CHIEF EXECUTIVE ANNUAL REPORT
DR PHAKAMANI BUTHELEZI
Water is not only key to life but is life. Benjamin Franklin is correct by stating: “when the well is dry, we know the worth of water”. The worth of water is irreplaceable. It is lifeblood of our existence, our nations and evolutionary development. Water is playing an important role to the economy of the Overberg District, Western Cape Province, and the country at large. It supports agriculture which is a vital component to sustainable growth. Therefore, if the well is dry, it would mean no jobs, no dependable GDP and no adherence to the Bill of Rights. Fauna and flora are at risks at losing their existence. Hence, one of the growth path core areas is alternative sources of water to keep the dry full of water.
Socio-economic growth
There is no doubt that Overberg Water Board’s performance in delivering bulk water in general and water distribution in particular contributes to socio-economic development. The recent drought and the COVID-19 pandemic had shown that water is central in our daily activities and none of us can live without water. It is often said that “water is the driving force of all nature”. The word nature refers to the phenomena of the physical world collectively including plants, animals, the landscape, and other features and products of the earth. Water is life to both fauna and flora. It becomes evident in drinking water. Drinking water must always be of quality not just meeting the prescribed standards as stated in the SANS241 but to the health of the consumers as well. Quality water is linked to primary healthcare. This, however, does not happen on its own. It requires dedicated Entities like the Overberg Water Board which are given the task of providing water services to ensure that they have sound internal controls, financial sustainability, clearly defined performance indicators and are aligned with the Constitution. The Constitution makes water access the human right issue. Without any word of contradiction, water services provision is a constitutional mandate which is a mantle that promotes human dignity and sustainable development. The Overberg Water Board in 2022/23 did all what it could to live up to the expectation. It is a commitment that defines its performance culture and organisational architecture. The winds of change have been blowing since 2015/16 and led OWB to consistently retain its unqualified audit opinion up to date. The discussion in this CEO Report provides an organisational performance overview.
Challenges
Before discussing the kaleidoscope pictorial view, it is important to provide a summary of challenges that
has been facing Overberg Water during the year under review. These are:
• Interrupted electricity supply
• Inflation
• Ageing infrastructure
• IT investment deficiencies
• Chemical increase
• Energy increase
• Fuel increase
• Audit fees
The above-mentioned challenges are grouped into two areas; infrastructure and key cost drivers. The Entity is defined as 3B business enterprise. It relies on its own revenue to discharge its business activities. The challenges as indicated in the bullet forms have a direct impact on the overall business processes in terms of revenue and water supply. The focus has been on running an Entity on an going concern basis and continually provide superior performance.
Key cost drivers
The focus throughout the 2022/23 financial year was to consistently supply water within the prescribed SAN241 standards to all customers. It was not a straightforward phenomenon as the Overberg Water reported a net deficit due to unforeseen cost drivers. Fuel increase to 574% due to loadshedding. As such, the Entity had to buy diesel generators using its own finances. The costs were never included in the tariff component. It was not envisaged that the country was to experience regular energy cuts. The situation became dire when loadshedding was beyond Stage 2 as more diesel had to be bought to comply with the service agreement in place. In addition, the overall energy tarrif was also hiked by 15.65%. The hike put more pressure on the finances of the Entity. The Entity had to withdraw its investment to carry on with the business. The hike was not only on the energy, the chemicals also were hiked by 15% due to global economic climate. In short the following diagram shows that the Entity’s expenditure exceeded its revenue.
The combined hikes had a serious financial dent on the Entity. There is a ray of hope ahead, the Entity expects to improve going forward in the next two financial years.