ethekwini municipality 2013 2014 annual report

1. 2013 / 2014 Annual Report
Presented By:
February 2015

2. Political Governance
COUNCILLORS
2012/2013 2013/2014
1. Total No. of Councillors 205 205
2. Total No. of
Ward
Councillors
Male 87 87
Female 15 16
3. 2. Total No.
of PR
Councillors
Male 50 52
Female 52 50
Vacant 1 0

3. Administrative Governance
There are 7 Clusters overseen by DCMs & 2 Offices and 3 Units within the Office of the
City Manager
AREAS OF RESPONSIBILITY
CLUSTERS OFFICES IN OCM
1. Finance 1.City Manager’s Operations Office
2. Community and Emergency Services 2. Office of Strategic Management
3. Corporate and Human Resources
4. Governance and International Relations UNITS WITHIN THE OFFICE OF CITY
MANAGER
5. Economic Development and Planning 1. Internal Audit and Risk Management
6. Trading Services 2. Information Management
7. Human Settlements, Engineering Services &
Transport Authority
3. City Integrity and Investigations

4. Backlogs
Basic Services Existing Backlog
(Households) as at
30 June 2013
% Existing Backlog
(Households) as at 30
June 2014
%
Water
71 496 7.56% 68 957 7.3%
Sanitation
218 248 23.07% 182 271 19.27%
Electricity
292 603 31% 274 810 29%
Roads
1 138km’s - 1 130.5km’s -
Public Transport
Ranks
59 - 58 -
Solid Waste – Kerb-
side refuse removal nil nil nil nil

5. Service Delivery Losses
37.3
39.2
Non Revenue Water Loss by Volume
2012/2013
2013/2014
5.85
6.11
Unaccountable Electricity Losses
2012/2013
2013/2014
The global benchmarks for water and electricity losses are 25% and
8% respectively. Accordingly compared to the international
benchmark and other Metros in South, the electricity loss in
distribution is acceptable. As regards water, we have put in place a
strategy to reduce the loss to 25% over the next five years.

6. SCM SPEND
2008/9 2009/10 2010/11 2011/12 2012/13 2013/14
Spend value R 3,639,624 R 4,366,670 R 4,141,556 R 6,329,735 R 8,534,061 R 12,722,69
R 0
R 2,000,000,000
R 4,000,000,000
R 6,000,000,000
R 8,000,000,000
R 10,000,000,000
R 12,000,000,000
R 14,000,000,000
Procurement spend

7. Awards through Bid Committees
2008/9 2009/10 2010/11 2011/12 2012/13 2013/14
No. of tenders 1015 1102 1088 1275 2064 2271
0
500
1000
1500
2000
2500
No. of tenders

8. SCM Improvements
 ISO 9001 accreditation - quality management system
 BPI2 (Business and Process Improvement Initiatives):
- centralised contract register
- procurement scheduling
- contract tracking
- supplier address book consolidation
- invoice scanning and logging

9. SCM Improvements
 SCM Policy review
 E-Procurement – Quotes Management System (QMS)
 Improved internal controls – reduce fraud and corruption
 Benchmarking
 SABS standards

10. MAJOR CAPITAL SPENDS
SERVICE R’M SOME PROJECTS
WATER 561.9 Western Aqueduct; Northern
aqueduct; mini-hydro power stations
SANITATION 599.0 Airport; Phoenix WTW; ablution blocks;
Kwa mashu WWTW, Tongaat WTW, etc
ELECTRICITY 319.8 Substations; Sapref; MVLV supply
HOUSING 172.3 Cornubia; Etafuleni; Ntuzuma
TRANSPORT 934.0 PTIS; Bayhead – Edwin Swales
ROADS 509.0 Road rehabilitation and reconstruction;
N2 interchange; Northern areas
upgrade; Port expansion; etc

11. Major Projects
• IRPTN
• Inner City – iTRUMP - regeneration
• Priority nodes
• Cornubia
• New central library
• Dube Tradeport
• Western Aqueduct

12. CONSOLIDATED
ANNUAL
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2014

13. Financial Highlights
(in Rand millions) 2014 2013
TOTAL REVENUE 7% 26,465 24,654
TOTAL EXPENDITURE 11% 24,478 22,118
ACCUMULATED SURPLUS FUNDS &
RESERVES
8% 29,517 27,269
NET CASH & CASH RESOURCES
(bank, investments, cash & call deposits)
23% 6,860 5,560
TOTAL ASSETS 8% 52,987 48,934
CONSUMER DEBTORS -2% 2,879 2,924

14. Financial Highlights (Cont…)
Ratios
RATIO COMMENTS 2013 2014
LIQUIDITY:
Current
Ratio
The decrease, in comparison to prior year, is attributable to the substantial
increase in in payables from exchange transactions. The cash resources
represents 107 days cash on hand and is mainly due to austerity measures
implemented as well as unspent grants.
1.24 : 1 1.23 : 1
Borrowings to Asset
Ratio
This ratio has improved from the prior year, due to a 9% increase in assets
with a minimal net increase in borrowings. 21% 20%
Collection
Rates
National Treasury benchmark is 95%
Dedicated teams to target top debtors, major debtors and government
debt more effective
Billing versus cash collection
103.41% 104.84%

15. Financial Highlights (Cont…)
Ratios
RATIO COMMENTS 2013 2014
Electricity Distribution Losses The norm for electricity losses ranges from
5.6% to 12%.
In comparison to other Metro's, eThekwini
Municipality maintains its losses at a lower
end of the norm.
5.85% 6.11%
Water distribution losses The estimated water losses were due mainly
to water theft and delays in the SCM
processes. The success of the NRW
programme has been hampered in the
2013/14 financial year due to the non-
availability of materials and resources.
37.3% 39.2%
Repairs and Maintenance/
Operating Exp %
Well above sector average 8% 8%
Days cash on Hand Benchmark: 90 Days 96 Days 109 Days

16. INCOME
Property rates
20%
Interest
2%
USDG
6%
Equitable share
7%
Sale of water
9%
Sale of electricity
35%
Other service
charges
5%
Other grants and
subsidies
3% Fuel levy
7%
Other
6%

17. EXPENDITURE
Employee costs
28%
Bulk purchases
32%
contracted services
5%
Finance costs
4%
Bad debts
7%
Repairs &
Maintenance
8%
Depreciation
7%
Other
9%

18. BALANCE SHEET
%(DECREASE)/
INCREASE
2014
R’m
2013
R’m
Assets
–Cash and investments
–Prop, Plant & Equip,
–Intangibles
–Inv Prop
–Consumer Debtors
–Other
19%
7%
12%
0%
(2%)
14%
7,716
38,113
774
329
2,879
3,176
6,465
35,740
692
329
2,924
2,784
TOTAL 8% 52,987 48,934
PPE
–Land & Buildings
–Infrastructure
–Community (Includes Stadium)
–Other
17%
6.6%
(1.3)%
1.1%
5,359
25,745
3,948
3,061
4,579
24,133
4,000
3,028

19. BALANCE SHEET
%
Increases/
Decreases
2014
R’ m
2013
R’ m
Liabilities
–Long term Liabilities
–Retirement Benefit
Obligation
–Creditors
–Unspent Conditional Grants
–Other
4%
(3)%
18%
28%
23%
10,370
2,815
5,733
1,328
3,225
10,000
2,888
4,864
1,039
2,613
Total Liabilities 10% 23,471 21,404
Net Assets 7% 29,517 27,530

20. SALIENT FEATURES - BALANCE SHEET
Property, plant
& Equipment;
Intangibles;
Invest Prop
Acquisitions of R 4bn (incl. WIP), Depreciation of R1.6b.
L-term Borrowings Increased due to new loan raised of R1,5b from DBSA.
Consumer Debtors Consumer debtors decreased by 2%.Provision for bad debts based
on assessment of recoveries per category of debtors - Collection
rate 105.1%.
Unspent Conditional Grants
and Cash and investments
The increase is mainly due to delays and under spending on grant
funded projects and this is mainly the PTIG GRANT projects. These
grants are being rolled over to 2014-2015 financial year.
Other Assets The increase is mainly attributable to 58% increase in DOHS Debtor.

21. Assets
Fixed assets
75%
Bank and cash
3%
Investments
10%
Consumer debtors
6% Other
assets
6%

22. Capital Expenditure
(In Rand millions) 2014
Budget
Rm
2014
Actual
Rm
Percentage
Spend
Rm
CAPITAL
Capital Expenditure
(Excl. capital commitments)
4,744 4,202 89%
NB: The capital spend is 109% when housing top structure is
included

23. • ‘In my opinion, the consolidated and separate financial statements
present fairly, in all material respects, the financial position of the
eThekwini Municipality and its subsidiaries as at 30 June 2014 and
its financial performance and cash flows for the year then ended, in
accordance with the SA Standards of GRAP and the requirements of
the MFMA and DoRA.’
• ‘I did not raise any material findings on the usefulness and
reliability of the reported performance information for the selected
objectives.’
Auditor General’s Opinion 2013/2014

24. 1. Material losses and impairments
The municipality has incurred material water losses amounting to R602,6
million (131 021 634 kl).
Response:
• 64 Pressure Reducing Valves were installed and 120 planned for 14/15
• The Leak Detection and Repair Strategy
• 4242 connections were regularised and registered in COINS
• Programme for meter replacement for domestic consumers which are
more than 20 years old
• Registered connections
Key Issues & Responses

25. 2. Material underspending of conditional grants and capital
budgets
a) The municipality had materially underspent on
conditional grants received from the National Department
of Transport by R819,69 million in respect of the Integrated
Rapid Public Transport Network (IRPTN).
b) The municipality had underspent on its capital budget by
R505,36 million as a result of delays experienced in Go
Durban project and the delay in the implementation of
IRPTN Grant funded projects.
Key issues & Responses

26. Response
Slow implementation of IRPTN project
Remedial Action:
• Tender for construction contracts
• Section 32 of the SCM Regulations to access existing contracts
• Detailed design is taking place at the same time with
construction
• C3 corridor broken down to 9 contracts to spread the work and
fast track construction
Key Issues & Responses

27. Unspent Capital budget
• Preparation and Monitoring of Procurement Plans
• Identify projects where there are savings in order to ensure that
they source projects that need funding
• Council monitors Capital spend through EXCO, and Finance and
Procurement Committee meetings
Key Issues and Responses

28. Service Delivery Highlights 2013/14
• 6 823 new houses built
• 667 houses refurbished
• 11.6 km gravel road surfaced , 315 lane km of existing road
resurfaced
• 28.5 million bus journeys undertaken
• 895 police officers on duty – attended to 780 335 bylaw
infringements
• 51.2 km of sidewalks constructed

29. Service Delivery Highlights 2013/14
• Attended to 10 483 fires, 5 328 other incidents such as road
accidents, and 29 rainstorm incidents with 5 675 blankets and
4 568 food packs/hampers issued
• 2 539 new households received access to potable water
• 15 583 new household were connected to electricity – 14 770 on
pre-paid and 843 conventionally
• 35 977 households got access to basic sanitation for the first
time
• 662 new units were serviced in terms of refuse removal
• 475 additional properties were provided with stormwater
solutions

30. Other Highlights
• The 2014 Stockholm Industry Water Award (first in any municipality in
the world)
• Completion of Phase 1A of the Cornubia Project
• Cornubia received 2014 Govan Mbeki Human Settlements Award
• Won numerous awards as leading Metro in provision of Housing.
• Our revenue collection with a rate of 104.84 %
• Drastic reduction of irregular expenditure from R782.5million from
January 2012 to R334 million in the 2013/2014 financial year, resulting
in a 57.2% reduction. Included in the R334 million is a s36 award that we
have written to National Treasury to clarify whether this constitutes
irregular expenditure or not.
• AA- Credit rating which is the highest given to a municipality