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					        Parliamentary Briefing

  Budget Review of the
 Municipal Infrastructure
 Investment Unit (MIIU)


                 Danai Magugumela
                Chief Executive Officer




15 April 2005                             1
CONTENTS

 MIIU Performance 2004-2005
 Strategy for year 2005-2006

 Business plan & KPIs for 2005-2006

 Approved Budget for 2005-2006




    15 April 2005               2
PERFORMANCE 2005-2006




 15 April 2005          3
Multi Year Capital and Operational Expenditure



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                                                           14
Rand (Millions)




                                                           12


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                                                           8


                                                           6


                                                           4


                                                           2


                                                           0
                                                                1998/ 99   1999/ 00   2000/ 01   2001/ 02   2002/ 03   2003/ 04   2004/ 05   2005/ 06   2006/ 07

                  Compl i ance expendi tur e                     0.388      0.459      0.767      0.619      0.589      0.921      0.882      1.123      1.174

                  Non-di sbur sement r el ated expendi tur e     0.347      0.266      0.366      0.743      0.993      1.123      1.217       1.56      1.648

                  Di sbur sement r el ated expendi tur e         1.027      0.833       1.23       1.67       2.04      3.241      2.407      4.249      4.475

                  Capi tal expendi tur e                         8.331      7.022      9.286       9.86      7.401      16.62      12.77      8.671       4.3
                                                                                                   Rand (Millions)
A. AUDITABLE (PFMA) KPIs
 Key Performance Area                          Target                     Actual
                                               April 2004 to March 2005   April 2004 to March 2005
 Active MSP Projects                           50                         77
 Completed projects:                           7                          4
                                               4 MSPs                     4 MSPs
                                                                                   Uthungulu Water (KZN);
                                                                                   CPT drop-off (solid waste) WC);
                                                                                   CPT SMMEs (solid waste) (WC);
                                                                                   Epping Fresh Produce Market (WC)
                                               1 loan guarantee           0 loan guarantee
                                                                          2 revenue management
                                                                                   Mogale City (GA);
                                                                                   Albert Luthuli (MP)
 Disbursement on MSP’s:                        R12,8 m                    R12,77m
 Efficiency ratio:                             25.5%                      18.8%
 Active Guarantee projects:                    3                          3:            Joburg Water (GA)L
                                                                                        Nigake (GA);
                                                                                        Midvaal (GA)
 Active Revenue Enhancement Projects           3                          3:            Ugu (KZN);
                                                                                        Thembisile (MP)
                                                                                        Dr JS Moroka (MP)
 Target value of guarantees to be committed:   50% of $35 mil             0
 Disbursement related to guarantee projects:   $375 000                   $257 500

 Monitoring of major projects:                 5                          5 ongoing
 Customer surveys                              5 completed projects       5 ongoing – Nelspruit (MP) ;Dolphin Coast (KZN)
                                                                          Kelvin Power (GP); Msunduzi (KZN); Mogalakwena (LM)
                                               3 new projects             0 – not yet started
B. INTERNAL KPIs
Key Performance Area                   Target                                  Actual
                                       April 2004 to March 2005                April 2004 to March 2005
Case studies written up                5                                       5 in progress (75% complete)

Standard terms of reference            2                                       3
documented                                                                     a)     Generic Terns of Reference
                                                                               b)     Generic Request for
                                                                                      Proposals
                                                                               c)     Template financial model




Publication of MIIU history and case   1                                       1 Pending
studies
Technical Assistance not associated    4 hours per project manager per         Section 78 task team, dplg MSP
with projects                          month or a total number of equivalent   workshops, Project Consolidate
                                       hours as a ceiling
TA Disbursement of USAID funds         $185 000                                $43 365

Market Development Seminar with        1                                       Session with Standard Bank in Aug
financial sector                                                               04; with Nedbank in Mar 05

Staff development SA staff (includes   6 personal development plans            6 plans followed: UK Study tour,
the use of USAID* funds of $15 000                                             Midrand Graduate Institute, various
                                                                               short courses
Implement MIIU obligations of JHI                                              N/A
fund becomes operational
Completed Projects
MSPs
  Uthungulu Water (KZN) an interim O & M contract
  with WSSA for operations of all rural schemes


  CPT drop –off (solid waste) (WC) establishment of four green waste
  drop-off centres


  CPT SMMEs (solid waste) (WC)

  Epping Fresh Produce Market (WC) - sale of a non-core asset. A 20yr
  lease was entered into with the new owner, with repair, maintenance &
  expansion risk transferred to new owner.

  15 April 2005                                               7
     Completed Projects
Revenue Management

    Mogale City (GA) – data cleansing, debt review and audit of customers, meters, connections, tariffs,
    etc resulting in significant saving of lost revenues. Private partner entered a shared risk contract with
    municipality, earning a reward only in the event where the municipality saves revenues relative to set
    revenue benchmarks.

    Ugu District (KZN) - data cleansing, debt review and audit of meters, connections, etc to improve
    revenue. Private partner is recommending a replacement of the existing revenue management
    systems to improve coordination of all billing systems that have existed in the individual B
    municipalities.

    Thembisile (MP) - data cleansing, debt review and audit of meters, connections, etc to improve
    revenue.

    Dr J S Moroka (MP) - data cleansing, debt review and audit of meters, connections, etc to improve
    revenue.


Loan Guarantee
MIIU has recently refined the implementation methodology and tender document for banks to bid on.

         15 April 2005                                                                        8
STRATEGY FOR YEAR 2005 -
2006




 15 April 2005        9
Key Focus Area 1:
PROJECT IMPLEMENTATION

   MSP Creation
   Revenue Enhancement
   Credit Enhancement
   Regulation
   Other Private Sector Participation


     15 April 2005                       10
Key Focus Area 2:
INSTITUTIONAL PRESERVATION

   MSP Standardisation
   Contract Monitoring and Evaluation
   Institutional Memory
   Marketing and Communication
   Training and Development


     15 April 2005                  11
OTHER FOCUS AREAS
INTERNAL
   Provide on-going technical assistance to
    municipalities for Municipal Service Partnerships
   Management of a local government loan guarantee
    programme
    Development Credit Authority (DCA) product
   Contract Monitoring and Evaluation
   Resourcing of MIIU and staff development
   PFMA compliance
   Package MIIU institutional memory
   Transition plan?

     15 April 2005                               12
OTHER FOCUS AREAS

EXTERNAL
   Liaison with other local government
    strengthening programmes:
     Project Consolidate of the dplg
     ISLGS (Increasing Sustainable Local Government
      Service Delivery) Programme of the USAID
   Collaborate with National Treasury on
    regulation of and guidelines for MSPs
   Engage the financial sector on issues of
    municipal access to finance

     15 April 2005                               13
Business Plan and Key
Performance Indicators for
2005 - 2006




  15 April 2005              14
Key Performance            Indicator                            Tool of Measurement                Target March
Areas                                                                                              2006 (Shut
                                                                                                   down)
MSPs                       No. of completed MSPs                Completed MSP agreements                   8


Credit Enhancement         No. of active loan guarantee         Loan Guarantee grant agreements            3
                           projects

Revenue Enhancement        No. of active revenue enhancement    Revenue Enhancement grant                  3
                           projects                             agreements

Other Municipal Projects   No. of completed other projects      Final deliverable completed                9


Contract Monitoring &      Completed M&E Assessments            Report submitted to MIIU                   5
Evaluation

Community Relations        Completed Community Relations        Survey reports submitted to MIIU           8
Monitoring                 M&E Surveys

Loan Guarantee             Target value of Guarantees           $ value of guarantees provided           $17m


Credit Enhancement         Feasibility studies towards DCA      $ value of disbursements on DCA         $125 000
technical assistance       loan guarantee projects              feasibility

Disbursement on Projects   Total disbursements via grants to    Rand value of invoices paid to          R12.2m
                           clients                              municipalities and consultants

Funding                    Disbursement – related operational   Efficiency ratio                         29.0%
                           costs to total grant expenditure

Active MSP Projects        No. of projects leading up to MSP    Projects in Phase 2 or 3                  50
APPROVED BUDGET FOR 2005-2006
                       MIIU APPROVED BUDGET, 2005/06
                                                                  2005/06
                                                              Proposed Budget
                                                                   R’000
        A. FUNDING
        MPPP Transfer from DCD
        DCD Seed Capital Grant
        Budget Allocation (MTEF process)                                 8,900
        Anticipated Interest on investments                                600
        Recoverable expenses                                                90
        TOTAL ANTICIPATED INFLOW OF FUNDS                                9,590

        B. APPLICATION of FUNDS
        B1. CURRENT (operational):
             Board of Directors                                             61
            DBSA                                                         3,559
                 Salaries seconded staff & support services              2,751
                 Overheads                                                 808
            Costs related to general admin activities                    1,607
            Marketing and communication strategy                           800
            Trainee programme                                              330
        TOTAL OPERATIONAL EXPENDITURE                                    6,357

        B2. CAPITAL (projects):
            Waste management                                             4,000
            Water resources                                              4,203
            Water – credit guarantee                                         0
            Revenue enhancement                                          2,000
            Other                                                        2,000
        TOTAL CAPITAL EXPENDITURE                                       12,203

        TOTAL EXPENDITURE (B1 + B2)                                     18,560

   15 April 2005                                                                 16
                THANK YOU
                www.miiu.org.za




15 April 2005                     17

				
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