RAND WATER ANNUAL REPORT 2023

Chemicals

28.8%

Energy

13.8%

Water Purchases

6.9%

Revenue from externally funded projects increased to R46.5 million (FY2022: R39.9 million), mainly supported by government assignments and Rand Water’s appointments by municipalities on water related infrastructure projects. For the year under review, just like in the FY2022, the focus was on the Emfuleni Local Municipality Section 63 Intervention Project (ELM s63 Intervention), which is largely aimed at rehabilitating the Integrated Vaal River System and simultaneously capacitating the municipality to efficiently manage its water services. The other major project is the National Treasury Graduate Internship Programme (NTGIP), aimed at grooming professionals in the water sector. The Board of Rand Water approved the resuscitation of Rand Water Services, which would see the externally funded projects and other revenue diversification projects being ring-fenced and executed under this subsidiary. The R7 billion Ministerial directive on the Emfuleni Local Municipality Section 63 Intervention programme and the execution of growth projects like the reclamation plants at Sebokeng and Northern Works are expected to support the sustainability of Rand Water Services. The ELM s63 Intervention focuses on rehabilitating the Vaal River System and improving water reticulation and sanitation services in Emfuleni Local Municipality, an economic region south of Gauteng. The two reclamation plants are aimed at water reuse, which is essential for water conservation. All these projects are critical for economic, environmental, and social development.

Labour Costs: Labour costs have increased by 6.5% (FY2022: 3.7%) on average driven by salary increases and vacancies and short-term incentive payouts. Operational Costs: Operational costs increased by 136.7% (FY2022: -49.7%), mainly attributable to expected credit loss increases amounting to R704 million (FY2022: R567 million), which was recognised due to increasing debts in arrear as customers failed to meet their debt settlement agreements. Repairs and maintenance costs further impacted operating costs due to an upsurge in maintenance activities undertaken during the year and software licenses increases due to an adverse rise in exchange rates. Other operational costs increases were primarily driven by higher-than-expected inflation levels and some operational activities returning to full normality post COVID-19 pandemic. Secondary Activities entail the externally funded projects that Rand Water executes on behalf of stakeholders on water related matters (viz Management, Consulting, Training, and other Support Services) together with the raw water sales and supply to direct consumers who could not be supplied by their local municipalities. Revenue from Secondary Activities increased to R1.2 billion (FY2022: R1.1 billion). The main movement on Secondary Activities is attributable to the tariff increases in raw water sales and potable water supply to direct consumers. Secondary Activities:

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