Vuthela helping to address Auditor-General concerns

The Vuthela iLembe LED Support Programme is implementing several initiatives which will help to address concerns raised by the Auditor-General of South Africa in the iLembe district and the family of local municipalities’ most recent audit.

The iLembe District Municipality and the local municipalities of KwaDukuza and Mandeni received an unqualified audit opinion in the Auditor-General’s 2021/22 audit reports.

But the reports also raise concerns, by way of emphasis of matters, on several challenges related to revenue losses from electricity and water and irregular expenditure. Some of these challenges are being addressed by the Vuthela Programme.

Richard Clacey, Vuthela Programme Manager, said, “The Vuthela Programme interventions, particularly the Public Finance Management (PFM) and Municipal Infrastructure (MI) Components, are designed to assist resolve many of the key issues raised in the Auditor-General’s reports. While some results have been forthcoming, particularly relating to Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE), others will require a longer period to “move the dial”, particularly non-revenue water (NRW) and non-revenue electricity (NRE) where the actual implementation projects are currently being transferred to the respective municipalities for direct implementation over the next 18 months.”

According to the AG’s report, the distribution losses on water in the district decreased by 2,76% compared to the 2020/21 financial year but was still a concern that had to be addressed.

Losses due to NRW have decreased in the iLembe District Municipality over the last three years from R120,41 million in 2019/20 (59,2% of total water purchased) to R111,71 in 2020/21 (48,87% of total water purchased) to R106 million in 2021/22 (46,11% of total water purchased).

The losses are due largely to illegal connections, leaks in the infrastructure, reservoir overflows and service connection leaks.

Irregular expenditure of R101,41 million was incurred, indicating a decrease of R6,45 million from R107,86 million in 2020/21. Irregular expenditure incurred in the current year has been reduced over the past three years. In 2019/20 it was recorded at R95,07 million and for 2021/22 it is R41,48 million.

Vuthela strategy for NRE

Electricity losses in the KwaDukuza Local Municipality have increased by R56,12 million from 2020/21, to a total of R237,73 million in 2021/2022, due mainly to illegal connections and distribution losses.

The Vuthela Programme has developed consolidated strategies to address NRE for the KwaDukuza and Mandeni Local Municipalities. If the interventions are implemented as planned, the municipalities should see results in the 2022/23 financial year.

The Vuthela Programme also launched the Non-Revenue Electricity Strategies and Programmes (NRESP) to assist the KwaDukuza and Mandeni Local Municipalities to reduce losses due to NRE.

An in-depth analysis was conducted to gain a thorough understanding of each municipality’s situation.

Four aspects of the electricity supply process were analysed:

  • Existing infrastructure
  • Technical losses assessment
  • Non-technical losses assessment
  • Community engagement and end-user campaigns

Vuthela strategy for UIFWE

Over the past three years total UIFWE has decreased in all three municipalities.

But fruitless and wasteful expenditure has increased due to issues around construction contracts.

The reduction of UIFWE over the past three years follows a strategy developed by the Vuthela Programme and implemented by municipalities to address non-compliant expenditure in the iLembe district.

Community engagement

The community engagement campaign was aimed at making the community aware of their responsibility to pay for the services they receive, the dangers and consequences of tampering with or stealing electricity, and where members of the community can report faulty meters, incidents of electricity theft or other criminal activity which undermines revenue collection.

Strategies were identified to curb losses and reduce them to international standards, while improving the revenue from electricity sales for the municipalities. Existing initiatives from each municipality were incorporated to represent consolidated strategies, programmes and management plans for each municipality.

Specific strategies were developed to suit the unique needs identified in each of the two local municipalities.

SCADA initiative

The Vuthela Programme developed a functional specification for the establishment of a Supervisory Control and Data Acquisition (SCADA) system and Control Room to manage electrical services in the KwaDukuza Local Municipality.

The SCADA system will allow for remote monitoring of the electricity supply infrastructure and provide critical information about the performance of the electrical system in real time. It will also assist the KwaDukuza Local Municipality to better manage the electricity distribution and load in the network during times of power outages.

The Vuthela Programme assisted the KwaDukuza Local Municipality to secure funding through the National Treasury/ EU General Budget Support Programme to finance the acquisition and installation of the SCADA and Control Room.

Vuthela’s initiatives to address NRE include the formulation of asset management plans, training staff in asset management and updating the electricity master plans. Vuthela is currently engaging the Mandeni Local Municipality to assist with the implementation of NRE strategies.

Vuthela initiatives for NRW

Vuthela has also implemented several initiatives in NRW which refers to the water supplied by the water utility but for which it receives no income.

NRW incorporates unbilled (metered or unmetered) authorised consumption, apparent, commercial losses and physical losses.

The Vuthela Programme will be transferring a budget of R30,2 million to complete two implementation projects, the first focusing on metering and water balance and other issues in six geographic areas, and the second focusing on bulk and consumer meter population management.

A pilot project to improve revenue from water was rolled out in June 2019.

The project investigated operational practices around the management of water services and collection of revenue for water services in the Sundumbili urban area.

The study focused on the meter reading cycle and data transfer errors during the process of meter reading, meter data management, transfer of the data to the billing system and the billing process. Consumers are metered through conventional as well as prepaid metering systems, resulting in two separate metering and billing systems run by the iLembe district.

The study also evaluated the actual billing and sales volumes against the volume of metered water which had been supplied, leading to the analysis of NRW.

The study found that R7 000 000 of additional income could be generated every month if all prepaid meters were replaced by conventional meters and read on a regular basis.

The iLembe District Municipality is in the process of rolling out a smart metering programme which includes meter reading hand-held devices that can also capture the GPS coordinates of meters.

The study in Sundumbili has produced several recommendations for the iLembe District Municipality to improve operations and procedures for billing and metering.

This list of practical steps to improve revenue collection can be applied by all municipalities providing water services. The strategies to address NRW are supported by asset management plans and training provided by the Vuthela Programme.

Vuthela has also assisted the iLembe District Municipality to review and update the district’s Operations and Maintenance Plan and to develop an Asset Management Strategy.

Vuthela has undertaken a study on energy efficiencies and energy management at the Sundumbili Water Treatment Works. Many of the findings in the study will be relevant to water management facilities throughout the district and the country.