11 2.23 2.35 2.48 2.62 2.76 2.91 3.07 3.24 Surplus/ (Deficit) (3.63) (3.67) (3.77) (3.93) (3.92) (3.86) (3.99) (4.16) (4.42) (4.64)

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest (2.35) (2.58) (2.82) (3.05) (3.29) (3.52) (3.76) (3.99) (4.23) (4.46) Total Unit cost /kl 8.35 8.84 9.26 9.72 10.42 11.02 11.73 12.52 13.37 14.31

Total Selling Price /kl 3.42 3.61 3.81 4.02 4.24 4.47 4.72 4.97 5.25 5.54 Surplus/ (Deficit) (4.93) (5.23) (5.46) (5.70) (6.18) (6.55) (7.01) (7.54) (8.12) (8.77)

38 Balance Sheet

6 947 137 - - 118 662 283 232 457 452 346 343 258 460 333 567 574 042 264 687 660 433 801 637 543 915 690 158 1 029 910 092 1 144 084 112 D e b t o r s - - 837 632 886 215 935 843 987 314 1 041 616 1 098 905 1 159 345 1 223 109 1 290 380 1 361 351 Ban k - - 117 824 651 231 571 237 345 407 416 459 346 253 573 000 648 686 561 528 800 478 198 914 467 049 1 028 619 712 1 142 722 761

Total Assets 332 674 377 665 348 755 750 743 600 831 271 331 911 889 700 992 612 571 1 073 053 830 1 153 404 562 1 234 114 234 1 314 899 410 1 395 851 907 1 476 758 489

Eq u it y 332 674 377 665 348 755 745 190 605 825 032 456 904 874 306 984 716 157 1 064 558 008 1 144 399 858 1 224 241 709 1 304 083 559 1 383 925 410 1 463 767 260 Re se r ve s 332 674 377 665 348 755 745 190 605 825 032 456 904 874 306 984 716 157 1 064 558 008 1 144 399 858 1 224 241 709 1 304 083 559 1 383 925 410 1 463 767 260

LTL Bo r r o w in gs ------

- - 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 C r e d it o r s - - 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Ban k ------

Total Equity & Liabilities 332 674 377 665 348 755 750 743 600 831 271 331 911 889 700 992 612 571 1 073 053 830 1 153 404 562 1 234 114 234 1 314 899 410 1 395 851 907 1 476 758 489

39 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

1 258 392 818 1 372 734 127 1 486 953 979 1 601 217 091 1 715 922 406 1 830 442 226 1 945 151 736 2 059 993 976 2 174 941 202 2 290 041 122 Debtors 1 436 225 1 515 217 1 598 554 1 686 475 1 779 231 1 877 089 1 980 328 2 089 247 2 204 155 2 325 384 Bank 1 256 956 593 1 371 218 910 1 485 355 425 1 599 530 616 1 714 143 175 1 828 565 137 1 943 171 408 2 057 904 730 2 172 737 047 2 287 715 738.05

Total Assets 1 557 799 758 1 638 873 629 1 719 826 043 1 800 821 717 1 882 259 595 1 963 511 977 2 044 954 050 2 126 528 852 2 208 208 640 2 290 041 122

Equity 1 543 609 111 1 623 450 962 1 703 292 812 1 783 134 663 1 862 976 513 1 942 818 364 2 022 660 214 2 102 502 065 2 182 343 916 2 262 185 766 Reserves 1 543 609 111 1 623 450 962 1 703 292 812 1 783 134 663 1 862 976 513 1 942 818 364 2 022 660 214 2 102 502 065 2 182 343 916 2 262 185 766

LTL Borrowings ------

Total Equity & Liabilities 1 557 799 758 1 638 873 629 1 719 826 043 1 800 821 717 1 882 259 595 1 963 511 977 2 044 954 050 2 126 528 852 2 208 208 640 2 290 041 122

40 Cash Flow Statement

Cashflow Statement Operating Acitvities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cash receipts from customers - - 7 897 672 9 193 369 9 709 873 10 244 802 10 808 266 11 402 721 12 029 871 12 691 514 13 389 547 14 125 972 Cash payments to employees and suppliers - 43 277 303 54 025 976 60 537 729 67 905 738 73 399 841 77 994 520 85 079 005 93 089 280 102 397 031 111 580 123 Interest - - - (3 534 740) (6 947 137) (10 362 222) (13 780 388) (17 190 019) (20 596 846) (24 014 346) (27 434 011) (30 858 591)

Cash generated from operations - - (35 379 630) (41 297 867) (43 880 719) (47 298 713) (48 811 187) (49 401 780) (52 452 288) (56 383 420) (61 573 473) (66 595 559)

Investing activities PPE (332 674 377) (332 674 377) ------

Financing activities 332 674 377 332 674 377 153 204 282 155 044 454 157 716 898 161 237 550 162 465 582 162 962 660 166 368 959 170 372 271 175 726 136 180 698 609 Grants - - 153 204 282 155 044 454 157 716 898 161 237 550 162 465 582 162 962 660 166 368 959 170 372 271 175 726 136 180 698 609 Equity 332 674 377 332 674 377 Loans ------

Cash at the beg 0 - - 117 824 651 231 571 237 345 407 416 459 346 253 573 000 648 686 561 528 800 478 198 914 467 049 1 028 619 712 Cash at end - - 117 824 651 231 571 237 345 407 416 459 346 253 573 000 648 686 561 528 800 478 198 914 467 049 1 028 619 712 1 142 722 761

41 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 14 902 900 15 722 560 16 587 301 17 499 602 18 462 080 19 477 495 20 548 757 21 678 939 22 871 280 24 129 201 Cash payments to employees and suppliers121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 Interest (34 281 683) (37 708 698) (41 136 567) (44 560 663) (47 985 918) (51 424 295) (54 856 954) (58 295 142) (61 737 142) (65 182 111)

Cash generated from operations (72 527 562) (78 819 253) (84 276 685) (89 922 427) (98 753 982) (106 695 580) (115 807 368) (126 049 362) (137 170 312) (149 484 010)

Investing activities PPE ------

Financing activities 186 761 394 193 081 569 198 413 200 204 097 619 213 366 542 221 117 542 230 413 638 240 782 684 252 002 629 264 462 701 Grants 186 761 394 193 081 569 198 413 200 204 097 619 213 366 542 221 117 542 230 413 638 240 782 684 252 002 629 264 462 701 Equity Loans ------

Cash at the beg 1 142 722 761 1 256 956 593 1 371 218 910 1 485 355 425 1 599 530 616 1 714 143 175 1 828 565 137 1 943 171 408 2 057 904 730 2 172 737 047 Cash at end 1 256 956 593 1 371 218 910 1 485 355 425 1 599 530 616 1 714 143 175 1 828 565 137 1 943 171 408 2 057 904 730 2 172 737 047 2 287 715 738

42 Ratios

Ratios 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Gross Profit % ( Excl Indigent #DIV/0! #DIV/0! -43% -52% -63% -74% -78% -79% -86% -94% -103% -110% Gross Profit % ( Incl Indigent) #DIV/0! #DIV/0! -376% -407% -442% -480% -492% -496% -521% -546% -576% -599%

Grant funding include in the ratios below Net Profit % #DIV/0! #DIV/0! 274% 259% 245% 233% 221% 209% 198% 188% 178% 169% Current ratio #DIV/0! #DIV/0! 21.37 37.26 49.37 58.30 67.57 76.37 81.20 84.66 86.35 88.07 Debt /Equity 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% ROA 0% 0% 13% 13% 14% 15% 16% 17% 18% 20% 22% 24% Interest cover ratio #DIV/0! #DIV/0! #DIV/0! -2159% -1049% -671% -479% -364% -288% -232% -191% -159%

Ratios 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Gross Profit % ( Excl Indigent -118% -124% -128% -132% -140% -144% -150% -156% -161% -167% Gross Profit % ( Incl Indigent) -625% -648% -661% -673% -700% -715% -733% -752% -770% -789%

Grant funding include in the ratios below Net Profit % 160% 152% 144% 136% 129% 122% 116% 110% 104% 99% Current ratio 88.68 89.01 89.94 90.53 88.99 88.45 87.25 85.74 84.09 82.21 Debt /Equity 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% ROA 27% 30% 34% 40% 48% 60% 80% 120% 240% Interest cover ratio -133% -112% -94% -79% -66% -55% -46% -37% -29% -22%

43 8.4 Scenario 4 - 100% loan recovered through tariff and grant funding

 This scenario considers the investment "Status Quo" with a set tariff of R1.7 kl, an indigent factor of 70% and loan at 100%.

 The 100% loan will result in the borrowing costs of R 1 037 985 033 having to be paid back,

 It is very difficult to imagine how the borrowing costs will be paid back, since Westonaria Municipality has already expressed that their revenue collection can hardly sustain their operating costs

Income Statement

Net Revenue 305 699 107 - - 8 735 304 9 241 952 9 759 501 10 296 274 10 862 569 11 460 010 12 090 311 12 755 278 13 456 818

GP (1 946 550 268) - - (32 848 448) (37 657 851) (43 136 716) (49 414 214) (53 493 157) (56 848 797) (62 952 375) (69 613 521) (77 540 625)

Interest 1 478 904 234 36 963 820 78 034 730 78 034 730 76 895 246 75 878 104 74 858 275 73 835 365 72 820 989 71 809 418 70 787 173 69 762 763

Grants 4 269 253 064 - - 151 397 161 155 632 589 160 700 289 166 616 197 170 239 484 173 131 817 178 933 372 185 331 939 193 081 060

Net profit (114 998 550) (36 963 820) (78 034 730) ------

44 Income Statement 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Revenue 47 323 143 49 925 916 52 671 841 55 568 792 58 625 076 61 849 455 65 251 175 68 839 990 72 626 189 76 620 630 80 834 764 (Less) Indigent (33 126 200) (34 948 141) (36 870 289) (38 898 155) (41 037 553) (43 294 619) (45 675 823) (48 187 993) (50 838 332) (53 634 441) (56 584 335)

Net Revenue 14 196 943 14 977 775 15 801 552 16 670 638 17 587 523 18 554 837 19 575 353 20 651 997 21 787 857 22 986 189 24 250 429

GP (85 085 602) (93 642 683) (102 422 395) (110 233 766) (118 348 325) (129 846 992) (139 880 008) (151 344 804) (163 800 541) (177 032 118) (191 407 328)

Interest 68 733 439 67 705 603 66 673 843 65 641 229 64 612 389 63 582 389 62 539 268 61 501 865 60 458 932 59 412 188 58 362 474

Grants 200 448 788 208 906 829 217 622 260 225 349 147 233 428 820 245 092 999 255 239 255 266 930 607 279 694 908 293 310 108 308 165 436

Net profit ------

45 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 5.34 5.27 5.20 5.13 5.06 4.99 4.92 4.85 4.78 4.71 Total Unit cost /kl 10.97 11.29 11.68 12.12 12.40 12.64 13.08 13.57 14.15 14.70

Total Selling Price /kl 1.99 2.11 2.23 2.35 2.48 2.62 2.76 2.91 3.07 3.24 Surplus/ (Deficit) (8.97) (9.18) (9.45) (9.77) (9.92) (10.03) (10.32) (10.66) (11.07) (11.46)

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 4.64 4.57 4.50 4.43 4.35 4.28 4.21 4.14 4.07 4.00 Total Unit cost /kl 15.33 15.99 16.58 17.19 18.06 18.82 19.70 20.65 21.66 22.77

Total Selling Price /kl 3.42 3.61 3.81 4.02 4.24 4.47 4.72 4.97 5.25 5.54 Surplus/ (Deficit) (11.91) (12.38) (12.77) (13.18) (13.82) (14.35) (14.98) (15.68) (16.42) (17.23)

46 Balance Sheet

2 156 626 - 0 38 820 432 72 773 751 106 817 707 140 966 165 174 833 011 208 609 330 242 744 589 276 955 353 311 333 437 345 665 606 Debtors - - 837 632 886 215 935 843 987 314 1 041 616 1 098 905 1 159 345 1 223 109 1 290 380 1 361 351 Bank - 0 37 982 800 71 887 536 105 881 864 139 978 851 173 791 395 207 510 425 241 585 244 275 732 244 310 043 057 344 304 256

Total Assets 332 674 377 665 348 755 670 901 749 671 587 630 672 364 148 673 245 168 673 844 578 674 353 458 675 221 280 676 164 606 677 275 252 678 339 984

Equity (36 963 820) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) Reserves (36 963 820) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550)

LTL Borrowings 369 638 197 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305

- (0) 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Creditors - - 5 552 995 6 238 875 7 015 394 7 896 414 8 495 823 9 004 703 9 872 525 10 815 851 11 926 497 12 991 229 Bank - (0) ------

Total Equity & Liabilities 332 674 377 665 348 755 670 901 749 671 587 630 672 364 148 673 245 168 673 844 578 674 353 458 675 221 280 676 164 606 677 275 252 678 339 984

47 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

380 132 462 414 631 920 449 009 922 483 431 183 518 294 648 552 972 617 587 840 277 622 840 666 657 946 041 2 325 384 Debtors 1 436 225 1 515 217 1 598 554 1 686 475 1 779 231 1 877 089 1 980 328 2 089 247 2 204 155 2 325 384 Bank 378 696 237 413 116 703 447 411 367 481 744 708 516 515 417 551 095 528 585 859 948 620 751 420 655 741 886 -

Total Assets 679 539 402 680 771 422 681 881 986 683 035 809 684 631 836 686 042 367 687 642 590 689 375 542 691 213 479 2 325 384

Equity (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) Reserves (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550) (114 998 550)

LTL Borrowings 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 -

14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 117 323 934 Creditors 14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 27 855 355 Bank ------89 468 578

Total Equity & Liabilities 679 539 402 680 771 422 681 881 986 683 035 809 684 631 836 686 042 367 687 642 590 689 375 542 691 213 479 2 325 384

48 Cash Flow Statement

Cashflow Statement Operating Acitvities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cash receipts from customers - - 7 897 672 9 193 369 9 709 873 10 244 802 10 808 266 11 402 721 12 029 871 12 691 514 13 389 547 14 125 972 Cash payments to employees and suppliers - 43 277 303 54 025 976 60 537 729 67 905 738 73 399 841 77 994 520 85 079 005 93 089 280 102 397 031 111 580 123 Interest 36 963 820 78 034 730 78 034 730 76 895 246 75 878 104 74 858 275 73 835 365 72 820 989 71 809 418 70 787 173 69 762 763 68 733 439

Cash generated from operations (36 963 820) (78 034 730) (113 414 361) (121 727 853) (126 705 961) (132 519 210) (136 426 939) (139 412 788) (144 858 552) (151 184 939) (158 770 248) (166 187 590)

Investing activities PPE (332 674 377) (332 674 377) ------

Financing activities 369 638 197 410 709 108 151 397 161 155 632 589 160 700 289 166 616 197 170 239 484 173 131 817 178 933 372 185 331 939 193 081 060 200 448 788 Grants - - 151 397 161 155 632 589 160 700 289 166 616 197 170 239 484 173 131 817 178 933 372 185 331 939 193 081 060 200 448 788 Equity - - Loans 369 638 197 410 709 108 ------

Cash at the beg 0 - - 37 982 800 71 887 536 105 881 864 139 978 851 173 791 395 207 510 425 241 585 244 275 732 244 310 043 057 Cash at end - - 37 982 800 71 887 536 105 881 864 139 978 851 173 791 395 207 510 425 241 585 244 275 732 244 310 043 057 344 304 256

49 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 14 902 900 15 722 560 16 587 301 17 499 602 18 462 080 19 477 495 20 548 757 21 678 939 22 871 280 24 129 201 Cash payments to employees and suppliers121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 Interest 67 705 603 66 673 843 65 641 229 64 612 389 63 582 389 62 539 268 61 501 865 60 458 932 59 412 188 58 362 474

Cash generated from operations (174 514 847) (183 201 794) (191 054 482) (199 095 480) (210 322 290) (220 659 144) (232 166 186) (244 803 436) (258 319 642) (273 028 596)

Investing activities PPE ------

Financing activities 208 906 829 217 622 260 225 349 147 233 428 820 245 092 999 255 239 255 266 930 607 279 694 908 293 310 108 (472 181 869) Grants 208 906 829 217 622 260 225 349 147 233 428 820 245 092 999 255 239 255 266 930 607 279 694 908 293 310 108 308 165 436 Equity Loans ------(780 347 305)

Cash at the beg 344 304 256 378 696 237 413 116 703 447 411 367 481 744 708 516 515 417 551 095 528 585 859 948 620 751 420 655 741 886 Cash at end 378 696 237 413 116 703 447 411 367 481 744 708 516 515 417 551 095 528 585 859 948 620 751 420 655 741 886 (89 468 578)

50 Ratios

Grant funding include in the ratios below Net Profit % #DIV/0! #DIV/0! 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Current ratio #DIV/0! -1.00 6.99 11.66 15.23 17.85 20.58 23.17 24.59 25.61 26.10 26.61 Debt /Equity -1000% -679% -679% -679% -679% -679% -679% -679% -679% -679% -679% -679% ROA -11% -12% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Interest cover ratio 0% 0% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Grant funding include in the ratios below Net Profit % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Current ratio 26.79 26.88 27.16 27.33 26.88 26.72 26.37 25.92 25.44 0.02 Debt /Equity -679% -679% -679% -679% -679% -679% -679% -679% -679% 0% ROA 0% 0% 0% 0% 0% 0% 0% 0% 0% Interest cover ratio 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

51 8.5 Scenario 5 - Required tariff to compensate indigent factor (No Grant funding)

 This scenario considers the investment by setting the tariff to compensate for the indigent factor of 70% requiring no grant funding aimed at achieving a NPV = 0 in year 20

 The Tariff is increased to R26.34 in order to compensate for the indigent factor of 70%. The Tariff is too high for Westonaria residents that are already under tremendous pressure with the current tariff of R1.70.

 The increase of tariff will do away with the grant from the Government, this would be a good option if the Westonaria residents were in a position to afford the increment

 This model should be discarded and assess other options

52 Income Statement

Total 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Revenue 15 787 789 651 - - 451 133 619 477 299 369 504 028 134 531 749 681 560 995 914 591 850 689 624 402 477 658 744 613 694 975 567 (Less) Indigent (11 051 452 755) - - (315 793 534) (334 109 559) (352 819 694) (372 224 777) (392 697 140) (414 295 482) (437 081 734) (461 121 229) (486 482 897)

Net Revenue 4 736 336 895 - - 135 340 086 143 189 811 151 208 440 159 524 904 168 298 774 177 555 207 187 320 743 197 623 384 208 492 670

GP 2 484 087 521 - - 93 756 333 96 290 008 98 312 223 99 814 417 103 943 048 109 246 400 112 278 058 115 254 585 117 495 227

Interest 1 533 599 266 36 963 820 78 034 730 78 034 730 78 003 223 77 690 986 77 324 662 76 919 751 76 405 615 75 737 591 74 970 560 74 113 291

Grants ------

Net profit (8 308 858) (36 963 820) (78 034 730) (24 792 380) (22 792 707) (21 064 231) (19 853 953) (15 887 665) (10 621 247) (7 631 113) (4 647 219) (2 395 736)

53 Income Statement 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Revenue 733 199 223 773 525 180 816 069 065 860 952 864 908 305 272 958 262 061 1 010 966 475 1 066 569 631 1 125 230 961 1 187 118 663 1 252 410 190 (Less) Indigent (513 239 456) (541 467 626) (571 248 346) (602 667 005) (635 813 690) (670 783 443) (707 676 532) (746 598 742) (787 661 672) (830 983 064) (876 687 133)

Net Revenue 219 959 767 232 057 554 244 820 720 258 285 859 272 491 581 287 478 618 303 289 942 319 970 889 337 569 288 356 135 599 375 723 057

GP 120 677 222 123 437 096 126 596 773 131 381 455 136 555 733 139 076 790 143 834 582 147 974 089 151 980 890 156 117 292 160 065 300

Interest 73 185 088 72 162 239 71 051 546 69 842 702 68 488 159 66 968 403 65 352 270 63 587 545 61 680 423 59 635 086 57 446 843

Grants ------

Net profit 862 386 3 716 314 7 019 205 12 064 602 17 599 469 20 444 769 25 662 334 30 302 605 34 865 032 39 616 404 44 222 823

54 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 5.34 5.34 5.32 5.30 5.27 5.23 5.19 5.13 5.08 5.01 Total Unit cost /kl 10.97 11.37 11.80 12.29 12.62 12.89 13.35 13.85 14.44 15.01

Total Selling Price /kl 30.90 32.69 34.52 36.42 38.42 40.54 42.77 45.12 47.60 50.22 Surplus/ (Deficit) 19.93 21.32 22.72 24.13 25.81 27.65 29.41 31.27 33.16 35.21

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 4.94 4.87 4.78 4.69 4.59 4.48 4.36 4.22 4.08 3.93 Total Unit cost /kl 15.64 16.29 16.86 17.46 18.29 19.02 19.84 20.73 21.68 22.71

Total Selling Price /kl 52.98 55.90 58.97 62.21 65.63 69.24 73.05 77.07 81.31 85.78 Surplus/ (Deficit) 37.34 39.61 42.10 44.75 47.34 50.23 53.21 56.34 59.63 63.08

55 Balance Sheet

343 744 - 0 14 028 053 25 188 664 38 168 388 52 462 893 70 442 075 93 597 146 120 101 293 149 664 838 181 647 186 216 841 742 Debtors - - 12 977 816 13 730 530 14 499 439 15 296 909 16 138 239 17 025 842 17 962 263 18 950 188 19 992 448 21 092 032 Bank - 0 1 050 236 11 458 134 23 668 949 37 165 984 54 303 837 76 571 305 102 139 030 130 714 650 161 654 738 195 749 709

Total Assets 332 674 377 665 348 755 646 109 370 624 002 543 603 714 830 584 741 897 569 453 641 559 341 275 552 577 984 548 874 091 547 589 001 549 516 119

Equity (36 963 820) (114 998 550) (139 790 930) (162 583 637) (183 647 869) (203 501 822) (219 389 487) (230 010 734) (237 641 846) (242 289 065) (244 684 801) (243 822 415) Reserves (36 963 820) (114 998 550) (139 790 930) (162 583 637) (183 647 869) (203 501 822) (219 389 487) (230 010 734) (237 641 846) (242 289 065) (244 684 801) (243 822 415)

LTL Borrowings 369 638 197 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305

Total Equity & Liabilities 332 674 377 665 348 755 646 109 370 624 002 543 603 714 830 584 741 897 569 453 641 559 341 275 552 577 984 548 874 091 547 589 001 549 516 119

56 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

255 024 912 296 543 575 342 986 179 395 006 908 450 315 142 510 655 445 575 825 710 645 691 132 720 412 911 36 028 238 Debtors 22 252 094 23 475 959 24 767 137 26 129 330 27 566 443 29 082 597 30 682 140 32 369 658 34 149 989 36 028 238 Bank 232 772 818 273 067 615 318 219 041 368 877 579 422 748 699 481 572 847 545 143 570 613 321 474 686 262 922 -

Total Assets 554 431 851 562 683 077 575 858 243 594 611 535 616 652 331 643 725 196 675 628 023 712 226 007 753 680 348 36 028 238

Equity (240 106 101) (233 086 896) (221 022 293) (203 422 825) (182 978 056) (157 315 722) (127 013 117) (92 148 085) (52 531 681) (8 308 858) Reserves (240 106 101) (233 086 896) (221 022 293) (203 422 825) (182 978 056) (157 315 722) (127 013 117) (92 148 085) (52 531 681) (8 308 858)

LTL Borrowings 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 780 347 305 -

14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 44 337 096 Creditors 14 190 647 15 422 667 16 533 231 17 687 054 19 283 082 20 693 613 22 293 835 24 026 787 25 864 724 27 855 355 Bank ------16 481 741

Total Equity & Liabilities 554 431 851 562 683 077 575 858 243 594 611 535 616 652 331 643 725 196 675 628 023 712 226 007 753 680 348 36 028 238

57 Cash Flow Statement

Cashflow Statement Operating Acitvities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cash receipts from customers - - 122 362 269 142 437 097 150 439 531 158 727 435 167 457 444 176 667 604 186 384 322 196 635 460 207 450 410 218 860 182 Cash payments to employees and suppliers - 43 277 303 54 025 976 60 537 729 67 905 738 73 399 841 77 994 520 85 079 005 93 089 280 102 397 031 111 580 123 Interest 36 963 820 78 034 730 78 034 730 78 003 223 77 690 986 77 324 662 76 919 751 76 405 615 75 737 591 74 970 560 74 113 291 73 185 088

Cash generated from operations (36 963 820) (78 034 730) 1 050 236 10 407 898 12 210 815 13 497 035 17 137 852 22 267 468 25 567 725 28 575 620 30 940 088 34 094 971

Investing activities PPE (332 674 377) (332 674 377) ------

Financing activities 369 638 197 410 709 108 ------Grants ------Equity - - Loans 369 638 197 410 709 108 ------

Cash at the beg 0 - - 1 050 236 11 458 134 23 668 949 37 165 984 54 303 837 76 571 305 102 139 030 130 714 650 161 654 738 Cash at end - - 1 050 236 11 458 134 23 668 949 37 165 984 54 303 837 76 571 305 102 139 030 130 714 650 161 654 738 195 749 709

58 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 230 897 492 243 596 854 256 994 681 271 129 389 286 041 505 301 773 788 318 371 346 335 881 770 354 355 268 373 844 808 Cash payments to employees and suppliers121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 Interest 72 162 239 71 051 546 69 842 702 68 488 159 66 968 403 65 352 270 63 587 545 61 680 423 59 635 086 57 446 843

Cash generated from operations 37 023 108 40 294 798 45 151 426 50 658 537 53 871 121 58 824 148 63 570 723 68 177 904 72 941 448 77 602 642

Investing activities PPE ------

Financing activities ------(780 347 305) Grants ------Equity Loans ------(780 347 305)

Cash at the beg 195 749 709 232 772 818 273 067 615 318 219 041 368 877 579 422 748 699 481 572 847 545 143 570 613 321 474 686 262 922 Cash at end 232 772 818 273 067 615 318 219 041 368 877 579 422 748 699 481 572 847 545 143 570 613 321 474 686 262 922 (16 481 741)

59 Ratios

Ratios 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Gross Profit % ( Excl Indigent #DIV/0! #DIV/0! 91% 90% 90% 89% 89% 88% 88% 87% 87% 86% Gross Profit % ( Incl Indigent) #DIV/0! #DIV/0! 69% 67% 65% 63% 62% 62% 60% 58% 56% 55%

Grant funding include in the ratios below Net Profit % #DIV/0! #DIV/0! -5% -5% -4% -4% -3% -2% -1% -1% 0% 0% Current ratio #DIV/0! -1.00 2.53 4.04 5.44 6.64 8.29 10.39 12.17 13.84 15.23 16.69 Debt /Equity -1000% -679% -558% -480% -425% -383% -356% -339% -328% -322% -319% -320% ROA -11% -12% -4% -4% -4% -4% -3% -2% -2% -1% -1% 0% Interest cover ratio 0% 0% 68% 71% 73% 74% 79% 86% 90% 94% 97% 101%

Ratios 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Gross Profit % ( Excl Indigent 86% 86% 85% 85% 85% 84% 84% 84% 83% 83% Gross Profit % ( Incl Indigent) 53% 52% 51% 50% 48% 47% 46% 45% 44% 43%

Grant funding include in the ratios below Net Profit % 0% 1% 1% 2% 2% 3% 3% 3% 3% 4% Current ratio 17.97 19.23 20.75 22.33 23.35 24.68 25.83 26.87 27.85 0.81 Debt /Equity -325% -335% -353% -384% -426% -496% -614% -847% -1485% 0% ROA 1% 3% 5% 9% 12% 19% 30% 52% 119% Interest cover ratio 105% 110% 117% 126% 131% 139% 148% 157% 166% 177%

60 8.6 Scenario 6 – 100% Equity Status Quo (NPV = Zero)

 This scenario considers the investment "Status Quo" with a set tariff of R1.7 kl, an indigent factor of 70% and Equity at 100%.

 100% Equity is ideal if the Westonaria Municipality has retained reserve to assist finance the project

 This model is not realistic, and therefore it must be discarded

Income Statement

Net Revenue 305 699 107 - - 8 735 304 9 241 952 9 759 501 10 296 274 10 862 569 11 460 010 12 090 311 12 755 278 13 456 818

GP (1 946 550 268) - - (32 848 448) (37 657 851) (43 136 716) (49 414 214) (53 493 157) (56 848 797) (62 952 375) (69 613 521) (77 540 625)

Interest (651 887 475) - - - (3 534 740) (6 947 137) (10 362 222) (13 780 388) (17 190 019) (20 596 846) (24 014 346) (27 434 011)

Grants 3 850 296 917 - - 153 204 282 155 044 454 157 716 898 161 237 550 162 465 582 162 962 660 166 368 959 170 372 271 175 726 136

Net profit 1 596 837 011 - - 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851

61 Income Statement 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Revenue 47 323 143 49 925 916 52 671 841 55 568 792 58 625 076 61 849 455 65 251 175 68 839 990 72 626 189 76 620 630 80 834 764 (Less) Indigent (33 126 200) (34 948 141) (36 870 289) (38 898 155) (41 037 553) (43 294 619) (45 675 823) (48 187 993) (50 838 332) (53 634 441) (56 584 335)

Net Revenue 14 196 943 14 977 775 15 801 552 16 670 638 17 587 523 18 554 837 19 575 353 20 651 997 21 787 857 22 986 189 24 250 429

GP (85 085 602) (93 642 683) (102 422 395) (110 233 766) (118 348 325) (129 846 992) (139 880 008) (151 344 804) (163 800 541) (177 032 118) (191 407 328)

Interest (30 858 591) (34 281 683) (37 708 698) (41 136 567) (44 560 663) (47 985 918) (51 424 295) (54 856 954) (58 295 142) (61 737 142) (65 182 111)

Grants 180 698 609 186 761 394 193 081 569 198 413 200 204 097 619 213 366 542 221 117 542 230 413 638 240 782 684 252 002 629 264 462 701

Net profit 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851 79 841 851

62 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest - (0.24) (0.48) (0.71) (0.94) (1.18) (1.41) (1.64) (1.88) (2.11) Total Unit cost /kl 5.62 5.78 6.00 6.28 6.40 6.48 6.75 7.07 7.49 7.88

Total Selling Price /kl 1.99 2.11 2.23 2.35 2.48 2.62 2.76 2.91 3.07 3.24 Surplus/ (Deficit) (3.63) (3.67) (3.77) (3.93) (3.92) (3.86) (3.99) (4.16) (4.42) (4.64)

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest (2.35) (2.58) (2.82) (3.05) (3.29) (3.52) (3.76) (3.99) (4.23) (4.46) Total Unit cost /kl 8.35 8.84 9.26 9.72 10.42 11.02 11.73 12.52 13.37 14.31

Total Selling Price /kl 3.42 3.61 3.81 4.02 4.24 4.47 4.72 4.97 5.25 5.54 Surplus/ (Deficit) (4.93) (5.23) (5.46) (5.70) (6.18) (6.55) (7.01) (7.54) (8.12) (8.77)

63 Balance Sheet

6 947 137 - - 118 662 283 232 457 452 346 343 258 460 333 567 574 042 264 687 660 433 801 637 543 915 690 158 1 029 910 092 1 144 084 112 Debtors - - 837 632 886 215 935 843 987 314 1 041 616 1 098 905 1 159 345 1 223 109 1 290 380 1 361 351 Bank - - 117 824 651 231 571 237 345 407 416 459 346 253 573 000 648 686 561 528 800 478 198 914 467 049 1 028 619 712 1 142 722 761

Total Assets 332 674 377 665 348 755 750 743 600 831 271 331 911 889 700 992 612 571 1 073 053 830 1 153 404 562 1 234 114 234 1 314 899 410 1 395 851 907 1 476 758 489

Equity 332 674 377 665 348 755 745 190 605 825 032 456 904 874 306 984 716 157 1 064 558 008 1 144 399 858 1 224 241 709 1 304 083 559 1 383 925 410 1 463 767 260 Reserves 332 674 377 665 348 755 745 190 605 825 032 456 904 874 306 984 716 157 1 064 558 008 1 144 399 858 1 224 241 709 1 304 083 559 1 383 925 410 1 463 767 260

LTL Borrowings ------

Total Equity & Liabilities 332 674 377 665 348 755 750 743 600 831 271 331 911 889 700 992 612 571 1 073 053 830 1 153 404 562 1 234 114 234 1 314 899 410 1 395 851 907 1 476 758 489

64 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

Total Assets 1 557 799 758 1 638 873 629 1 719 826 043 1 800 821 717 1 882 259 595 1 963 511 977 2 044 954 050 2 126 528 852 2 208 208 640 2 290 041 122

LTL Borrowings ------

Total Equity & Liabilities 1 557 799 758 1 638 873 629 1 719 826 043 1 800 821 717 1 882 259 595 1 963 511 977 2 044 954 050 2 126 528 852 2 208 208 640 2 290 041 122

65 Cash Flow Statement

Cash generated from operations - - (35 379 630) (41 297 867) (43 880 719) (47 298 713) (48 811 187) (49 401 780) (52 452 288) (56 383 420) (61 573 473) (66 595 559)

Investing activities PPE (332 674 377) (332 674 377) ------

66 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 14 902 900 15 722 560 16 587 301 17 499 602 18 462 080 19 477 495 20 548 757 21 678 939 22 871 280 24 129 201 Cash payments to employees and suppliers121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 Interest (34 281 683) (37 708 698) (41 136 567) (44 560 663) (47 985 918) (51 424 295) (54 856 954) (58 295 142) (61 737 142) (65 182 111)

Cash generated from operations (72 527 562) (78 819 253) (84 276 685) (89 922 427) (98 753 982) (106 695 580) (115 807 368) (126 049 362) (137 170 312) (149 484 010)

Investing activities PPE ------

67 Ratios

68 8.7 Scenario 7

8.7.1 Option 1: Debt/ Equity 50:50 Status Quo  This scenario considers the investment "Status Quo" with a set tariff of R1.7 kl and an indigent factor of 70%,50:50 Debt/Equity

 The 50:50 Debt /Equity financing, is ideal for any project, however with Zuurbekom it won't work

 The Westonaria Municipality will have to take out a loan of R273 153 965.5 at annual interest rate of 10%, the repayment is very expensive and considering that there is no equity to supplement the loan.

Income Statement

Net Revenue 305 699 107 - - 8 735 304 9 241 952 9 759 501 10 296 274 10 862 569 11 460 010 12 090 311 12 755 278 13 456 818

GP (1 946 550 268) - - (32 848 448) (37 657 851) (43 136 716) (49 414 214) (53 493 157) (56 848 797) (62 952 375) (69 613 521) (77 540 625)

Maintenance 172 224 656.38 - - 4 921 293 5 206 728 5 498 304 5 800 711 6 119 750 6 456 336 6 811 435 7 186 064 7 581 297 Overheads 121 223 701.54 2 325 252 2 605 327 2 919 726 3 275 560 3 523 774 3 738 257 4 092 706 4 477 743 4 928 937 Depreciation 665 348 754.76 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438 33 267 438

Interest 293 689 219.15 17 509 178 35 939 891 35 939 891 33 506 571 31 195 593 28 881 927 26 565 181 24 256 969 21 951 562 19 635 481 17 317 235

Grants 4 008 144 919.31 - - 152 430 192 155 371 783 159 145 646 163 767 719 166 097 170 167 695 667 172 203 385 177 308 117 183 763 402

Net profit 809 108 320 (17 509 178) (35 939 891) 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869

69 Income Statement 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Revenue 47 323 143 49 925 916 52 671 841 55 568 792 58 625 076 61 849 455 65 251 175 68 839 990 72 626 189 76 620 630 80 834 764 (Less) Indigent (33 126 200) (34 948 141) (36 870 289) (38 898 155) (41 037 553) (43 294 619) (45 675 823) (48 187 993) (50 838 332) (53 634 441) (56 584 335)

Net Revenue 14 196 943 14 977 775 15 801 552 16 670 638 17 587 523 18 554 837 19 575 353 20 651 997 21 787 857 22 986 189 24 250 429

GP (85 085 602) (93 642 683) (102 422 395) (110 233 766) (118 348 325) (129 846 992) (139 880 008) (151 344 804) (163 800 541) (177 032 118) (191 407 328)

Interest 14 994 075 12 672 403 10 346 807 8 020 357 5 697 681 3 373 845 1 036 887 (1 294 352) (3 631 121) (5 971 701) (44 255 142)

Grants 189 837 294 197 001 498 204 423 093 210 856 144 217 641 981 228 012 324 236 864 744 247 262 259 258 732 725 271 054 089 248 675 689

Net profit 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869 43 127 869

70 Unit Cost Summary

Unit Cost Summary R/kl 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 O&M 3.34 3.75 4.20 4.71 5.07 5.38 5.89 6.44 7.09 7.72 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 2.46 2.29 2.14 1.98 1.82 1.66 1.50 1.34 1.19 1.03 Total Unit cost /kl 8.08 8.32 8.61 8.97 9.17 9.32 9.67 10.06 10.55 11.02

Total Selling Price /kl 1.99 2.11 2.23 2.35 2.48 2.62 2.76 2.91 3.07 3.24 Surplus/ (Deficit) (6.09) (6.21) (6.39) (6.62) (6.69) (6.70) (6.91) (7.15) (7.48) (7.78)

Unit Cost Summary R/kl 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 O&M 8.42 9.14 9.80 10.49 11.42 12.26 13.21 14.23 15.32 16.49 Capital/Depreciation 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Interest 0.87 0.71 0.55 0.39 0.23 0.07 (0.09) (0.25) (0.41) (3.03) Total Unit cost /kl 11.57 12.13 12.63 13.16 13.93 14.61 15.40 16.26 17.19 15.74

Total Selling Price /kl 3.42 3.61 3.81 4.02 4.24 4.47 4.72 4.97 5.25 5.54 Surplus/ (Deficit) (8.15) (8.52) (8.82) (9.14) (9.70) (10.14) (10.68) (11.29) (11.94) (10.20)

71 Balance Sheet

4 744 298 - - 81 948 302 159 029 490 236 201 315 313 477 642 390 472 359 467 376 546 544 639 675 621 978 308 699 484 262 776 944 301 Debtors - - 837 632 886 215 935 843 987 314 1 041 616 1 098 905 1 159 345 1 223 109 1 290 380 1 361 351 Bank - - 81 110 670 158 143 275 235 265 472 312 490 328 389 430 742 466 277 641 543 480 330 620 755 200 698 193 882 775 582 950

Total Assets 332 674 377 665 348 755 714 029 619 757 843 369 801 747 757 845 756 646 889 483 925 933 120 675 977 116 366 1 021 187 561 1 065 426 077 1 109 618 678

Equity 157 582 600 305 949 843 349 077 712 392 205 582 435 333 451 478 461 321 521 589 190 564 717 059 607 844 929 650 972 798 694 100 668 737 228 537 Reserves 157 582 600 305 949 843 349 077 712 392 205 582 435 333 451 478 461 321 521 589 190 564 717 059 607 844 929 650 972 798 694 100 668 737 228 537

LTL Borrowings 175 091 778 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912

Total Equity & Liabilities 332 674 377 665 348 755 714 029 619 757 843 369 801 747 757 845 756 646 889 483 925 933 120 675 977 116 366 1 021 187 561 1 065 426 077 1 109 618 678

72 Balance sheet 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 PPE 299 406 940 266 139 502 232 872 064 199 604 626 166 337 189 133 069 751 99 802 313 66 534 875 33 267 438 0

854 539 026 932 166 353 1 009 672 224 1 087 221 355 1 165 212 689 1 243 018 527 1 321 014 057 1 399 142 316 1 477 375 560 1 196 362 587 Debtors 1 436 225 1 515 217 1 598 554 1 686 475 1 779 231 1 877 089 1 980 328 2 089 247 2 204 155 2 325 384 Bank 853 102 801 930 651 136 1 008 073 670 1 085 534 880 1 163 433 458 1 241 141 439 1 319 033 728 1 397 053 069 1 475 171 405 1 194 037 203.21

Total Assets 1 153 945 965 1 198 305 855 1 242 544 288 1 286 825 981 1 331 549 878 1 376 088 278 1 420 816 370 1 465 677 191 1 510 642 998 1 196 362 587

Equity 780 356 407 823 484 276 866 612 145 909 740 015 952 867 884 995 995 754 1 039 123 623 1 082 251 493 1 125 379 362 1 168 507 231 Reserves 780 356 407 823 484 276 866 612 145 909 740 015 952 867 884 995 995 754 1 039 123 623 1 082 251 493 1 125 379 362 1 168 507 231

LTL Borrowings 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 359 398 912 -

Total Equity & Liabilities 1 153 945 965 1 198 305 855 1 242 544 288 1 286 825 981 1 331 549 878 1 376 088 278 1 420 816 370 1 465 677 191 1 510 642 998 1 196 362 587

73 Cash Flow Statement

Cashflow Statement Operating Acitvities 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cash receipts from customers - - 7 897 672 9 193 369 9 709 873 10 244 802 10 808 266 11 402 721 12 029 871 12 691 514 13 389 547 14 125 972 Cash payments to employees and suppliers - 43 277 303 54 025 976 60 537 729 67 905 738 73 399 841 77 994 520 85 079 005 93 089 280 102 397 031 111 580 123 Interest 17 509 178 35 939 891 35 939 891 33 506 571 31 195 593 28 881 927 26 565 181 24 256 969 21 951 562 19 635 481 17 317 235 14 994 075

Cash generated from operations (17 509 178) (35 939 891) (71 319 522) (78 339 178) (82 023 449) (86 542 863) (89 156 756) (90 848 768) (95 000 696) (100 033 247) (106 324 720) (112 448 226)

Investing activities PPE (332 674 377) (332 674 377) ------

Financing activities 350 183 555 368 614 269 152 430 192 155 371 783 159 145 646 163 767 719 166 097 170 167 695 667 172 203 385 177 308 117 183 763 402 189 837 294 Grants - - 152 430 192 155 371 783 159 145 646 163 767 719 166 097 170 167 695 667 172 203 385 177 308 117 183 763 402 189 837 294 Equity 175 091 778 184 307 134 Loans 175 091 778 184 307 134 ------

Cash at the beg 0 - - 81 110 670 158 143 275 235 265 472 312 490 328 389 430 742 466 277 641 543 480 330 620 755 200 698 193 882 Cash at end - - 81 110 670 158 143 275 235 265 472 312 490 328 389 430 742 466 277 641 543 480 330 620 755 200 698 193 882 775 582 950

74 Cashflow Statement Operating Acitvities 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Cash receipts from customers 14 902 900 15 722 560 16 587 301 17 499 602 18 462 080 19 477 495 20 548 757 21 678 939 22 871 280 24 129 201 Cash payments to employees and suppliers121 712 145 132 250 511 142 000 553 151 982 692 165 201 981 177 597 370 191 213 079 206 023 443 221 778 734 238 795 322 Interest 12 672 403 10 346 807 8 020 357 5 697 681 3 373 845 1 036 887 (1 294 352) (3 631 121) (5 971 701) (44 255 142)

Cash generated from operations (119 481 647) (126 874 758) (133 433 610) (140 180 771) (150 113 746) (159 156 763) (169 369 970) (180 713 384) (192 935 753) (170 410 979)

Investing activities PPE ------

Financing activities 197 001 498 204 423 093 210 856 144 217 641 981 228 012 324 236 864 744 247 262 259 258 732 725 271 054 089 (110 723 223) Grants 197 001 498 204 423 093 210 856 144 217 641 981 228 012 324 236 864 744 247 262 259 258 732 725 271 054 089 248 675 689 Equity Loans ------(359 398 912)

Cash at the beg 775 582 950 853 102 801 930 651 136 1 008 073 670 1 085 534 880 1 163 433 458 1 241 141 439 1 319 033 728 1 397 053 069 1 475 171 405 Cash at end 853 102 801 930 651 136 1 008 073 670 1 085 534 880 1 163 433 458 1 241 141 439 1 319 033 728 1 397 053 069 1 475 171 405 1 194 037 203

75 Ratios

Grant funding include in the ratios below Net Profit % #DIV/0! #DIV/0! 148% 140% 133% 126% 119% 113% 107% 101% 96% 91% Current ratio #DIV/0! #DIV/0! 14.76 25.49 33.67 39.70 45.96 51.90 55.17 57.51 58.65 59.81 Debt /Equity 111% 117% 103% 92% 83% 75% 69% 64% 59% 55% 52% 49% ROA -5% -5% 7% 7% 8% 8% 9% 9% 10% 11% 12% 13% Interest cover ratio 0% 0% 220% 229% 238% 249% 262% 278% 296% 320% 349% 388%

Grant funding include in the ratios below Net Profit % 86% 82% 78% 74% 70% 66% 63% 59% 56% 53% Current ratio 60.22 60.44 61.07 61.47 60.43 60.07 59.25 58.23 57.12 42.95 Debt /Equity 46% 44% 41% 40% 38% 36% 35% 33% 32% 0% ROA 14% 16% 19% 22% 26% 32% 43% 65% 130% Interest cover ratio 440% 517% 638% 857% 1378% 4259% -3232% -1088% -622% 3%

76 8.7.2 Option 2: Debt/ Equity 50:50 Status Quo

Income Statement

Description Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Income R 29 088 000.00 R 62 830 080.00 R 67 856 486.40 R 73 285 005.31 R 79 147 805.74 R 85 479 630.20 R 92 318 000.61 R 99 703 440.66 R 107 679 715.91

Operating and Maintenance costs -R 42 765 568.09 -R 46 186 813.54 -R 49 881 758.62 -R 53 872 299.31 -R 58 182 083.25 -R 62 836 649.91 -R 67 863 581.91 -R 73 292 668.46 -R 79 156 081.94 Operating costs -R 14 573 388.13 -R 15 739 259.18 -R 16 998 399.91 -R 18 358 271.91 -R 19 826 933.66 -R 21 413 088.35 -R 23 126 135.42 -R 24 976 226.26 -R 26 974 324.36 Maintenace costs -R 28 192 179.96 -R 30 447 554.36 -R 32 883 358.71 -R 35 514 027.40 -R 38 355 149.59 -R 41 423 561.56 -R 44 737 446.49 -R 48 316 442.21 -R 52 181 757.58

Net profit before Interest -R 13 677 568.09 R 16 643 266.46 R 17 974 727.78 R 19 412 706.00 R 20 965 722.48 R 22 642 980.28 R 24 454 418.70 R 26 410 772.20 R 28 523 633.98 Finance costs -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 NET PROFIT/LOSS -R 561 721 687.49 -R 531 400 852.94 -R 530 069 391.62 -R 528 631 413.40 -R 527 078 396.92 -R 525 401 139.12 -R 523 589 700.70 -R 521 633 347.20 -R 519 520 485.42

77 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 R 116 294 093.19 R 125 597 620.64 R 135 645 430.29 R 146 497 064.72 R 158 216 829.89 R 170 874 176.28 R 184 544 110.39 R 199 307 639.22 R 215 252 250.36 R 232 472 430.38

-R 85 488 568.49 -R 92 327 653.97 -R 99 713 866.29 -R 107 690 975.59 -R 116 306 253.64 -R 125 610 753.93 -R 135 659 614.25 -R 146 512 383.39 -R 158 233 374.06 -R 170 892 043.98 -R 29 132 270.30 -R 31 462 851.93 -R 33 979 880.08 -R 36 698 270.49 -R 39 634 132.13 -R 42 804 862.70 -R 46 229 251.72 -R 49 927 591.85 -R 53 921 799.20 -R 58 235 543.14 -R 56 356 298.19 -R 60 864 802.04 -R 65 733 986.21 -R 70 992 705.10 -R 76 672 121.51 -R 82 805 891.23 -R 89 430 362.53 -R 96 584 791.53 -R 104 311 574.86 -R 112 656 500.84

R 30 805 524.69 R 33 269 966.67 R 35 931 564.00 R 38 806 089.12 R 41 910 576.25 R 45 263 422.35 R 48 884 496.14 R 52 795 255.83 R 57 018 876.30 R 61 580 386.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 517 238 594.71 -R 514 774 152.73 -R 512 112 555.40 -R 509 238 030.28 -R 506 133 543.15 -R 502 780 697.05 -R 499 159 623.26 -R 495 248 863.57 -R 491 025 243.10 -R 486 463 733.00

Cash flow statement

78 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

R 107 679 715.91 R 116 294 093.19 R 125 597 620.64 R 135 645 430.29 R 146 497 064.72 R 158 216 829.89 R 170 874 176.28 R 184 544 110.39 R 199 307 639.22 R 215 252 250.36 R 232 472 430.38

-R 627 200 201.34 -R 633 532 687.89 -R 640 371 773.37 -R 647 757 985.69 -R 655 735 094.99 -R 664 350 373.04 -R 673 654 873.33 -R 683 703 733.65 -R 694 556 502.79 -R 706 277 493.46 -R 718 936 163.38 -R 26 974 324.36 -R 29 132 270.30 -R 31 462 851.93 -R 33 979 880.08 -R 36 698 270.49 -R 39 634 132.13 -R 42 804 862.70 -R 46 229 251.72 -R 49 927 591.85 -R 53 921 799.20 -R 58 235 543.14 -R 52 181 757.58 -R 56 356 298.19 -R 60 864 802.04 -R 65 733 986.21 -R 70 992 705.10 -R 76 672 121.51 -R 82 805 891.23 -R 89 430 362.53 -R 96 584 791.53 -R 104 311 574.86 -R 112 656 500.84 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 548 044 119.40 -R 519 520 485.42 -R 517 238 594.71 -R 514 774 152.73 -R 512 112 555.40 -R 509 238 030.28 -R 506 133 543.15 -R 502 780 697.05 -R 499 159 623.26 -R 495 248 863.57 -R 491 025 243.10 -R 486 463 733.00

Amortisation table

Loan Information Summary Loan Amount R 457 442 103.40 Rate (per period) 0.875% Annual Interest Rate 10.50% Number of Payments 240 Term of Loan in Years 20 years Total Payments 1 096 082 392.41 First Payment Date 2016/01/01 Total Interest 638 640 289.01 Payment Frequency Monthly Est. Interest Savings (3.24) Compound Period Monthly Payment Type End of Period

79 This table illustrate the repayment of loan, it includes the total payment (interest and principal) and lastly the remaining balance.

Years Interest Payment Principal Balance Year 1 R 47 695 788.47 R 548 044 119.40 R 500 348 330.93 R 450 333 772.47 Year 2 R 46 912 425.88 R 548 044 119.40 R 501 131 693.52 R 442 442 078.95 Year 3 R 46 042 734.03 R 548 044 119.40 R 502 001 385.37 R 433 680 693.58 Year 4 R 45 077 199.12 R 548 044 119.40 R 502 966 920.28 R 423 953 773.30 Year 5 R 44 005 258.94 R 548 044 119.40 R 504 038 860.46 R 413 154 912.84 Year 6 R 42 815 187.26 R 548 044 119.40 R 505 228 932.14 R 401 165 980.70 Year 7 R 41 493 965.57 R 548 044 119.40 R 506 550 153.83 R 387 855 826.87 Year 8 R 40 027 140.71 R 548 044 119.40 R 508 016 978.69 R 373 078 848.18 Year 9 R 38 398 666.64 R 548 044 119.40 R 509 645 452.76 R 356 673 395.42 Year 10 R 36 590 729.15 R 548 044 119.40 R 511 453 390.25 R 338 460 005.17 Year 11 R 34 583 550.71 R 548 044 119.40 R 513 460 568.69 R 318 239 436.48 Year 12 R 32 355 174.26 R 548 044 119.40 R 515 688 945.14 R 295 790 491.34 year 13 R 29 881 223.04 R 548 044 119.40 R 518 162 896.36 R 270 867 594.98 year 14 R 27 134 633.86 R 548 044 119.40 R 520 909 485.54 R 243 198 109.44 year15 R 24 085 361.09 R 548 044 119.40 R 523 958 758.31 R 212 479 351.13 year 16 R 20 700 047.94 R 548 044 119.40 R 527 344 071.46 R 178 375 279.67 year 17 R 16 941 661.58 R 548 044 119.40 R 531 102 457.82 R 140 512 821.85 year 18 R 12 769 088.10 R 548 044 119.40 R 535 275 031.30 R 98 477 790.55 year 19 R 8 136 682.61 R 548 044 119.40 R 539 907 436.79 R 51 810 353.76 year 20 R 2 993 770.05 R 54 804 123.81 R 51 810 353.76 R 0.00

80 8.8 Contributions by developers

Estimated flow from new developments 86.90ML/d

Developers contributions 5000 per households

=R 518 670 000

Percentage contribution =518 670 000/1 065 896 370

=48.66%

A contribution of 42.66% from the expected developments is going to reduce the capital costs from R 1 065 896 370 to R 41 773 630. This will result in the debt to be obtained and serviced being reduced to an affordable level. The new developments in the Westonaria municipality and other beneficiaries will definitely be a positive contribution the reduction of the total capital cost.

This table illustrate the revenue contribution by various users and key players

Chart Title

47% Debt 49% MIG/Grants Developers Households+Industrial users

MIG/Grants R 0.00 Developers R 518 670 000.00 Households+Industrial users R 41 808 240.00 R 560 478 240.00 Total capital cost R 1 065 896 370.00 Possible debt R 505 418 130.00 Funding by means of reclaimed water

Description Zuurbekom Water Reclamation Plant with flow from Hannes van Niekerk & Flip Human Costs Bulk sewer lines 42 226 104 as per Table 25 of feasibility study report - December 2010 figures Civil : WWTW 658 473 347 Table 25, 65% is civil portion (2013 w orks) - 40&30 Ml/d, 10% per annum for 3 years Mech/Elec : WWTW 327 424 110 Table 25, 35% is mech/elec portion (2013 w orks) - 40&30 Ml/d, 10% pa for 3 years Total WWTW 985 897 456 14.1 mil/Ml/d in 2013

Civil : WWTW 287 882 046 Table 25, 65% is civil portion (2018 w orks) - 20 Ml/d, 10% per annum for 8 years Mech/Elec : WWTW 155 013 409 Table 25, 35% is mech/elec portion (2018 w orks) - 20 Ml/d, 10% per anum for 8 years 442 895 455 22.1 mil/Ml/d in 2018

Civil : WTP 397 103 850 For 2013 w orks - 70 Ml/d, 10% per annum for 3 years Mech/Elec : WTP 213 825 150 For 2013 w orks - 70 Ml/d, 10% per annum for 3 years Total WWTW 610 929 000 20.4 mil/Ml/d in 2013

Civil : WTP 387 599 831 For 2015 extension - 20 Ml/d, 10% per annum for 7 years Mech/Elec : WTP 208 707 601 For 2015 extension - 20 Ml/d, 10% per annum for 7 years 596 307 433 29.8 mil/Ml/d in 2018

The above table illustrates the costs to be incurred for the reclamation plant; the costs are incurred in phases because the plant will be implemented in phases as well. It is assumed that the operating costs will escalate by 8% each year.

The Reclamation plant first phase is determined at 40ML/d. and it will be increased as and when the demand increases. The operating costs per kl are determined at R1.97. The selling price has been determined at R4.00; this price is not conclusive as the possible buyer (Rand Water) has not committed to buying the reclaimed water from the Westonaria municipality at that specific price.

Assuming that Rand water and Westonaria municipality agrees that the selling price of reclaimed water to be R4.00.

83 9. Conclusion

Taking in consideration that the majority of the benefiting population is indigent the option of obtaining a loan will not be viable due to the fact that the repayment terms will not be reached by the 19% of the population that is not indigent.

If the Department of Water and Sanitation finances 81% of the capital cost, that will mean only 19% R 142 723 106.98 has to be financed by the Westonaria Municipality. The Reclamation plant appears to be a business option to recover cost for Westonaria Municipality. Isiphethu Water Services doubt if the reclamation plant will be viewed as essential services being provided for the population of Westonaria.

The reclamation plant is a viable option to financially sustain the Zuurbekom project, however if the plant is going to be implemented with the waste water treatment, it will mean that the total capital cost of R 1 065 896 370.00, will need financing and might be difficult to receive the financial assistance from the Department of Water and Sanitation as this will be too expensive.

The project is expected to be funded through Regional Bulk Infrastructure Grant (RBIG) derived from the national revenue. RBIG is a specific purpose capital grant with the objective to supplement the financing of the social component of regional bulk water supply and sanitation infrastructure.

It is envisaged that Zuurbekom will be funded through the grant as the scheme will service mostly the indigent population. The RBIG funding has been used for the extension of Hannes Van Niekerk WWTW. Westonaria Local Municipality will not be in the position to fund Zuurbekom due to the lack of affordability. The project cannot be funded from MWIG as the grant is targeted for water projects. The project will neither be funded from the Accelerated Community Infrastructure as the cost is far above the financial threshold and availability of the programme. This is exacerbated by the fact that Municipality does not have funding to start the project for the ACIP to be used for acceleration of the project. This situation leaves Zuurbekom to be funded from RBIG. The project qualifies as it is an integral part of the Westonaria Regional Bulk Sewer Scheme which provides services to municipalities outside the boundaries of Westonaria