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| Table of Contents ChapterTable of ContentsPageChapter 1. Foreword by the Chief Executive 3Chapter 2. Introduction and Strategy 5Chapter 3. Policy Statement 19Chapter 4. Directives by the Minister 21Chapter 5. Self-Appraisal 23Chapter 6. Participation in Companies 27Chapter 7. Water Resources 29Chapter 8. Bulk Potable Water Supply Plan 41Chapter 9. Bulk Wastewater Treatment and Disposal 57Chapter 10. Retail Supply 59Chapter 11. Other Activities (Section 30) 61Chapter 12. Human Resources Plan 65Chapter 13. Environmental Management Programmes and Plans 73Chapter 14. Water Conservation and Demand Management Plan 77Chapter 15. Financial Plan 79Chapter 16. Debt Management and Funding Requirements 122Chapter 17. Materiality and Significance Framework 132Chapter 18. Financial Ratios 135Chapter 19. Self-Evaluation Statement on Financial Viability 139Chapter 20. Bank Accounts 148Chapter 21. Analysis of Risk 149Chapter 22. Organisational Scorecard 153Chapter 23. Declaration 163Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 1

Chapter| Table of ContentsPage 2 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Forewordby theChiefExecutiveChapterChapter 1.ForewordbytheChiefExecutiveThis Five-Year Businesss Plan,coveringg the period1 JulyJy 2011to 30 June2016,seeksto comply withh therequirementsof theWaterServicesActt (Act 108of 1997),PublicFinance ManagementActt (Act 1 of1999)), andassociatedregulationsandd prescribedguidelines issuedby theDepaDartment of WaterAffairss andNationalTreasury.Underpinningthee businessplanare:• The February 2011State of o the NationAddress,• The February 2011National BudgetSpeech,• The State of WaterAccesss andStrategicObjectives for Waterin KwaZulu-Natal,ass per theKZNDepartmentof Co-operativeGovernanceandd Traditional Affairsoutcomess from its DecDember2010 WaterSummit,and• OutcOcomesof Governmentand pertinentOutputs cascadingto theExecEcutiveThe Twelvee StrategicAuthorityy (the Minister of Water and Environmental Affairs,Edna Molewa), in which water isembeddedas a strategic catalystfor development, criticalto achievementt of government’’s economic growthpathobjectives.Insupportof this, , theBoardd ofUmgeniWaterhass articulated thestrategiess to be achieved,withinn thecontextofUmgeniWater’s mandate.This businesss plan seeks to respondd to thee organisation’s strategiesthrough targtgetingthe inputs,activities andd outputs to t progressively realise the t tenn organisational outcomesof:1. Productt (Bulkk Waterr and Wastewater)Quality,2. Customer Satisfaction,3. Infrastructuree Stability,4. Water ResRourcesAdequacy,5. Stakeholder Understanding and a Support,6. Financial Viability,7. Community andEnvironmental Sustainability,8. Leadershipp and EmployeeDevelopment,9. Operational Resiliency,, and10. Operational Optimisation..Cognisantof customer water demandsin the context of a developmental state, thisbusinessplan identifies theplannedandfunded infrastructuree requiredd too supportt economic growthandenhancerurallivelihoods,committinga total of3.44 billionrand,whichwill bee spenton: :•Economic growth: R 1,524 million;•Enhancingrural livelihoods:: R 1,138 milliomon;•Upgradingandd rehabilitation of infrastructure:R528 million.Overall,theinfrastructuredevelopmentt programmee strives too ensure theorganisation’’s infrastructureis stableandprovidesreliable andsafe bulkbk potablewaterr supply to customersand vulnerablecommunities, whilstensuringwastewater discharges comcmplyy with environmental requirements.UmgeniWaterwill continuee to provide on-going supportt to municipalities,such as, ass ann implementing agent forthe Greater Mbizanaa RegionalBulk Water SupplyScheme,providingoperations supportt forr the bulkdistributionsystemin King SabataDalindyeboLocalMunicipalityandd Nyandeni Local Municipality to t supportthe waterservicesturnaround strategy inORR Tambo DistrictMunicipality..Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Page3

Chapter| Foreword by the ChiefExecutiveWater resourcesassurancee and suppsply security iss paramount to Umgeni Water beingg able to t providesustainablebulkpotable water.In responseto thee developmentalstateagenda andto assuure supplyy securityto targetedCategory B municipalities,UmgeniWateWr iss developingthee Mhlabatshanedam,the SikoSoto Damandd theMvutshanee Dam.In addition, Umgeni Water will continue too collaboratewith the Department of Water AffaiAirs foradequate water resources to be timely plannedd and developedforeconomicc growth,notably, theconstructionofthe SpringGroveDamtoo supplementt thee Mgeni system,thee Smithfield Damm on thee Mkomazi Riverandthe raisingof the HazelmereDam on o the MdlotiRiver.UmgeniWater will furthercontinueto manage its existingwaterresourcesupplies withh the utmostcare, whilstinvestigatingalternative sources, includingwastewater reusee fromits DarvillWastewater TreaTatmentWorkWks andsea-waterdesalinationin theeThekwini Metropolitan Munnicipality,to ensuresuitable future resource diversitytoo sustain the long-termwaterrequirementsoff thee region.Plans thatpromote watter conservationn and demand mannagementwill bee pursued,whilstt researchon climatechangerisks and developmentof adaptation strategies will continue.Umgeniwill ensurethat it is compliantt with customerservice level agreements withh particular reference tosupply voluumes,pressure,servicee disruption intervals,andd metering.Furthermore,Umgeni Waterwill collaboratee with w localgovernment, provincialgovernmentt andnationalgovernment for better efficeciency in i respectof allocationof scarsrce resources,includingfunding resources.Bulkvolume growthfor 2010//2011 is expected to reduceby 2.6% as a resultoff the successfulwaterdemandmanagementinitiativess thathave beenn implementedby municipalities,in particulareThekwini MetropolitanMunicipality.In thiscontext, Umgeni Water will ensurefinancialsustainabilitythroughprovidingg a tariff thatisconstant in realtermss whileallowingforthe repayment of debtt and infrastructuree fundingrequirements,maintainingg optimaldebt levels, andad enhancing shareholder value.UmgeniWaterr will contributeto the t socialeconomy, throughleveraging its capital expenditure andoperationalexpenditure too createe jobs.Furthermore,Umgeni WatWter will investt ininitiatives inn supportof thee greeneconomy includingelectricity co-generationn investigations at itsDarvill Wastewater Works.investinginRetentionandd developmentof corece anddistinctive competenciess is of vital importanceto thee organisation’ssustainability andd will be ensuredd throughplans thatt deepenimplementationof thee human resources strategy,notablythroughlearnerships,graduatee developmentandd employeeandd leadershipdevelopmentplanss andthroughdeveloping strong partnerships withuniversities,, FET colleges, vocational institutions and SETAs.TheBoardof Umgeni WateWer will continue tostrengthen corpcporategovernanceandd risk managementand ensuremonitoringg in terms of the fraud prevpventionplan.MZIMKULUMSIWACHIEFEXECUTIVE30 APRIL2011Pagee 4Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

Chapter| Introduction and Strategy2.2 Operating EnvironmentThe changes in the operating environment and specifically the expectations of the Executive Authority, theMinister of Water and Environmental Affairs, Edna Molewa, have informed Umgeni Water’s development of thisFive-Year Business Plan.The Executive Authority’s expectations are implicitly and explicitly reflected in the following pronouncements:2.2.1 The February 2011 State of the Nation Address, where President Jacob Zumareiterated:• Government’s continued commitment to building a developmental state for which the five keypriority areas are job creation, education, health, rural development and land reform, and fightingcrime.• Job creation through meaningful economic transformation and inclusive growth was particularlyemphasised. A New Growth Path has been introduced that will guide government’s work inachieving its goals. Every sector and business entity is urged to focus on job creation. Allgovernment departments will align their programmes with the job creation imperative.• Six priority areas have been identified for job creation: infrastructure development, agriculture,mining and beneficiation, manufacturing, the green economy and tourism.• Government has established a jobs fund of 9 billion rand over the next three years to finance new jobcreationinitiatives.• Progress made with service delivery includes provision of basic water supply access to an additional400,000 people in 2010.• This year government will spend 2,6 billion rand on water services. Among the priority areas are theprovinces of Limpopo, KwaZulu-Natal and the Eastern Cape where there are still large numbers ofpeople without safe drinking water.• Government will develop infrastructure that will boost the agricultural sector, including rehabilitationof water reservoirs. These projects will enhance food security and create work opportunities formany, especially women in rural areas.• The job creation drive will further enhance youth development.2.2.2 The February 2011 Budget, where Finance Minister Pravin Gordhan, indicated that:• The Budget sets out the financial framework for implementing government’s vision of creating jobs,reducing poverty, building infrastructure and expanding the country’s economy.• The New Growth Path outlines government’s approach to accelerating growth and employment,focusing on several key drivers: Continuing and broadening public investment in infrastructure;Targeting more labour-absorbing activities in the agricultural and mining value chains,manufacturing, construction and services; Promoting innovation through “green economy”initiatives; and Supporting rural development and regional integration.• Regarding economic growth and expectations, the domestic economy grew by 2.8 per cent in 2010.Real GDP growth is projected to reach 3.4 per cent in 2011, 4.1 per cent in 2012 and 4.4 per cent in2013.• Inflation is forecast to remain within the target range of 3 – 6 per cent, edging towards the upper endof the range in 2013 as the economy strengthens. Increasing food and oil prices represent risks to theinflation outlook.• Public sector investment remains the cornerstone of government’s strategy to support sustainableeconomic growth. Over 800 billion rand is projected to be spent over the MTEF period.Page 6 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Introduction and Strategy Chapter2.2.3 State of Water Access in KZN (KZN CoGTA, December 2010)• 400,000 households in KZN do not have access to water, requiring a 400% increase in the rate ofwater services delivery to meet the 2014 targets.• Factors compounding the water backlog include cost escalations in operation and maintenance andthe effect of ageing infrastructure.• There is lack of cohesion among water sector stakeholders, which has resulted in fragmentedplanning, and contributes to lack of alignment between bulk water infrastructure planning andeconomic development goals of the province.• KZN does not have a single plan that enjoys ownership by all water sector stakeholders with cleardistinction of roles and functions, strategic objectives and implementation framework. Waterprovision is impeded by disintegrated planning, the absence of coordination, poor institutionalcapacity, financial/funding shortfalls and sustainability constraints.• The demand for an increased rate in water service delivery to 2014 requires strategic responses and aclear implementation plan which will be provincially coordinated in accordance with outcome 9.• In 2009, CoGTA developed four new municipal classification systems, based on indicators offunctionality, socio-economic profile and backlog status: class 1 - most vulnerable, class 2 - secondmost vulnerable, class 3 -second highest performing, and class 4 - highest performing.• In this regard: fifty-seven (57) municipalities were classified as vulnerable in South Africa, twenty-four(24) of which are in KZN, and nine (9) of which are in Umgeni Water’s supply area (Table 2.1).Table 2.1: Municipalities Classified as Vulnerable in Umgeni Water Supply Area.District MunicipalityLocal Municipalities Classified as VulnerableUgu DMuMgungundlovu DMiLembe DMSisonke DMVulamehlo LM, Umzumbe LM, uMuziwabantu LM, Ezinqolweni LMImpendle LMNdwedwe LM, Maphumulo LMIngwe LM, Umzimkhulu LM2.2.4 Strategic Objectives for Water in KZN (KZN CoGTA, January 2011)• Arising out of its December 2010 Water Summit, KZN CoGTA identified twelve (12) strategicobjectives for water in terms of its five priority areas of planning, capacity, sustainability, funding andinstitutional:• Priority Area 1: Planning, comprising the following four objectives: To develop a single water sector plan for the province of KZN (which includes establishment of aKZN Water and Energy Forum). To coordinate the planning activities of all water sector stakeholders. To align the policy environment with the requirement of a single provincial plan. To ensure that provision has been made to accommodate the impact of climate change in theplanning process.• Priority Area 2: Capacity, comprising the following three objectives To strengthen water sector institutions and to develop the institutional and technical capacities. To improve capacity of provincial water sector stakeholders and raise necessary funding (whichincludes development of comprehensive funding/financial model and funding plans aligned to theMunicipal Turn Around Strategies). To regulate capacity requirements and to ensure compliance.• Priority Area 3: Sustainability, comprising the following two objectives To maximise sustainability through catchment protection, water security and equity betweenenvironmental and livelihood production requirements. To ensure provision for FBWS has been made in sustainability programmes.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 7

Chapter| Introduction and Strategy• Priority Area 4: Funding, comprising the following objective To mobilise funding to address backlogs within the performance timeframe.• Priority Area 5: Institutional, comprising the following two objectives To produce a single provincial institutional framework for the water sector (i.e. to establish asingle provincial water board). To review the current institutional policy environment in order to establish institutions bestplaced to deliver on the performance targets (i.e. to review the current institutional frameworkpowers and functions).2.2.5 Government Outcomes and the Executive Authority, the Minister of Water andEnvironmental Affairs, Edna Molewa’s Response (December 2010)• Government has agreed on twelve (12) strategic outcomes to focus its work to 2014: Outcome 1 (Education) “Quality of our basic education” Outcome 2 (Health) “A long and healthy life for all South Africans” Outcome 3 (Security) “All people in South Africa are, and feel safe” Outcome 4 (Employment) “Decent employment through inclusive economic growth” Outcome 5 (Skills) “Skilled and capable workforce to support an inclusive growth plan” Outcome 6 (Infrastructure) “An efficient, competitive and responsive infrastructure network” Outcome 7 (Rural Development) “Vibrant, equitable, sustainable rural communities,contributing towards food security for all” Outcome 8 (Human Settlement) “Sustainable human settlements and improved quality ofhousehold life” Outcome 9 (Local Government) “Responsive, accountable, effective and efficient localgovernment system” Outcome 10 (Environment) “Protect and enhance our environmental assets and naturalresources” Outcome 11 (International) “Create a better South Africa, a better Africa and a better world” Outcome 12 (Public Service) “An efficient, effective and development oriented public serviceand an empowered, fair and inclusive citizenship”• Each outcome has a delivery agreement with the pertinent sphere of government, which whencombined; reflect government’s delivery and implementation plans for the country’s foremostpriorities to 2014.• In respect of this, the Executive Authority, the Minister of Water and Environmental Affairs, hasidentified ultimate responsibility to fulfil nine water related outputs of six identified outcomes asshown in Table 2.2.Table 2.2: Executive Authority’s response to the twelve government outcomes, showing six identified outcomesand nine water-related outputs.Selected Outcomes of GovernmentOutcome 10 (Environment) “Protect and enhance ourenvironmental assets and natural resources”Outcome 6 (Infrastructure ) “An efficient, competitiveand responsive infrastructure network”Outcome 7 (Rural Development) “Vibrant, equitable,sustainable rural communities, contributing towardsfood security for all”Page 8 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016Contribution by Executive Authority to Specific OutputsExecutive Authority will LeadOutput 1: Enhanced quantity and quality of our water resources.Executive Authority will LeadOutput 4: Maintenance and supply availability of our bulk waterinfrastructure.Executive Authority will Contribute toOutput 1: Sustainable agrarian reform andOutput 3: Access to rural services.

| Introduction and Strategy ChapterSelected Outcomes of GovernmentOutcome 9 (Local Government) “Responsive,accountable, effective and efficient local governmentsystem”Outcome 4 (Employment) “Decent employmentthrough inclusive economic growth”Outcome 8 (Human Settlement) “Sustainable HumanSettlements and improved quality of household life”Contribution by Executive Authority to Specific OutputsExecutive Authority will Contribute toOutput 1: Differentiated approach;Output 2: Access to basic water services; andOutput 7: Single window of coordination.Executive Authority will indirectly Contribute toOutput 7: Expansion of the Expanded Public Works Programme.Executive Authority will indirectly Contribute toOutput 2: Improve access to basic services.2.2.6 Executive Authority Programme for Water Sector Institutional Realignment(December 2010)In January 2011, DWA reported progress on the water sector institutional realignment project. Therealignment initiative is informed by the 2003 Strategic Framework for Water Services.The intended outcomes of the realignment process were identified as:• Creating nine to ten water boards in the country through a process of consolidation andestablishment of new boards.• Reduction of catchment management agencies from nineteen to about nine, without changing thenineteen water management areas.• Extending the role of water boards to maintain water resources infrastructure.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 9

Chapter| Introduction andd Strategy2.3Responseto keyy StrategicUmgeniWatWerIssuesbyy thee Chairpersonoff thee Boardd ofThechangesin theoperatingenvironment andspecifically theexpectationsoff the Executive Authorityinformed Umgenii Water’s development of thisFive-YearBusiness Plan.haveTheclear message that emanates fromm our Executivee Authority,thee Ministerr of Water and EnvironmentalAffairs(EdnaMolewa),is that instititutions of governmentmust convergearound thesameagenda.Thissymbioticrelationshipis reflected in thisbusinessplan, wheresix of thee twelve government outcomess thattheminister is responsiblee for togetether withh its relatedoutputs,have been firmly integratedd intoUmgeniWater’sbusinessplan throughlinkagess to organisational outcomess shownn inTablee 2.3.Furthermore, CoGTAhas identified the water sector challengess and munmnicipalitiesin South AfriAca andKZN whichare ‘stressed’.Umgeni WateWer will resprpondd tothesein practical / explicitt terms.Table 2.3:ExecutiveAuthority’s response tosix off government’s outcomes,andnineoutputs whicwh will be b linkedtoo UmgeniWater’’s ten appraroved outcocomes.Government Outcomess and Outputs cascaded tooUmgeniWaterr Outcomes thatwill bee specificallytheExecutivee Authorityycross-referencedto Government Outcomess andExecutive Authority OutOtputs.Outcome 10 (Environment)Executive Authority will lead:Output1: Enhanced quaantity and quality ofourwater resources.Outcome 6 (Infrastructure)Executive Authority will lead:Output4: Maintenance andd supplyy availability ofour bulkwater infrastructure.Outcome 7 (Rural Development)Executive Authority will contctributeto:Output1: Sustainableagrarianreformm andOutput3: Accessto rural services.Outcome 9 (Local Government)Executive Authority will contctributeto :Output1: Differentiatedapproach;Output2: Accessto basiic water services;; andOutput7: Single windoww of coordination.Outcome 4 (Employment)Executive Authority will indirectly contctribute to:Output7: Expansionof the t Expandedd PublicWorksProgramme.1. Product Quality(Water & Wastewater)2. Customer Satisfactionn3. OperationalResiliencyy4. OperationalOptimisationn5. Infrastructure Stabilityy6. Stakeholderr Understandingandd Support7. . FinancialViability8. Water Resources Adequacy9. CommunityandEnvironmentalSustainabilityy10. Leadershipp and EmployeeDevelopmenttOutcome 8 (HumanSettlement)Executive Authority will indirectly contctribute to:Output2: Improvee access too basicservices.Pagee 10Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Introduction andd StrategyChapterIn this context,Umgeni Water will striveto:1.2.3.4.Aligntoo government outocomesandoutputs cascadingg too theexecutivee authoritywithinn thecontextof thee organisation’ss mandate.Workwith all stakeholders - customers,, national, provinciall and local government,organisedlabour,employees,investors,suppliers, civilcl societyand mediaa - toward coordinatedd andeffective bulkk waterservicess deliveryy in Umgeni Water’s supplyarea andd beyond.Continue totreatt bulkpotable waterandd bulkk wastewaterr too statutory standards.Planand fundd infrastructure to support economicgrowth andlivelihoods, whilstenhancingand maintainingthecondition of its infrastructure assets.5.Improvee the sequencingof bulkinfrastructureprojectsimplementation,municipalities’ reticulation infrastructure implementation.too better align to6.7.Collaborate withwh municipalities andthe KZNN province,to ensure sequential andreciprocalfundingstreamss betweenn theMunicipalInfrastructureGrantandUmgeniWater’scapitalexpenditure progpgramme.Collaborate withwh theDepartment of WaterAffairs toensurethatt the BulBlk InfrastructureGrant targetsvulnerablelocalmunmnicipalities andd leveragess UmgeniWater’scapitalexpenditure progpgramme.8.Providea predictableand sustainabletarifff and anfinancial sustainabilityy off the organisation.optimallevelofdebt,whilst ensueuring9.Efficientlyusee and conservewaterr resources andd ensure theorganisation has h waterresourcesassuranceandd supply secsurity.10. Contributeto thee greenn economy.11.Contributeto ruraldevelopment,the social economyy and jobcreation, notablyy throughh theorganisation’ss capitalinfrastructuree programme, whilstpromotingthee objeoectivesoff broad-basedblackeconomic empepowerment..12. Ensure that theree isemployee andd leadership development at Umgeni Water.13.Furthermore,theBoardd willl continuegovernancefor Umgeni Water.toupholdthe higheststandardsofcorporateMRANDILEE MAHLALUTYECHAIRPERSONOFF THEBOARDD OF UMGENI WATERRUmgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201611Page 1

Chapter| Introduction and Strategy2.4 Umgeni Water Mission, Strategic Intent, Vision, Strategic Perspectives,Objectives and Outcomes2.4.1 Mission“To provide effective and affordable bulk water, bulk sanitation and related solutions to local government inaccelerating the water sector’s national developmental agenda”As articulated in its mission, Umgeni Water’s business is provision of water and sanitation services to localgovernment.2.4.2 Strategic Intent“A key partner in enabling local government to deliver effective water services”Umgeni Water continues to strive to be a strategic and sustainable partner of municipalities, creating distinctshareholder value through providing bulk water and sanitation services as a catalyst for local economicdevelopment and supporting government’s developmental agenda.2.4.3 Vision“To be The Number One Water Utility in the Developing World”The organisation’s long term aspiration is to become the first-choice water utility in the developing world and toleave a positive legacy in the areas it serves.2.4.4 Umgeni Water’s Service AreaUmgeni Water will pursue its strategy in the following strategic markets:1. Umgeni Water’s gazetted area of supply: water services and other related activities.2. Rest of KwaZulu-Natal: water services and other related activities.3. Rest of South Africa: water services and other related activities on demand.4. Rest of Africa: knowledge management, networking and responding to bi-lateral agreements betweenSouth Africa and other countries.2.4.5 Four Strategic PerspectivesUmgeni Water’s strategy comprises four perspectives, Customer and Growth, Financial, Developmental andEnvironmental and Organisational Learning and Growth.2.4.6 Eleven Strategic ObjectivesThese four perspectives are expounded through eleven strategic objectives:1. Exceed customer expectations.2. Grow / increase customer base.3. Manage stakeholder relations.4. Contribute to an affordable tariff.5. Maintain an optimal debt level.6. Enhance shareholder value.7. Contribute to developmental agenda and the social economy.8. Contribute to the green economy.9. Maintain strategic effectiveness.10. Ensure functional excellence.11. Ensure operational competence.When mapped together through its four perspectives, these eleven strategic objectives would enable theorganisation to achieve its mission in a balanced and sustainable manner (Figure 2.1).Page 12 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Introduction andd StrategyChapterFigure2.1: Umgeni Water’s Strategyy Mapshowing eleven strategic objectives,embedded infoursustainabilityperspectivesthat collectivelyy contribute too the organisation’smission.Mission:Toprovide effective and affordablebulkwater, bulksanitation and related solutions to localgovernmentt in acceaeleratingthewater sectoor's nationaldevelopmentalagendaCustomer andGrowthhTo create valuee forour custoomersExceedCustomerExpectationsGrow/ Increase CustomerBaseManageStakeholderRelationsWhilst mainntainingsoundfinancialhealtthContribute to anAffordablee TariffFinancialMaintainn an OptimalDebtLevelEnhanceShareholderValueTocontributetosustainabledevelopment and alivelihoodsDevDvelopmental andEnvironmentalContribute too developmentalagendaContribute too the green economyand the socialeconomyWe will enableour peopleeOrgaOanisationalLearningandGrowthMaintain StrategicEnsure FunctionalEnsureOperationalEffectivenessExcellenceCompetencee2.4. .7TenOutcomesThestrategyfurther targetstenn outcomes,shown in FiguFure 2.2Targetingthesee outcomes enabless theorganisation to followa path of contctinuousimprovement thattt wouldd ultimately leadto a highhhly performingg andsustainablee waterr utility.Figure 2.2: Umgeni Wateer’ss Ten OutcOcomes4WaterResources2AdequacyCustomerSatisSsfaction51StakeholderProduct Quality3Understandingand SupportInfrastructureStability6FinancialViability7Community andEnvironmentalSustainability8Leadership andEmployeeDevelopment9OperationalResiliency10OperationalOptimisationUmgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201613Page 1

Chapter| Introduction and Strategy2.5 Strategic Objectives, Outcomes and Key Performance Indicators (KPIs)The organisation has eighteen key performance indicators that respond to its eleven strategic objectivesand ten outcomes, as shown in Table 2.4. The business plan chapters that follow responds to these KPIs, andtargets pertaining to these are contained in the scorecard at the end of this business plan.Table 2.4: Strategic objectives, outcomes and key performance indicators with cross-reference to GovernmentOutcomes and Executive Authority Outputs*StrategicObjectiveUmgeni WaterOutcomeExplanation ofOutcomeKey PerformanceIndicatorReference to GovernmentOutcome and ExecutiveAuthority (EA) OutputCustomer and Growth Perspective1. Exceedcustomerexpectations2. Growth /Increasecustomer baseProduct qualityCustomerSatisfactionInfrastructureStabilityProduct Quality (Waterand Wastewater) isachieved when UmgeniWater produces potablewater and wastewater incompliance with statutoryrequirements andconsistent with customer,public health, andenvironmental needs.1. Per cent statutorycompliance for bulkpotable water and bulkwastewater.*Customer Satisfaction is 2. Per cent compliance withachieved when Umgeni service level agreementsWater provides reliable, with particular referenceresponsive, and affordable to supply volumes,services in line withpressure, serviceexplicit, customer-agreed disruption intervals, andservice levels and receives metering. *timely customer feedbackto maintain responsivenessto customer needs andemergencies.Umgeni Water hasInfrastructure Stabilitywhen it understands thecondition and costsassociated with criticalinfrastructure assets andmaintains and enhancesthe condition of all assetsover the long-term. This isdone at the lowest possiblelife-cycle cost andacceptable risk levels, isconsistent with customerand statutory-supportedservice levels, andconsistent with anticipatedgrowth and systemreliability goals.3. The extent to which thereis planned and fundedinfrastructure to supporteconomic growth andlivelihoods, and assetcondition is enhanced andmaintained.*Outcome 10 EnvironmentEA will Lead Output 1: Enhancedquantity and quality of waterresources.(Sub-output: Regulation of waterquality – water works andwastewater works compliance)Outcome 6: InfrastructureLead Output 4 Maintenance andsupply availability of bulk waterinfrastructure(Sub-outputs: New augmentationschemes; Regional bulk waterinfrastructure (RBIG) systems;Existing water resourcesinfrastructure maintained)Outcome 9 Local GovernmentEA Contributes to Output 2:Improved access to basicservices.(Sub-outputs: Support the deliveryof bulk and reticulationinfrastructure following adifferentiated approach. Bulkinfrastructure fund)WaterResourcesAdequacyUmgeni Water has WaterResources Adequacy,when it assesses thescarcity of freshwaterresources, investigatessustainable alternatives,manages water4. The extent to which thereis water resourcesassurance / supplysecurity.*Page 14 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016Outcome 7: Rural DevelopmentContribute to Outcome 3 Accessto rural services (Sub-outputs:improved access to services)Outcome 6: InfrastructureLead Output 4 Maintenance andsupply availability of bulk waterinfrastructure(Sub-outputs: New augmentationschemes; Regional bulk waterinfrastructure (RBIG) systems;

| Introduction and Strategy ChapterStrategicObjectiveUmgeni WaterOutcomeExplanation ofOutcomeabstractions assiduouslyand has access to stableraw water resources tomeet current and futurecustomer needs.Key PerformanceIndicatorReference to GovernmentOutcome and ExecutiveAuthority (EA) OutputExisting water resourcesinfrastructure maintained)Outcome 10: EnvironmentLead Output 1 Enhanced qualityand quantity of water resources(Sub-output: Water demandmanagement)3. ManageStakeholderRelationsStakeholderUnderstandingand SupportStakeholderUnderstandingand SupportFinancial Perspective4. Contribute to anaffordable tariff5. Maintain anoptimal debtlevel6. EnhanceshareholdervalueFinancialviabilityFinancialviabilityFinancialviabilityStakeholder5. Per cent alignment toUnderstanding andprovincial water plan.*Support, is attained whenUmgeni Water engendersunderstanding and supportfrom statutory, contractedand non-contracted bodiesfor service levels, tariffstructures, operatingbudgets, capitalimprovement programmes,risk managementdecisions, and waterresources adequacyamongst others.StakeholderUnderstanding andSupport6. The extent to which thereis engagement ofstatutory, contracted andnon-contractedstakeholders and responseto queries regarding theorganisation’sdevelopments andperformance.Umgeni Water is7. The extent to which thereFinancially Viable when it is a tariff that is constantunderstands thein real terms whileorganisational life-cycle allowing for thecosts and maintains a repayment of debt andbalance between debt and infrastructure fundingassets while managing requirements.*operating expendituresand increasing revenues. Inaddition, the organisationaims at a sustainable tariffthat is consistent withcustomer expectations,recovers costs andprovides for futureexpansion.Financially Viable 8. The extent to which thereis an optimal debt level.*Financially Viable9. The extent to which thereis ability to raiseaffordable funding.10. The extent to which thereis Improvement inaccumulated reserves.Outcome 6: InfrastructureLead Output 4 Maintenance andsupply availability of bulk waterinfrastructure(Sub-outputs: New augmentationschemes; Regional bulk waterinfrastructure (RBIG) systems;Existing water resourcesinfrastructure maintained)Outcome 6: InfrastructureLead Output 4 Maintenance andsupply availability of bulk waterinfrastructure(Sub-outputs: Raw water pricingstrategy and funding modelreviewed).Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 15

Chapter| Introduction and StrategyStrategicObjectiveUmgeni WaterOutcomeExplanation ofOutcomeDevelopmental and Environmental Perspective7. Contribute todevelopmentalagenda and thesocial economy8. Contribute tothe greeneconomyCommunityandEnvironmentalSustainabilityCommunityandEnvironmentalSustainabilityUmgeni Water achievesCommunity andEnvironmentalSustainability when it isexplicitly cognisant of andattentive to the impacts ithas on current and futurecommunity sustainability,supports socio-economicdevelopment, andmanages its operations,infrastructure, andinvestments to protect,restore, and enhance thenatural environment,whilst using energy andother natural resourcesefficiently.Community andEnvironmentalSustainabilityOrganisational Learning and Growth Perspective9. MaintainStrategicEffectiveness10. EnsureFunctionalExcellence11. EnsureOperationalCompetenceLeadership andEmployeeDevelopmentLeadership andEmployeeDevelopmentOperationalResiliencyKey PerformanceIndicator11. Number of jobs createdthrough infrastructureand other programmes*12. The extent to which thereis use of preferentiallyprocured suppliers,cooperatives, NGOs orcharities.*13. The extent to whichsupport is provided tovulnerablemunicipalities.*14. Number ofenvironmentalsustainability initiatives.*Leadership and Employee 15. The extent to which theDevelopment is achieved organisation provideswhen Umgeni Water is a leadership and influencesparticipatory, collaborative the water sector.organisation dedicated tocontinual learning andimprovement, recruits andretains a workforce that iscompetent, motivated,adaptive and works safely,ensures institutionalknowledge is retained andimproved; providesopportunities forprofessional andleadership development,and creates an integratedand well-coordinatedsenior leadership team.Leadership and EmployeeDevelopmentUmgeni Water hasOperational Resiliency,when it’s leadership andstaff work together toanticipate and avoidproblems and proactively16. Per cent retention anddevelopment of core anddistinctive competencies.17. Number of systems andprocesses that enableimplementation ofstrategy.Page 16 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016Reference to GovernmentOutcome and ExecutiveAuthority (EA) OutputOutcome 4: EmploymentIndirectly Contribute to Output 7Expansion of the extendedpublic works programmeOutcome 9 Local GovernmentEA Contributes to Output 2:Improved access to basicservices.(Sub-outputs: Support the deliveryof bulk and reticulationinfrastructure following adifferentiated approach. Bulkinfrastructure fund)Outcome 7: Rural DevelopmentContribute to Outcome 3 Accessto rural services (Sub-outputs:improved access to services)Outcome 10: EnvironmentLead Output 2 Reducedgreenhouse gas emissions,climate change and improved airquality.(Sub-outputs: Energy efficiency,adapting to the impacts of climatechange, reduction of carbonemissions, renewable energy)Outcome 10: EnvironmentLead Output 1 Enhanced qualityand quantity of water resources(Sub-output: Water demandmanagement)

| Introduction andd StrategyChapterStrategicObjectiveUmgeni WaterOutcomeOperationalOptimisationExplanation ofKey PerformanceOutcomeIndicatoridentify,assess,andestablishtolerance levelsfor, and proactivelyand deffectively managesa fullrange ofbusiness risks,consistent with industryytrends and systemreliabilitygoals.Operational18. Per centincrease inOptimisation, has beennutilisation ofachievedwhen Umgeniorganisational resourcesWater has on-going,(more balanceduse).timely, cost-effectiveandsustainableeperformanceimprovements inall facetsof itsoperations, minimisesresourceuse, loss, andimpactsfromday-to-dayyoperations and maintainsawareness of informationand operationaltechnology deveelopmentsto anticipateandsupporttimely adoption ofreliable,improvements.Reference too GovernmentOutcome and ExecutiveAuthority(EA)OutputUmgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201617Page 1

Chapter| Introduction and StrategyPage 18 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Policy StatementChapterChapter 3.PolicyStatementUmgeniWater’soveralll policyhas not changedsince the t previousyear andthee organisation willcontinuetoimplementits business planin accordance with this.The information containedin the ‘Introductionand Strategy’ chapterof thiss businessplan, notanablyy the long-termandapproach and is supportedbya conttinuouslyimprovedsuite of policiess withinthe organisation thatt covers theentire scope ofthe organisation’sbusiness.strategic objectives and a outcomesoftheorganisation, further contextualises the organisation’ss overall policyy Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201619Page 1

Chapter| Policy StatementPage 20 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Directivesby thee MiniisterChapterChapter 4.DirectivesbytheMinisterIn2009/2010,thee Ministerr ofWateWer andEnvironmentalAffairsrequested Umgeni Water to assist withh theturnaroundstrategyfor the waterservices function inn the ORTamboo DistrictMunicipality,in Eastern Cape.Following completion of o therequiredinterventionin 200209/2010, UmgUgenii Water wasrequestedd toundertakefurtherwork to supportt thee OR TamTmbo District Municipality inn 2010//2011.Progressas at 313Decemberr 2010,issummarised beloww and furtherdetailss are providedd in Chapter 11 (Other Activities) of thisbusiness plan.1.The GreaaterMbizanaRegionalBulk Water Supply Developmentt•Construction work onn the raw water pump stationandrisingmain is progressingg well.•Construction work onn the LudekaDamm has comcmmenced.•Construction work off thee first phase of the Nommlacu Water TreatmentWorkss has begun.•Detaileddesign workk onn phase1 of the bulktreated water supply system is complete.2.Mthathaa Bulk WatWter Intervention•Work wascompleted andthe operationmunicipality.andd maintenancemanual handedovertothee district3.4.Quakeni(Ingquza Hill) Regional Bulk WaterSupplyy Scheme•The proposedZalu Damis under discussion..Refurbishmentof WaterTreatment Works’•Refurbishmentt ofthee four works’- Mbizana, Libode,Ngqeleni,andPort St Johns - is underway.Oneworks wasrefurbished andhanded overto the District MunMicipality and theotherss aree scheduled forcompletionn in 2011.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201621Page 2

Chapter| Directives by the MinisterPage 22 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

For thee strategicobjective ‘excceedcustomer expectations’ targetingg theoutcome ofcustomer satisfaction:| Self-AppraisalChapterChapter 5.Self-AppraisalThe business achievementsandunder achievements as at 311 December 20100 areprovidedd below. (Alsorefer to thebaselinee informationprovidedin the organisational scorecard inn Chapter 22 of this business plan)):5.15.1.115.1.25.1.35.1.4Performancee inrelationtoo theCustomer andad GrowthPerspectiveFor thee strategicobjective ‘excceedcustomer expectations’ targetingg theoutcome ofproductt quality (water and wastewaterr quality):•The organisationis meetmtingg statutoryy requirements for potablewatersupply.•The organisationis currently not meetingg itss permit requirements for treatedd wastewaterdischarge.The challenges that are a constrainingthee achievement off the target are:stormwater ingressinto themunicipalsewersystem, resulting in highh infloww volumes too theDarvillWastewaterTreatmentWorks,whichare difficult too manage,as well as, illegal industrial dischargesintoo the municipal sewernetwork, whicwh impact on the worrks influent quality.To mitigate this, UmgUgeniWater intendss too augment thecapacityof thee DarvDvill WastewaterTreatmentWorksforr whichh it hasbudgetedan amount of o R 1688 million too bee implemented withiwin theFive-Year infrastructureexpenditure programme.•Umgenii Waterr has met m all customerrequirementss in accordance withh supplyy agreementsin termsofwater quantity/volume demand, pressure, meteering and permissible service disruptionintervals.• Infrastructureimprovements continue to be b in linewith municipality water servsvices developmentplans.•All major customers werwre consulted andsupportedd the proposed bulksupplyy tariff.•Of significancee is thee critical intervention madde in response too the drought situationn and loww damwater levels in theSouthh Coast, for whichh the BoarBrd approved an emergencyy pipeline project.•The lowlight inn respect of thisoutcomeis still s the non-concludedbulk watewer supply agreementt withThe MsunduziLocal MunMnicipality.The municipalityy is currentlyawaiting a responsee from DWA.Forthee straategicobjectiveinfrastructuree stability:‘grow/increasee customerr base’ targetingg theoutcome of•The organisationhadd stratifieditss capital infrastructureprogrammeintoo the following major areas:Supportforr rural livelihoodss (35%); Economic growth(32%);Upgrade andd refurbishment ( 25% %).•Projectsin these portfolioswere inn various phaspses of implementation as at 311 st DeceDember2010.o Supportingrurallivelihoods:Six projectsin constructionphase;; twoprojects inn tenderphasee or entering tenderphase;; threeprojects in design phase; andd two projectsin planningphase.o Supportingeconomicgrowth:: Threee projectsin construction phase;andd threee projectsintender phase orr enteringtenderr phase.o Infrastructure upgradesandrefurbishment: Five projectsin designn phase.•The lowlight inn respect of thisoutcomeis projepect snagsattributable to variousreasons andresultinginbehind schedule implementation of infrastructure programme.For thee strategic objectivee ‘grow/increasecustomer base’ targetingg theoutcomee waterresources adeequacy:•Construction of the SpriSng Grove Damm (by TCTATA) iss scheduled too commencein 201121.• Investigationsof alternativesources areunderway, namely,, the desalinationinvestigationwitheThekwini,as well as, the Darvill wastewater reclamationn investigation.•Modelling work assessing the impactss off climate changeon water resources hasbeen undertaken.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201623Page 2

Chapter| Self-Appraisal5.1.5 For the strategic objective ‘manage stakeholder relations’ targeting the outcome ofstakeholder understanding and support:• Umgeni Water has made progress towards engendering understanding and support from statutory,contracted and non-contracted institutions in respect of: business planning, capital improvementprogrammes, operating budgets and tariff structures, performance with plans, and service delivery,amongst others.Highlights include:• Engagement with DWA at its strategy planning session in December 2010, where the twelvegovernment outcomes were presented and the six outcomes that were relevant to the ExecutiveAuthority and DWA clearly articulated.• Collaboration with KZN CoGTA in organising and participating in the KZN Water Summit inDecember 2010, where participation and input into the key issues affecting the water sector weremade.• Participation in the KZN Cabinet Lekgotla session.• Appointment of the Chief Executive to the KZN Planning Commission.• Arising from the Minister’s Directive to assist OR Tambo, the organisation concluded an agreementto operate a total of 70,500 cubic metres per day water treatment works and associatedinfrastructure for OR Tambo DM (further details of which are provided in chapter 11 of this businessplan).5.2 Performance in relation to the Financial Perspective5.2.1 For the strategic objectives ‘contribute to an affordable tariff,’ ‘maintain an optimal debtlevel,’ ‘improve return on asset,’ and ‘enhance shareholder value,’ which are targeting theoutcome of financial viability:• The medium-term trend shows slowing in revenue growth due to slowing in volume growth.• The organisation has, at least in the past five years, provided a tariff consistent with customerexpectations, cost recovery and enabled reasonable provision for infrastructure expansion. Themedium-term trend is however a slightly higher (above inflation rate) tariff that will enable costrecovery for water resources developments to assure future raw water supplies.• Regional Bulk Infrastructure Grants were allocated for the Mhlabatshane Bulk Water Supply and theGreater Eston Water Scheme.• The financial self-evaluation chapter that follows the financial plan of this business plan providesmore details on the achievement of this outcome.5.3 Performance in relation to the Developmental and EnvironmentalPerspective5.3.1 For the strategic objective ‘contribute to the national developmental agenda and reductionof backlogs’ targeting the outcome of community and environmental sustainability:• As part of ensuring assurance and security of bulk water supply to category B municipalities,Umgeni Water is developing the following water resource dams:o The Mhlabatshane Dam, which is under construction.o The Sikoto Dam and the Mvutshane Dam, for which the designs have significantly advanced.• As part of its contribution to the social economy:o Umgeni Water approved a cooperatives policy in September 2010, following which, fouropportunities for cooperatives have been identified in the areas of: Pipeline Maintenance;Reservoir and General Maintenance; Security; and Cleaning Services.o In addition, one cooperative was established as part of the Adopt a River project for whichUmgeni Water is the implementing agent for DWA.• Job Creation: significant jobs have been created during implementation of projects:Page 24 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Self-Appraisal Chaptero The projects that are in construction stage during the past six months created 292 jobs.o The Greater Mbizana Regional Bulk Water Supply project where Umgeni Water is theImplementing Agent on behalf of OR Tambo DM has created 96 jobs.o 1,217 jobs were created during implementation of the Working-for-Water programme forwhich Umgeni Water is the implementing agent.o 100 women are employed in the iSipingo Adopt a River project where Umgeni Water is theImplementing Agent on behalf of DWA.• As part of its contribution to the green economy:o Umgeni Water is continuing to investigate the feasibility of electricity co-generation at itsDarvill Wastewater Works.5.4 Performance in relation to the Organisational Learning and GrowthPerspective5.4.1 For the strategic objectives ‘maintain strategic effectiveness,’ ‘ensure functionalexcellence,’ and ‘ensure operational competence’ targeting the outcomes of Leadershipand Employee Development, Operational Resiliency, and Operational Optimisation.• The organisation continues to keep abreast of its operating environment contributing to key watersector debates, and importantly has noted its Executive Authority expectations as well as the state ofthe water sector and municipality environment in KZN. This, amongst others, will ensure theorganisation continues to have a responsive strategy and develops an aligned business plan.• As an indication of the esteem in which the organisation is regarded in the water sector, UmgeniWater has received several invitations and delegations from some of the SADC water utilities,notably:o A visit by the Botswana Water Utility Corporation to understand the business model ofUmgeni Water in the context of the restructuring that they are undertaking in Botswana.o An invitation to visit the Water and Sanitation Department of Benguela and Lobito, which isthe result of the twinning arrangement between the province of KwaZulu-Natal and theprovince of Benguela, Angola, in which Umgeni Water is one of the key players. As part offurther collaboration this utility is now trying to benchmark its operations along the lines ofUmgeni Water and has requested specific support for: Design of a new laboratory; Design ofa monitoring programme; and Review of their bulk water supply planning.• The organisation has made further progress with implementation of its organisation-wide ISOmanagement system and is preparing for external audit.• The Employment Equity Plan was submitted to the Department of Labour in October 2010, whilst theWorkplace Skills Plan is being completed for submission to ESETA by June 2011. The organisation hasincreased its partnership in learnerships, with twelve additional learnerships approved by ESETA forcommencement in April 2011.• The Board approved the Succession, Mentoring and Coaching Policy in September 2010 for which theorganisation is finalising the implementation framework.• A succession plan has not yet been developed for Executives but a recruitment plan has been developedfor the filling of the posts of the Chief Executive and General Manager Operations. The contract of theGeneral Manager Finance has been extended by two years.• Umgeni Water is participating in the Best Company to Work for Survey and has also commenced work onits Annual Salary Survey.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 25

Chapter| Self-AppraisalPage 26 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Participation inCompaniesChapterChapter 6.Participationinn Coompanies6.1UmgeniWatWer Services(Pty)) LtdUmgeniWaterhas a 100% shareholdingin Umgeni Water Services(UWS)) (Pty) Ltd. . This subsidiaryholds an 18.5%investmentin DurbanWateWer Recycling.UmgeniWaterissueda letter of supportto UWS, as at 300 June2009, duedto thefact thatits liabilities exceeded itsassets by R1.8m.Initiatives undertaken by b DurbanWaterr Recyclingg (Pty)Ltdd (throughh Umgeni Water Services (Pty)) LtdDurbanWaterRecyclingg was set up as Umgeni WateWer’s contributionto waterdemand management,specificallyfocussing on recycling.Thecompanyhasalwaysbeen suststainable, andis noww startingto pay dividendstoshareholders.DurbanWater Recycling contributes to Umgeni Water’ss ‘Customerandd GrowthPerspective’’ and strategicobjective ‘Grow/ increase customerbase’ for which theoutcomeandd key performance indicator are as indicatedbelow.CustomerandGrowthPerspectiveeStrategic ObjectiveeGrow/ IncreasecustomerbaseUmgeni WaterOutcomeWaterResourcesAdequacyDescription of OutcomeUmgeniWater hashWateer ResourcesAdequacy,when itassessess thee scarcityof freshwaterresources, investigates sustainable alternatives,manages waterabstractionsassiduously andhasaccess to stableraw w water resources to meet currentandfuture customerr needs.Keyy Performance Indicator:The extent towhichthere iswaterr resources assurance /supplyy security.6.2Msinsii Holddings(Pty)LtdUmgeniWaterhas a 100% shareholdingin Msinsi Holdings (Pty)) Ltd.The Boardof Umgeni Waterhass takenn a decision to sell s its shareholdingg in MsinsHoldings subjectto DWAgrantinga lease on the landd betweenthee purchaselinee and floodd line for f Inanda,Albertt Falls and a Hazelmere dams.UmgeniWaterhas provvided a letterof supportt too MsinsHoldingsass its goingconcern status is dependentuponUmgeniWater’scontinuedd supportin terms of contracting/engaging Msinsi to undertakee the Water ResourceManagement Function for f thedams.Msinsi’ss loan account ass att 30 June 2009 was R0. .3m due by b Umgenii Water toMsinsi. Thee operations of Msinsibreak-evenas illustratedd in thefinancialplanoff this businesss plan.UmgeniWatersigned ann agreementfor theO& &M of dams withh DWAA in 2011. Theese dams are a to be managed byMsinsi, andtherelationshipp betweenUmgeni Water andMsinsiwill thus continue for the duration off the contract.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201627Page 2

Chapter| Participation in CompaniesStrategic Initiatives to be undertaken by Msinsi HoldingsMsinsi Holdings contributes to Umgeni Water’s ‘Developmental and Environmental Perspective’ and strategicobjective ‘Conserve limited natural resources’ for which the outcome and key performance indicator are asindicated below.Developmental and Environmental PerspectiveStrategic Objective Umgeni Water Outcome Description of Outcome Key Performance Indicator:Conserve limitednatural resourcesCommunity andEnvironmentalSustainabilityUmgeni Water achieves Community andEnvironmental Sustainability when it isexplicitly cognisant of and attentive to theimpacts it has on current and future communitysustainability, supports socio-economicdevelopment, and manages its operations,infrastructure, and investments to protect,restore, and enhance the natural environment,whilst using energy and other natural resourcesefficiently.Number of environmentalsustainability initiatives.The following initiatives are to be undertaken by Msinsi in respect of the above strategy of UmgeniWater:1. The maintenance and enhancement of the natural environment around Umgeni Water managed dams.i. Control of alien invasive plants.ii. Management of game species according to the carrying capacity of each reserve.iii. Grassland management.2. The control of pollution inside of the purchase area surrounding Umgeni Water managed dams.i. Ensuring that infrastructure developments takes place with minimum impacts on theenvironment.ii. Controlling visitor activities on the water surface and within the purchase line.iii. Ensuring that there is no illegal dumping by industries within the purchase line.Page 28 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Water ResourcesChapterChapter 7.WaterResources7.1Waterr AvailabilityyUmgeniWatersources water primarily fromten impoundments on three major water resourcee systemsnamely,the MgeniSystemm (Mooi andMgenirivers), the North Coasst System(Mdloti River) andthee Southh Coastt System(Nungwane, Mzimmayi and Mzintorivers). Twofurtherr impoundmentsaree owned and managedby Umgeni Water,which are no longer usedd for water supply purposes. Table 7.1 shows the t capacitiesof these resorources.Table 7.1: Capacity of WateWer Resource SystemssSystemMgeniCatchmentMooiMgeniImpoundmentMearnsWeirMidmar DamMgeniAlbertFallss DamMgeniNagle DammMgeniInandaDammMlaziShongweni Dam Msunduzi, MgeniHenleyDam Total forCentral SystemNorthCoastMdlotiHazelmeree DamTotal forNorthCoast SysttemmSouthCoastNungwane,LovuMzimayiNungwanee DamE J Smith DammMzintoUmzinto DamTotal forSouthCoast SysttemmOtherIxopo, MkommaziIxopo DammTotal forUmgeni Water Systems# notutilisedforwater suppplyOwnerDWADWADWAUWWDWAUWWUWWDWAUWWUguu DMUguu DMUWWManagerUWUWUWUWUWUWUWUWUWUWUWUWGross CapaCacityy (million m 3 )5.1235.4290.124.6251.63.81.5812.117.917.92.20.90.43.50.6834.17.1.11Mgeni SystemThe MgeniSystemm comprises of fourdams on theMgeniRiver,namelyy MidmarDam, Albert FallsFs Dam,NagleDamandInandaDam.It is augmented by the Mooi-Mgeni TranTnsfer Schemee (Phase 1) whichwh consistsof thee MearnsWeironthe Mooi River,, the MearnsPumpingStation witha maximumtransfer capacityy off 3.22 cubicmetres persecondanda raww water transferpipeline thatt discharges intoo the MpoMfana Stream,whichh flowsinto theLionsRiver and theninto the MgeniRiver upstream of Midmarr Dam.The system currently hasa yield(att a 99 % levelofassurance)of 334. .5 millioon cubic metrmres perannumm att Inandaa Dam.7.1.2NorthCoastSystemThe NorthCoast Systemm comprises the Hazelmeree Damon thee Mdloti River, whichh serves ass a dual-purposedam,providing water for bothh potable and a irrigationrequirements. Thedamm has a yield(at a 988 % level of assurance)of19.0millioncubicmetres per annumavailable fortreatmentt and potablee usage, providedd the reserveallocationisnotimposed.SinceJuly 2007UmgeniWaterhas alsobeen abstractingg water fromm the MvoMti River ass partofmanaging the MvotiWaterWorksandd the supply of bulkpotable water too thee townof KwaDukuza on behalf of theiLembeDistrict Municipality.7.1.3SouthCoast SystemThe SouthCoast Systemm comprises a number of interlinkedoperational entities. Water resources for this area areobtained fromthe NunngwaneDamonn the Nungwanee Riverr (a tributaryto thee Lovuu River)), theMzintoo andEJ Smithdamsonn the MzinMnto andd Mzimayiriversrespectively,, and a sand abstraction systemon theMtwalumeRiver. This systemm issubstantiallyy augmentedby thee Mgeni systemvia thee Southh Coastt AugmentationPipelineand the SouthCoastPipeline.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201629Page 2

Chapter| Water Resources7.1.4 Water Resource Assurance and Supply Security per Water Services AuthorityeThekwini Metropolitan MunicipalityThe Mgeni system is the primary resource for this municipality. Water in the municipality’s northern areas is alsosecured from the Hazelmere Dam on the Mdloti River, as well as from the Tongati River. The Nungwane Dam onthe Nungwane River provides a small portion of the municipality’s water requirements in its southern areas.Groundwater is also used to a limited extent. Water transfers from the Mkomazi River, wastewater reuse andseawater desalination are potential future sources of water for this area. Water from the uThukela River could alsobe utilised to a limited extent.Msunduzi Local MunicipalityThe Midmar Dam on the Mgeni River is the only source of surface water for this municipality. Water transfers fromthe Mooi River are used to augment this resource. Groundwater is used to a limited extent.uMgungundlovu District MunicipalityThe Midmar Dam on the Mgeni River is the primary source of water for this municipality. A number of minorabstractions on other rivers and tributaries are also undertaken and groundwater is used extensively for many ofthe rural and outlying peri-urban areas. The Mkomazi and Mooi rivers are potential future sources of water for thisarea.iLembe District MunicipalityThe Hazelmere Dam on the Mdloti River is the primary source of water for this municipality. To a far lesser extent,water is also abstracted from the Mvoti and uThukela rivers, and groundwater is used extensively in the outlyingrural areas. The Mvoti and uThukela rivers and seawater desalination are potential future sources of water for thismunicipality.Ugu District MunicipalityThere are a number of rivers that are utilised in this area. The southern areas (not served by Umgeni Water) utilisewater from the Mzimkhulu and Mtamvuna rivers, while the central area primarily receives water from the MzintoDam and EJ Smith Dam on the Mzinto and Mzimayi rivers respectively and from the Mtwalume River. Thenorthern area primarily receives water from the Mgeni system via Inanda Dam and the Nungwane Dam on theNungwane River. Groundwater is used extensively within this municipality to supply many of the rural areas. TheMkomazi and Mzimkhulu rivers and seawater desalination are potential future sources of water for thismunicipality.Sisonke District MunicipalityNumerous small abstractions on the Mkomazi, Mzimkhulu and Mzintlava rivers and their tributaries are utilisedwithin this area. Groundwater is also used extensively within this municipality to supply many of the rural areas.The Mkomazi, Mzintlava and Mzimkhulu rivers are potential future sources of water for this municipality.Page 30 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Water Resources Chapter7.2 Water Quality of Raw WaterThe status of raw water quality and problem per supply source/catchment are presented in Table 7.2. The rawwater quality status of each source/catchment is determined by comparing key determinands against WaterResource Quality Objectives developed for each water supply catchment.Potential water quality risks associated with Umgeni Water raw water supplies include: eutrophication (nutrientenrichment and its associated threats including algal blooms, taste and odour problems and aquatic weedinfestation), faecal contamination and associated pathogen risks, suspended solids, and chemical constituents(including iron and manganese). This in turn has the potential to impact on treatability, chemical usage andassociated treatment cost.DWA is kept continuously apprised of the quality and risks associated with the source water and needs to morevigorously regulate catchment practices and waste discharges, to continue to ensure the long-term sustainabilityof these water resources.Table 7.2: Water Quality of Raw WaterSystem Catchment Impoundment Water Quality status Description of Raw Water Quality ProblemMar-2009 Mar-2010 Mar-2011Mooi, Mgeni Mearns Weir, Good Good Good Eutrophication with occasional high algalMidmar Damcount.Occasional high iron concentrations.MgeniAlbert Falls Good Good Good Eutrophication with occasional high algalDam, Naglecount.DamMgeni Inanda Dam Moderate Moderate Moderate Eutrophication with very high algal count.Microcystis is the dominant algal species withlarge amounts of the toxin microcystin presentat all abstraction levels and in the raw waterinflow to the Wiggins Water Treatment Works,when the algal count was very high.MdlotiHazelmere Moderate Moderate Moderate Eutrophication at the dam.DamHigh turbidity and elevated iron concentrationsat all water treatment abstraction levels.MgeniNorth CoastSouth CoastOtherNungwane,LovuNungwaneDamModerate Moderate Moderate Increased iron and manganese in the raw watersupply system.Mzimayi E J Smith Dam Poor Poor Poor High algal count and high organic carbonconcentrations.High manganese concentrations.High E. coli counts.Mzinto Umzinto Dam Poor Poor Poor High algal count and high organic carbonconcentrations, andHigh manganese concentrations in the rawwater supply system.Mthwalume RiverAbstractionModerate Moderate Moderate High E.coli.High algal count.Elevated iron and manganese concentrations.Ixopo,Ixopo Dam Moderate Moderate Poor High turbidity.MkomaziHigh iron and manganese concentrations.High conductivity.High organic carbon, exacerbated by the lowdam water levels in 2010.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 31

Chapter| Water Resources7.3 Water Use Rights, Licences by ResourceUmgeni Water’s most recently registered abstractions and licence applications are shown in Table 7.3.Table 7.3: Registered Abstractions for 2010/11 and Status of Licence Applications.MgeniSystem Abstraction Point Registered Abstractionfor 2010/2011(10 3 m 3 /day)Midmar DamNagle Dam (Albert Falls Dam)Inanda DamCurrent Licence(10 3 m 3 /day)and date issued1,099 1,096May 1985Licence Application(10 3 m 3 /day) and datesubmitted to DWA1,287November 2005North CoastSouth CoastOtherHazelmere Dam 45 311985/8892April 2010Mvoti River 16 11 18April 2008Sikoto Dam N/A N/A 6.3Still to besubmittedMvutshane Dam N/A N/A 10Still to besubmittedLower Thukela N/A N/A 110January 2010Nungwane Dam 26.5 - -E J Smith DamMzinto Dam12 - -Mtwalume River Well points 8.5 3 5May 2006Mhlabatshane Dam N/A 4.1N/AJune 2010Ixopo Dam 2.3 - -Page 32 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

7.4 Water Demands, Planned Developments and Shortfalls| Water Resources ChapterUmgeni Water’s bulk water sales have slowed considerably over the past seven months with minimal to zerogrowth expected in the short-term. This can largely be attributed to the impact of the eThekwiniMetropolitan Municipality’s water demand management initiatives coupled with a slower than expectedgrowth in the same region. Growth in water sales is expected to increase in the medium to long-term, as theeconomy continues to recover from the last recession, and with government stimulation to grow theeconomy.Umgeni Water, as a bulk water services provider, requires sustainable and cost-effective water resources to meetits customer’s demands. In view of the significant lead times required to plan, design, construct and commissionmajor water resource development projects, future medium to long-term water resources from the Department ofWater Affairs (DWA), as the custodian of the country’s water resources, have to be secured in a timely manner.DWA has to date undertaken regional water resource development investigations within Umgeni Water’s area ofoperation in close collaboration with Umgeni Water and its major customers. A number of these studies were cofundedby Umgeni Water. The status of water demand within Umgeni Water’s area of supply, however,requires several of these water resource investigations to be completed as a matter of urgency. Failing which,customers could be faced with severe water shortages in coming years. A summary of resource needs is shownin Table 7.4 and described further in the sections that follow.Table 7.4: Summary of Water Resource/Supply needs, Timing and Estimated CostScheme Date Needed Timing Estimated Cost ResponsibilityPhase 2 Mooi-Mgeni Transfer Scheme: Spring Grove Dam 2007 Behind Schedule R 1,700 million DWAPhase 1 Mkomazi Water Project: Smithfield Dam 2010 Behind Schedule R 4,500 million DWANorth Coast System: Raising of Hazelmere Dam 2013 Behind Schedule R 120 million DWAMvutshane Dam 2012 On Schedule R 136 million UWMhlabatshane Dam 2012 On Schedule R195 million UWSikoto Dam 2013 On Schedule R 95 million UWLower Mvoti Bulk Water Supply Scheme: Welverdient Dam 2020 Behind Schedule R 1,000 million DWALower Mkomazi Bulk Water Supply Scheme 2019 Behind Schedule R 500 million UWUpper Mvoti Bulk Water Supply Scheme: Mvoti-Poort Dam 2025 On Schedule R 500 million DWAUmgeni Water will continue to manage its existing resource supplies with the utmost diligence. In addition,Umgeni Water is investigating alternative sources to assist with meeting the long-term water requirements of theregion, including:• A detailed feasibility investigation of two large-scale seawater desalination plants for the eThekwiniregion;• Continuation of the reuse investigation at the Darvill Wastewater Works;• Participation in eThekwini Metropolitan Municipality’s reuse investigation with the intention ofcombining the two reuse projects into one regional initiative.Further initiatives are described in the water conservation and demand management plan later in this businessplan.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 33

Chapter| Water Resources7.4.1 Mgeni System: Planned Developments and ShortfallsPhase 2 of the Mooi-Mgeni Transfer Scheme: Spring Grove DamThe Mooi-Mgeni River Transfer Scheme (MMTS) was intended for phased implementation in accordance withgrowth needs. Phase 1 of this scheme (MMTS-1) was commissioned in 2003 and comprised the new Mearns Weiron the Mooi River, the raising of Midmar Dam, the provision of a standby pump for the existing Mearn’s PumpingStation and the registration of a servitude of aqueduct along sections of the Mpofana, Lions and Mgeni rivers.Phase 2 of this scheme (MMTS-2) comprises the proposed Spring Grove Dam (full supply capacity of 141.6 millioncubic metres) on the Mooi River, a new pumping station at Spring Grove Dam and a new pipeline to transfer waterdirectly into the Mpofana River, which is within the Mgeni catchment. The overall transfer capacity of the MMTSwill then be increased to its ultimate rate of 4.5 cubic metres per second.Over the past few years water demands from the Mgeni System have continued to grow, with this past financialyear showing a decreased growth rate from the previous year (refer to Figure 7.1). The current financial year isexpected to show a further decline in growth rate with an increase in the years thereafter. Figure 7.1 indicates thatdemands have already exceeded the 99% assurance of supply level that will be achieved with the commissioningof MMTS-2, and even further augmentation of the Mgeni System is already needed.At the end of 2007 the Minister of Water and Environmental Affairs instructed the Trans-Caledon-Tunnel-Authority (TCTA) to implement the MMTS-2 project as quickly as possible in order to augment the existing systemand reduce the risk of possible future restrictions. Construction of the dam is scheduled to begin in the first half of2011. At this stage construction is scheduled to be completed in September 2012 with the first water delivered inApril 2013. However, the construction of water supply pipeline from the dam, which will maximise the transfercapacity from the dam, has been delayed due to an appeal against the environmental record of decision. It appearsthat the completion of this pipeline is now likely to only occur a year or two after the dam completion.Phase 1 of the Mkomazi Water Project: Smithfield DamIt is evident from current and projected water demand trends (refer to Figure 7.1), that the planning of the nextmajor water resource development, the Mkomazi Water Project, to support the Mgeni system urgently needs tobe brought to a stage of implementation. Without this augmentation of the Mgeni system, Umgeni Water will beunable to ensure that future water demands can be met timeously and at the appropriate level of assurance.Therefore, there is now a need for DWA to move beyond the findings of the 1998 pre-feasibility study of thisscheme and initiate a detailed feasibility level investigation into this augmentation option.It is anticipated that DWA will initiate a detailed feasibility investigation of the raw water component of thisscheme during the first half of 2011. Umgeni Water has undertaken to complete concurrent detailed feasibilitylevel investigations into the associated potable water component. It is envisaged that these investigations willproceed simultaneously and in an integrated manner, and the environmental impact assessment of the entireproject conducted as a single co-funded investigation.Page 34 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Water Resources ChapterFigure 7.1: Long-Term Water Demand Projection for the Mgeni SystemLong-Term Water Demand Projection for the Mgeni SystemWater Demand (million cubic metres per annum)6506005505004504003503002501994/951996/971998/992000/01Current 99% Assurance Level (Mooi-Mgeni Transfer Scheme Phase 1)99% Assurance Level (Mooi-Mgeni Transfer Scheme Phase 2 - Spring Grove Dam)Actual SalesProjected Sales (revised 2011)2002/032004/052006/072008/092010/112012/132014/152016/172018/192020/212022/232024/252026/272028/292030/312032/332034/352036/372038/392040/41Sikoto DamCommunities within the Ozwathini area are currently supplied with water from a number of boreholes that areproving to be unsustainable. The long-term solution that has been proposed by Umgeni Water for this region is toextend the existing Wartburg pipeline to also serve this region. However, current levels of water demand in thearea do no yet warrant the implementation of this project, and a medium to long-term solution has beendeveloped.The proposed Ozwathini Bulk Water Supply Scheme project is located in the uMgungundlovu and iLembe DistrictMunicipalities. The scheme will consist of a 5.5 million cubic metre dam on the Sikoto River (a tributary of theMvoti River), a raw water pump station and rising main to a 6,000 cubic metre per day water treatment works anda further pump station and rising main to supply potable water to the existing Nondobula Reservoir. Potablewater can be reticulated through existing networks to the various communities within Ozwathini.7.4.2 North Coast System: Planned Developments and ShortfallsWater demand in the North Coast region - the coastal strip between Veralum, to the north of Durban, and thetown of KwaDukuza - has risen over the past few years and is expected to continue to grow in the future (refer toFigure 7.2). The drop in demand for the 2008/2009 financial year was as a result of a load shift from theHazelmere Water Treatment Works onto the Durban Heights Water Treatment Works, and not due to a drop indemand in the North Coast area.DWA recently commissioned the KwaZulu-Natal Coastal Metropolitan Areas Water Reconciliation StrategyStudy, which amongst other things, considered strategies for augmenting the North Coast water supplies. Theaugmentation options included:• Raising of Hazelmere Dam,• Implementing the Lower Thukela Bulk Water Supply Scheme (BWSS), and• Building a new dam on the Mvoti River (either the Welverdient Dam or Isithundu Dam).Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 35

Chapter| Water ResourcesRaising of Hazelmere DamRaising the full supply level of Hazelmere Dam by seven metres to increase the firm yield of the resource toapproximately 27.3 million cubic metres per annum (at a 98 % level of assurance), is found to be the most costeffective and quickest option of augmenting the water supply to the North Coast region.The environmental record of decision for this project has already been issued. DWA is currently busy with theexpropriation and design procedures for this project, which needs to be completed by the beginning of the wetseason of 2012 to ensure that the additional water will be available early in 2013 when the upgrade to theassociated bulk water supply infrastructure is scheduled to be completed by Umgeni Water.Figure 7.2: Long-Term Water Demand Projection for the Hazelmere (Mdloti) SystemLong-Term Water Demand Projection for the Hazelmere SystemExisting Yield Available (no reserve)Raised Yield Available (no reserve)Actual UsageProjected UsageWater Demand (million cubic metres per annum)7060504030201001997/981999/002001/022003/042005/062007/082009/102011/122013/142015/162017/182019/202021/222023/242025/262027/282029/302031/322033/342035/36Lower Thukela Bulk Water Supply SchemeFollowing the raising of the Hazelmere Dam, the Lower Thukela Bulk Water Supply Scheme is the most practicaland cost-effective scheme to implement to supply additional water to the area. This scheme will be required toaugment the water supplies of the Mdloti System, as the raising of Hazelmere Dam on its own will not providesufficient resources to supply this area in the medium term. The Lower Thukela Bulk Water Supply Scheme willdraw water from the Thukela River and will not require raw water storage. Umgeni Water is in the process ofconcluding a detailed feasibility investigation and preliminary design of this scheme. Detailed design is expectedto commence later in 2011.Mvutshane DamCommunities in the largely rural areas inland from the North Coast region - areas bounded by the Thukela andMvoti rivers and extending from Greytown in the west to Maphumulo in the east - currently receive water fromboreholes or small stand-alone surface water supply schemes. Many communities in this area receive a sub-RDPstandard level of service.Umgeni Water has implemented the Ngcebo Bulk Water Supply Scheme that draws water from the Thukela Riverto supply potable water to some of these communities. Furthermore, Umgeni Water is in the process ofPage 36 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Water Resources Chapterconstructing Phase 1 of the Maphumulo Bulk Water Supply Scheme (BWSS) to supply the communities ofMaphumulo, Maqumbi and Ashville. This scheme will initially draw water directly from the Mvutshane River,which is a tributary of the Hlambitwa River, which in turn is a tributary of the Mvoti River. Phase 2 of this schemeentails the construction of a dam on the Mvutshane River to replace the run-of-river abstraction system. This willincrease the yield from the scheme and ensure a more sustainable supply. The detailed design of this dam iscurrently underway and construction is expected to commence in 2012. A possible later extension to this scheme isto augment the Mvutshane Dam from the Hlambitwa River.Upper Mvoti Bulk Water Supply Scheme: Mvoti-Poort DamIn the long-term the intention is to consolidate the various schemes in the area inland from the North Coast region(areas bounded by the uThukela and Mvoti rivers and extending from Greytown in the west to Maphumulo in theeast) ,as well as incorporate other communities that fall outside of the current supply areas. This can be achievedthrough the development of a regional bulk water supply scheme that is able to meet the potable water needs ofthe region on a long-term sustainable basis. This regional scheme will best be supported by a water resourcedevelopment on the upper Mvoti River. Investigations conducted by DWA in the past have shown that a smalldam at the previously identified Mvoti–Poort dam site would be a possible solution. Umgeni Water has thereforerequested DWA to undertake appropriate water resource investigations linked to developing a dam at the Mvoti-Poort site or at another suitable site in its vicinity. It is envisaged that the water resource development andtransfer infrastructure development investigations will proceed in a concurrent and integrated manner.Lower Mvoti Bulk Water Supply Scheme: Welverdient DamDWA and Umgeni Water conducted numerous water resource and supply infrastructure investigations of the lowerMvoti River catchment during the latter half of the 1990s. At the time, the proposed Isithundu Dam (serving bothirrigation and potable water demands) with a downstream abstraction works located near the town of KwaDukuzawas identified as being the preferred infrastructure development configuration. However, a number of criticalassumptions have since changed. Most significantly, legislative changes governing national raw water pricing hasled to the irrigation sector withdrawing from the proposed scheme on affordability grounds. The implication isthat storage options serving only the potable water sector now need to be considered.Umgeni Water has therefore requested DWA to urgently re-institute investigations to review the findings of theprevious investigations and develop detailed feasibility plans for the next phase of water resource augmentationfor the North Coast System – most likely to be the proposed Welverdient Dam option. Umgeni Water willundertake concurrent detailed feasibility level investigations into the associated bulk water transfer infrastructure.It is envisaged that both investigations will proceed simultaneously and in an integrated manner.7.4.3 South Coast System: Planned Developments and ShortfallsThe water resources that support the Middle South Coast area lack substantial storage capacity, making themespecially susceptible during periods of drought as witnessed during the latter part of 2010. While theinfrastructure linkages between the Umzinto, Mtwalume and Craigieburn water treatment works’ were able toalleviate localised supply shortages for short periods, they were not able to sustain supply over longer periods andwater restrictions were often required.Several localised solutions were investigated, including an assessment by DWA of the feasibility of a low-level weiron the Mtwalume River to improve abstractions at this point during low flow periods. These minor water resourcedevelopments only solve the problem in the short-term. As with the North Coast area, the Middle South Coastarea is experiencing strong growth in water demand, driven by economic growth in the region, and it is envisagedthat a major water resource development and/or inter-basin transfers will be required to provide a long-termsolution to water scarcity in the area.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 37

Chapter| Water ResourcesLower Mkomazi Bulk Water Supply SchemeUmgeni Water has commissioned Phase 1 of its South Coast Pipeline that transfers potable water from the MgeniSystem to the Upper and Middle South Coast areas. It is recognised that the Mgeni System has insufficientresources to support this region in the medium to long-term and that a local sustainable long-term scheme needsto be developed to replace it. The Mkomazi River is best suited for this purpose. Umgeni Water intends initiating adetailed feasibility investigation of the Lower Mkomazi Bulk Water Supply scheme, which will abstract water fromthe lower reaches of the Mkomazi River for treatment to feed into the South Coast Pipeline.The availability of a local sustainable source will then allow the extension of this pipeline (Phase 2) furthersouthwards to increase the area of supply and enable a linkage to other supply systems in the south. It is unknownat this stage whether storage will be required. The initiation of this investigation can only proceed once the resultsfrom the hydrological study that forms part of DWA’s Mkomazi Water Project Detailed Feasibility Study areavailable.Mhlabatshane Bulk Water Supply SchemeUmgeni Water is currently constructing the Mhlabatshane Bulk Water Supply Scheme as part of a larger regionalscheme development by Ugu District Municipality aimed at reducing water services backlogs in certain rural areasin the Mzumbe and Hibiscus Coast Local Municipalities. This scheme is situated within the Lower South Coast Sub-Region. Ugu District Municipality is responsible for the reticulation component of the scheme, which in itsentirety, is planned to serve an estimated 101,000 people (approximately 15,300 households) of which about halfare currently classified as having a water service backlog.The bulk component of the scheme will initially comprise of a dam on the Mhlabatshane River (a tributary of theMzumbe River), from where water will be pumped to a water treatment works situated in close proximity to thecommand reservoir. Potable water will then be supplied to Ugu District Municipality from the command reservoirfor reticulation through an extensive gravity-fed network to the various communities in the area. Some of thereticulation component currently exists as stand-alone schemes, with the remainder still to be installed.When water demands from this scheme exceed the firm yield of the dam, the intention is to develop the secondphase of the project. Water will be abstracted directly from the Mzimkhulu River, pumped to the existing watertreatment works (which will need to be upgraded) and then fed into the reticulation system via the commandreservoir.7.4.4 Alternate Resource OptionsWastewater ReuseUmgeni Water is currently investigating the option of treating domestic sewage from its Darvill WastewaterTreatment Works to potable standards. The proposal is to return the treated water back into the distributionsystem at Umlaas Road. The water can then be used to augment the supply to the Western Aqueduct which willserve the high growth areas along the western corridor of the eThekwini Metropolitan Municipality. Theadvantage of this is that water is made available higher up in the system and can therefore be supplied usinggravity.Seawater DesalinationUmgeni Water has recently completed a large-scale desalination pre-feasibility study. The objective of this studywas to investigate the viability of constructing a large scale desalination plant in the eThekwini area as a possiblealternative to the proposed Mkomazi Water Project.A detailed feasibility study has now been initiated by Umgeni water with a revised approach. The detailedfeasibility investigation is considering the option of a 150,000 cubic metres per day plant on both the North CoastPage 38 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Water ResourcesChapterandSouthCoast.Thecapacityof these plants is based on the capacityy off existing andproposedbulk water supplyinfrastructurein these areas, which will be utilisedto conveyy the potablewater fromm the desalination plants to thevariousdistribution poinnts. eThekwini MetropolitanMunicipality,and Uguu District Municipality,andtoo a lesserextent iLembee District MunMicipality, willbe thebeneficiariesof thisproject.Discussionss aree currentlyy underway withvarious stakeholders inn orderto finalisethee mostsuitable locations for thedesalination plants.Thereafter,detailed technical andd environmentalinvestigations of the t inlet,outfall andconnectionn pipelines,energy requirements will be conducted.7. .4.55Assessingthe impacts of climatee changeonn water resourcesUmgeniWater has beenn researchingg the risk of a changingg climatesince 2007and developedd a waterplanningframeworkk to includethe possiblee impacts of a changingclimate inwaterr planningandd management.Simulationsfromm 10GeneralCirculation Modelshavebeen addedto a dailyhydrological model to simusulate future waterresourcescenarios in a changing climate. Thesee scenarioss havebeen usedd in a water resources simulation modeltodetermine thepotentialimpactonn waterr yield andsecurity inn the Mgeni catchment, Southh Africa.Resultsindicate a decreasein streamfloww of about 10%in the immediatee planningg horizon (201(11 – 2030),, with anincreasee in thee intermediatee (2046-2065)) and distant futuress (2081-2100). Figure7.33 shows watewer yield(in red) andthe predicted water demmand for the immediatee planningfuture(in blue) for Midmarr Dam,without considerationofthe potential effectsof a changing climate. The possible climatechange scenarios for theplanningfuturehavebeenn appliedto theyear 2030, andasummarisedd ass percentiles(in black). Asann indication,thee median(50thpercentile)predictioncorrespondss too a possible 15%(ca. 700 Ml/day) increase inwaterr availability over and abovethe yieldwithoutclimate change,by thee year 2030. Although not shown,thee 35thpercentilee wouldd correspondtothe projecteddemand, suggestingg a ca. 65%chanceof a climate changee inducedyield being ableto meet futuredemands for water fromm Midmar DamDm.Figuure 7.3:Waterr Yield,Predictedd DemandandClimate Changee Scenarios.Themost up-to-datesciencehass beenused in thisassessment.However,, the discipline of o performingg impactstudies,such as water resources, basbed on scennariosof futufure climates iss relativelyy new. Thereare also numerouscomplexities thatt are associatedwith modellingthee naturalclimate – waterprocesses, resurulting in increaseduncertainty. The confidencee levelss in theresultss of such studiesare thereforepossibly lessthan ideal.Future 5-yeear planThere are severalimprovements thatcann bemadeto themodellingprocess.At theheart of these improvementsisthe inclusion of newscientificdevelopments especially withh regards to modellingof futureclimates suchh ass newimproved modelss to ensuree thatpredictedrainfall andpotentialevaporation are moreadequately represented.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201639Page 3

Chapter| Water ResoRourcessSeveralotherimprovementsaree beingg consideredincludingg identifyingpotentialimpactson waterquality,including feedbacksof impactsoff climate changeon futurelanduse and a waterdemands,, and extending theyieldmodelling to the entire Umgeni catchmentandd possiblyother keywatersourcecatchments.Theseimprovementsshould greaatly reduceuncertaintyandd enhancethee credibility off thewater planningg process at a UmgeniWater.7.5Managementt ArrangementsUmgeniWaterr operatess thee majorityy of thewaterr resourcess infrastructure itt uses on behalfof theDepartmentofWater Affairs (asper Table7.1) ). This T is currently undertakenn witha signed agencyagreement thatUmgeni Waterconcluded withh DWAin 2011.Pagee 40Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| BulkPotable WaterSupply PlanChapterChapter 8.BulkPotableWatWterSupplyPlann8.1Supplyy CappacityBulk watertreatment workwks designcapacity is shown in i FiguFure 8.11 and percent andutilisationn in Figuree 8. .2.Some of the smaller watter treatmentt worksaree requiredto be operated above their design capacityy in responsetocustomer demands.Figure8.1: Water TreatmentWorksDesignn Capacity.Water Treatment WorksDesign Capacity(cubicmetres perr day)Wiggins,350 000Midmmar ,250 0000DurbanHeights614 000Ogunjini, 1 0000Maphephethwa,1 130DV Harris, 110000Hazelmere,45 000Amanzimtoti,240000Mzinto, 120000Mtwalume,7 500Ixopo, 2 2000Figure 8.2: WaterTreatment WorkWks Capacityy Utilisation.WaterTreatmentWorks Utilisationas at 31 December 20100100.0%79.3% %73.4% %83.3%85.5%95.7% %73.2% %69.3%123.5%107.0%168.8%133.0%0.0% %8.2Condition ofWaterTreatmentWorksRegularmaintenanceand inspections are undertakenn onn all assets ass part of on-going systemoperations. Theseconsistof plannedd maintenance whicwch includess preventativee maintenance, repair,redesign andamodification, andunplanned,reactive,andd corrective maintenance.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201641Page 4

Chapter| Bulk Potable Water Supply PlanFurthermore, condition assessments of the various components (i.e. mechanical, electrical, civil, and instruments)of the assets are carried out using a ranking system to grade the condition of assets.As a result of these programmes, the condition status of water and wastewater treatment works has beenestablished.The asset management policy is used to set the appropriate lives of the assets. Unless the level of service orperformance of the system require otherwise, the policy of Umgeni Water at present is to replace the assets whenthe asset has deteriorated to a level that is unserviceable. Identifying this moment and the associated failure modeof the asset is critical to both maintenance and strategic decision making for the assets.Based on the condition status of Umgeni Water’s infrastructure, there is comfort that there would be no majorinterruptions to the business of Umgeni Water for the next five years and beyond.8.3 Water Quality Produced (relative to SANS 241)All major water treatment works achieved 100% compliance with physical, chemical and microbiologicalrequirements in the previous year (Table 8.2).Table 8.2: Potable Water Quality Compliance with SANS 241:2006 per Water Treatment Works at 30 June 2010.Water Treatment Works Per cent Total TreatedPer cent Compliance with SANS 241:2006VolumeChemicalMicrobiologicalDurban Heights 43.2 100.0 100.0Wiggins 23.0 100.0 100.0Midmar 19.9 100.0 100.0DV Harris 5.2 100.0 100.0Hazelmere 3.5 100.0 100.0Amanzimtoti 1.4 100.0 100.0Mvoti 1.0 99.1 100.0Mzinto 0.9 100.0 98.1Mtwalume 0.8 100.0 100.0Ixopo 0.2 100.0 100.0Ogunjini 0.1 100.0 100.0For works experiencing compliance problems due to infrastructure constraints, Umgeni Water will assure productquality through identified infrastructure maintenance, upgrade, and refurbishment or development plans, asdescribed further in this chapter. The organisation will also continue to monitor and manage water quality toensure that product quality is achieved as per the following programmes:Monitoring programmes are to be reviewed each year in accordance with: legislative requirements, customer bulksupply agreements, process requirements, and to ensure that previously identified water quality risks in thesystem can be mitigated. Sampling and analyses will be undertaken in accordance with Umgeni Water’s ISO 9001certified monitoring programme and SANAS 17025 accredited laboratory, respectively. The SANS 241: 2006Drinking Water Specification, and as updated, will be the compliance standard used.Umgeni Water will manage water quality through its water quality management system, which includes alert leveltriggers and incident management protocols. Water quality risk assessments associated with abstraction,conveyance, treatment and distribution systems will be reviewed and the effectiveness of control measuresassessed.Page 42 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| BulkPotable Waterr Supply PlanChapterWater qualityperformancedata, infoiormation andreports will be disseminated to all stakeholders as per statsutoryrequirements andd bulk supply agreements.UmgeniWater will alsocontinueto provideassistance to t its customersto ensurethat customer systems can beprogressively improved andd blue dropdp certificationachieved.Water qualityassessmentswill alsobe undertaken forproposedwatertreatment infrastructuredevelopments.This,in partnership withh DWA,will include rawwatermonitoring, assessment of water quality risks, predictionsofimpoundedd quality, andrecommendations fordesignof abstraction, conveyance and water treatatmentto mitigateany identifiedwater qualityy risk.8.448.4.11Demandoff Majorr Consumerss by SchhemePotablee Water QuantityDemandFigure 8.3showscurrent populationdensitiesandd itss spatial distributionn withinthe water serviceauthorityareassuppliedbyy Umgeni Watter. Umgeni Water’scurrent supply ‘footprint’is overlainonto this.UmgeniWaterr continues too develop water sales volume projpjections in consultationwith its majoor consumers.Thisiss undertakenannuallyto enableUmgeni Watter to projectt revenuess and futurecapitall expenditure. For F areaswithin the existingg supply ‘footprint’ area, the bulkk waterr supplyy agreementss require the water servicesauthoritiestoo provideUmgeni Wateer withprojectedd demandss at sett intervalsfor each sales point, basedd onn expectedd growthoverthecontractperiod. The twoo majorr urbann areas,, the eThekwini MetropolitanMunicipalityandd the MsuMnduziLocal Municipality,currentlyaccountfor approximatelyy 91 % off thewatersuppliedbyy Umgenii Water.Consequently,they remainthemain driversof demand within Umgeni Water’s operational area.Descriptions of UmgeniWater’’s overall short and long-termsales forecast are providedd inn thee section thatt follows,as wellas forthee Wateer ServiceAuthorities currently servsed by thee organisation. These forecasts apply to thecurrentsupplyy ‘footprint’ area.Figure8.3: Umgeni Water’s ExistingSupplyy ‘Footprint’Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201643Page 4

Chapter| Bulk Potable Water Supply PlanUmgeni Water Short-Term Bulk Sales ForecastThe projected sales volumes are shown in Figure 8.4. In September 2010 the short-term bulk water sales forecastfor 2010/2011 was revised downward from 1 167 million cubic metres per day to 1 136 million cubic metres per day(Figure 8.4) based on recent discussions with major customers and on the developing trend in the organisation’sbulk water sales. This value is a consolidation of individual customer forecasts and is primarily shaped by theforecast provided by Umgeni Water’s major customer, eThekwini Metropolitan Municipality. The forecastrepresents a negative year-on-year growth of 2.65 %, which is a significant change from the positive growth of2.38 % that was achieved in the previous year. A smaller negative growth of 0.16% is forecast for 2011/2012 toreach a sales volume of 1 134 million cubic metres per day. This value is again primarily determined by the forecastprovided by eThekwini Metropolitan Municipality.Umgeni Water Long-Term Bulk Sales ForecastThe 30-year long term sales forecast for Umgeni Water’s entire supply area has been developed using long-termgrowth rates agreed upon between Umgeni Water and its major customers. The base projection was developedfrom the short-term forecasts and then extended at a compounded 1.5% growth rate until 2040/2041. This growthrate is considered acceptable for this long-term forecast as it closely matches the forecast that was independentlyderived as part of the “Water Reconciliation Strategy Study for the KwaZulu-Natal Coastal Metropolitan Areas”completed by the Department of Water Affairs, using a population projection technique.Figure 8.5 depicts this long-term sales projection together with 1 % and 2 % growth rate scenarios for comparison.The drop in sales in 2016/2017 and 2017/2018, as shown in Figure 8.5, is as a result of the anticipatedcommissioning by eThekwini Metropolitan Municipality of its Northern and KwaMashu wastewater re-use plantswhich are planned to produce 51 000 cubic metres per day and 65 000 cubic metres per day respectively. Theseplants intend to feed potable water directly into the municipality’s bulk supply network, thereby reducing therequirement from Umgeni Water.The long-term sales projections, present an average view and fluctuations around the mean values can besubstantial, giving rise to localised infrastructure or water resources constraints. Sales are monitored on a regularbasis to assess actual demand patterns.Page 44 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Bulk Potable Water Supply Plan ChapterFigure 8.4: Umgeni Water’s Historic and Projected Total Sales VolumesUmgeni Water Historic and Projected Sales Volumes2007 Projection 2008 Projection2009 Projection 2010 ProjectionActual UW Sales1 250Demand (thousand cubic metre per day)1 2001 1501 1001 050116711401136113411062007/8 2008/9 2009/10 2010/11 2011/12Financial YearFigure 8.5: Long-Term Water Sales Projections, 2040/2041Long-Term Water Sales ProjectionsActual Total UW SalesProjected Total UW SalesLow Scenario (1% growth)High Scenario (2% growth)Average Daily Sales (thousand cubic metre per day)2 0001 8001 6001 4001 2001 0008002006/072008/092010/112012/132014/152016/172018/192020/212022/232024/252026/272028/292030/312032/332034/352036/372038/392040/41Financial YearUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 45

Chapter| Bulk Potable Water Supply PlaneThekwini Metropolitan Municipality: Short-Term Bulk Sales ForecastIn 2008 and 2009 the year-on-year growth in sales to eThekwini Metropolitan Municipality increased by as muchas 5%. This growth has reduced to approximately 1% over the past year and the reduction in growth has beenmainly attributed to the municipality’s water demand management initiatives.The eThekwini Metropolitan Municipality is currently implementing an intensive water demand managementprogramme, which includes pressure management and active leakage control, in order to reduce its non-revenuewater. This programme has started to have a marked impact on its water purchases from Umgeni Water, startingin the 2010/2011 financial year.Over the next two years growth is still expected to occur in the northern eThekwini area. This expected growth canbe ascribed to the proposed development of formal housing projects and to the industrial development of theDube Trade Port in the vicinity of the new King Shaka International Airport. The eThekwini MetropolitanMunicipality has, however, predicted that its continuing water demand management initiatives will completelyoffset the expected growth in the northern areas. It is anticipated that the water demand management initiativesin the supply area of the Durban Heights Water Treatment Works and the Wiggins Water Treatment Works willreduce demand. In addition, water demand management initiatives in both the supply areas of the Wiggins WaterTreatment Works and the Umlaas Road supply area are expected to completely offset any potential growth indemand.While it is expected that substantial urban and peri-urban housing growth will continue to occur within theeThekwini area, the implementation programme is currently behind schedule. Therefore the current growth inwater sales in this area is lower than initially expected.Hence, the anticipated growth in bulk water sales to eThekwini Metropolitan Municipality for 2010/2011 and2011/2012 is -4.00 % and -1.04% respectively. This equates to approximately 864 000 cubic metres per day in2010/2011 and 855 000 cubic metres per day in 2011/2012 (refer to Figure 8.6). These forecast values are lowerthan the 0.7 % actual growth achieved by eThekwini in 2009/2010, and the 3.4 % achieved in 2008/2009.Msunduzi Local Municipality: Short-Term Bulk Sales ForecastFigure 8.7 shows the sales trends for the Msunduzi Local Municipality and projections for 2010/11 and 2011/12.The average daily sales, at 30 June 2010, amounted to approximately 160 000 cubic metres per day. Thisrepresents a 3.6% increase in sales from the 155 000 cubic metres per day sold in the previous year. Average dailysales to the Msunduzi Municipality are expected to grow to 164 000 cubic metres per day by 30 June 2011 and to168 000 cubic metres per day by 30 June 2012.uMgungundlovu District Municipality: Short-Term Bulk Sales ForecastThe sales to the uMgungundlovu District Municipality increased by 6% from 28 964 cubic metres per day to 30 737cubic metres per day in the previous financial year. This type of growth is not expected to be maintained for theshort-term forecast period. The sales for 2010/2011 and 2011/2012 are expected to be 30 871 cubic metres per dayand 32 156 cubic metres per day respectively.There are no water loss reduction initiatives currently being undertaken, or planned, that will reduce the growth inwater demand. The growth in water demand in Howick (Mngeni Local Municipality) will increase once thereticulation infrastructure is extended to support proposed new developments west of the N3 freeway. Newhousing developments are also proposed in the uMshwati Local Municipality however, the water demand in thisarea is constrained by the limited capacity of the existing Umgeni Water infrastructure to support furtherdevelopments.Page 46 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Bulk Potable Water Supply Plan ChapterFigure 8.6: Total Daily Sales to eThekwini Metropolitan MunicipalityTotal Daily Sales to eThekwini Metropolitan MunicipalityActual Monthly Sales 12-Month Moving Average Forecast1000950900850800750Oct-05Apr-06Oct-06Apr-07Oct-07Apr-08Oct-08Apr-09Oct-09Apr-10Oct-10Apr-11Oct-11Apr-12Average Daily Sales (thousand cubic metre per day)MonthFigure 8.7: Total Daily Sales to Msunduzi Local MunicipalityTotal Daily Sales to Msunduzi Local Municipality200Actual Monthly Sales 12-Month Moving Average ForecastAverage Daily Sales (thousand cubic metre per day)180160140120100Oct-05Apr-06Oct-06Apr-07Oct-07Apr-08Oct-08Apr-09Oct-09Apr-10Oct-10Apr-11Oct-11Apr-12MonthUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 47

Chapter| Bulk Potable Water Supply PlaniLembe District Municipality: Short-Term Bulk Sales ForecastSales to iLembe District Municipality can be described as follows:• Sales to the Coastal Area of iLembe through Siza Water.• Sales to the Coastal Area of iLembe through iLembe District Municipality.• Sales to iLembe District Municipality through schemes owned by the district municipality and managed byUmgeni Water.Urban and peri-urban growth across Siza Water’s concession area has caused a corresponding increase in waterdemand with the growth for 2009/2010 being 7.1%. Further developments in this area are expected to increase thedemand from 11 400 cubic metres per day to 12 100 cubic metres per day in 2010/2011 and 12 700 cubic metres perday in 2011/2012.The remaining water sales to iLembe District Municipality include:• approximately 8 000 cubic metres per day sales to the coastal areas from Umgeni Water’s Hazelmere WaterTreatment Works;• 16 000 cubic metres per day sales to KwaDukuza (Stanger) from the Mvoti Water Treatment Works. Thisplant is owned by iLembe District Municipality and operated by Umgeni Water; and• 8 000 cubic metres per day sales to 36 inland rural schemes owned by iLembe District Municipality andoperated by Umgeni Water.The iLembe District Municipality is implementing a number of water demand management initiatives within thetown of KwaDukuza (Stanger) and it estimates that savings from these initiatives will offset the growth in sales forthe area. The total sales growth to iLembe District Municipality, over the next two years, is therefore assumed tobe around a zero per cent.Ugu District Municipality: Short-Term Bulk Sales ForecastTotal sales to the Ugu District Municipality increased by 30.78% from 16 490 cubic metres in 2009 to 21 564 cubicmetres in 2010. This steep growth was due to the immediate uptake once the capacity of Mtwalume WaterTreatment Works had been upgraded from 4 500 cubic metres per day to 7 500 cubic metres per day. This growthis not expected to be maintained within the short-term forecast period. The projected growth in sales is expectedto be relatively high, at 5.0% in 2010/2011 and in 2011/2012. This equates to total sales for 2011 and 2012 of 22 643and 23 775 cubic metres respectively.This expected growth is as a result of the Ugu District Municipality’s proposed initiatives towards the reduction ofbacklogs and the rapid growth in water sales in the inland rural areas of the municipality, specifically in the Ifafaand Mathulini areas. There are a number of water loss reduction initiatives currently planned in the Umgeni Watersupply area within the Ugu District Municipality. These are due to be implemented within the next financial year.Sisonke District Municipality: Short-Term Bulk Sales ForecastThe Ixopo Water Treatment Works, which is operated by Umgeni Water supplies the greater Ixopo area. Averagedaily sales from the Water Treatment Works currently amount to 2 460 cubic metres per day, having increased at arate of 7% year-on-year. It is projected that sales from the Water Treatment Works will remain at 2 460 cubicmetres per day in 2010/11 and grow to 2 510 cubic metres per day in 2011/12.Page 48 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

8.4.2 Bulk Water Supply Infrastructure Constraints and Requirements| Bulk Potable Water Supply Plan ChapterThis section describes the more significant constraints within Umgeni Water’s existing bulk supply infrastructureand the proposed infrastructure development plans to overcome these constraints and provide the additionalcapacity required for further expansion of the existing supply ‘footprint’ area. The proposed water supplyinfrastructure links directly to the proposed water resource infrastructure discussed in Chapter 7.Inland RegionOver recent years the eThekwini Metropolitan Municipality has put considerable effort into optimising theoperation of its distribution systems that are served by the Lower Mgeni System. Amongst other things, this hasled to the municipality implementing new infrastructure in order to undertake a significant load shifting exercise.The municipality’s western aqueduct development, which is expected to be fully commissioned in mid-2013, willrepresent the most significant of these load-shifting operations. The intention is for those areas currently beingserved under pumping from the Lower Mgeni System (namely, from Durban Heights Water Treatment Works) tobe transferred onto the Upper Mgeni System, to be served under gravity from Midmar Water Treatment Works viathe western aqueduct. Further to this, eThekwini Metropolitan Municipality plans to link the western aqueduct toits northern aqueduct thereby extending this supply to the municipality’s northern areas as far as the Dube TradePort development zone. Whilst this measure will free up additional capacity within the Lower Mgeni System thatcan be redirected elsewhere within the Municipality, it places considerable additional load on much of UmgeniWater’s infrastructure in the Upper Mgeni System, including the ’57, ’61 and ‘251 Pipeline systems, Midmar WaterTreatment Works, and ultimately on the water resources available from Midmar Dam. The recent augmentation ofthe ’57 Pipeline by Umgeni Water was undertaken in order to provide sufficient capacity in this portion of thesupply network to meet the required demands of the western aqueduct.Once Phase 2 of the Mooi-Mgeni Transfer Scheme (MMTS-2) has been commissioned in 2013, the 99% assuredyield of the Mgeni System at Midmar Dam will increase from 322 500 cubic metres per day to 476 200 cubic metresper day. However, even an increased yield at Midmar Dam will be insufficient to support the imposition of theproposed full Western Aqueduct load shift for any significant period of time, and further water resourcedevelopments will be required. One water resource option that is to be investigated by DWA is the MkomaziWater Project which would transfer raw water from the Mkomazi River to a Water Treatment Works in theadjacent catchment, with potable water then being supplied to the Umlaas Road area to feed into the ’57 Pipelineand subsequently into the western aqueduct. The Mkomazi Water Project is currently only entering the detailedfeasibility investigation stage and therefore the very earliest that it is envisaged that the scheme could becompleted and operational is 2024. Refer to discussion in Chapter 7 of this Business Plan.With Midmar Dam’s yield then being fixed after MMTS-2, it is deemed prudent that all future bulk distributioninfrastructure upgrades within the Upper Mgeni System (Midmar Water Treatment Works - Umlaas Road) belimited to the water resources capacity that Midmar Dam can support (bearing in mind that Midmar Dam mustalso contribute to the water resource requirements downstream of it). Hence, the water available to meetdemands downstream of Umlaas Road Reservoir is limited until such time as the Mkomazi Water Project iscommissioned. Further to this, the available water will decrease over time as the demands upstream of the UmlaasRoad Reservoir increase.In order to meet the anticipated load shift in demand by eThekwini Metropolitan Municipality from the LowerMgeni System to the Upper Mgeni System, the following Umgeni Water infrastructure projects will be required:• Upgrade of Midmar Water Treatment Works;• Augmentation of the ’61 Pipeline from ED2 to Umlaas Road together with an upgrade of the Umlaas RoadReservoir.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 49

Chapter| Bulk Potable Water Supply PlanOther major infrastructure augmentations that will be required over the next 30 years in the inland area to overcapacity constraints include:• Augment the ’69 Pipeline (Claridge to Wartburg) and increase the capacity of Wartburg Reservoir. TheWartburg Pump Station will also need to be upgraded;• Upgrade the Bruyns Hill Pumps Station, replace the pipeline from Bryns Hill Pump Station to the Bryns HillReservoir, and increase the capacity of the Bruyns Hill Reservoir.Central RegionDue to a water resource constraint at Nugwane Dam and the limited capacity of Amanzimtoti Water TreatmentWorks, it is necessary to augment the supply to areas downstream of the Amanzimtoti Water Treatment Workswith potable water from Wiggins Water Treatment Works via the South Coast Augmentation Pipeline, until suchtime as a new regional bulk water supply system is developed on the lower reaches of the Mkomazi River (refer toChapter 7). In the interim, the Wiggins Water Treatment Works sub-system should have sufficient treatment anddistribution capacity to meet the long-term demands of Amanzimtoti and the South Coast Pipeline.Hydraulic analysis has confirmed that the existing South Coast Augmentation Pipeline has adequate capacity tomeet current and projected demands up to the year 2020, provided that a new in-line booster pump station isinstalled along the South Coast Augmentation Pipeline to replace the existing Umlazi Pump Station. UmgeniWater is in the process of constructing a new South Coast Augmentation Booster Pump Station to address thisconstraint. This will serve as a medium-term infrastructure development strategy to meet current and projecteddemands off the South Coast Augmentation Pipeline up to the year 2021.South Coast RegionThe main issue that needs to be addressed in this region is the continued reliance on the already stressed LowerMgeni System as the primary water source for this region, supplied from Inanda Dam via the Wiggins WaterTreatment Works along the South Coast Augmentation Pipeline to the Amanzimtoti Water Treatment Works.The Amanzimtoti Water Treatment Works will need to continue to operate together with the South CoastAugmentation Pipeline in order to meet demands until a long-term solution is in place.Umzinto Water Treatment Works has experienced significant changes in its year-on-year growth rates over thepast four years, with the year-on-year growth rate in June 2010 being in excess of 12.3% and then dropping to 1.3%by October 2010. This was attributed to the Middle South Coast Region experiencing very little rainfall. Theprevailing dry weather conditions throughout the area had a major impact on the storage levels of the Umzintoand the E J Smith dams.Umgeni Water is currently in the process of implementing Phase 2a of the South Coast Pipeline (SCP-2a), whichwill relieve the demand off Umzinto Water Treatment Works by approximately 4 500 cubic metres per day. Thiswill allow the relieved capacity to be utilised for growth further inland. In addition, Umgeni Water is alsoimplementing a new link from Scottburgh South Reservoir, via Ellingham Reservoir, to Umzinto Water TreatmentWorks to mitigate the risk of non-supply during dry periods and to meet future increases in water demand fromthe Umzinto Water Treatment Works. This project will provide an additional 4 500 cubic metres per day toaugment the supply from the Umzinto Water Treatment Works.The demand in the area immediately south of Mtwalume, under the jurisdiction of Ugu District Municipality, hasrecently increased significantly. This has placed excessive stress on the Mtwalume Water Treatment Works andsubsequently on the Umzinto Water Treatment Works, which supplements the Mtwalume Water TreatmentWorks via the pipeline linking the Bazley Reservoir to the Elysium Reservoir supply zonePage 50 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Bulk Potable Water Supply Plan ChapterThe development plan for the Upper and Middle South Coast regions is outlined below. This plan utilises theavailable resources from the Lower Mgeni, Nungwane, Mkomazi, Mzimayi, Mzinto and Mtwalume systems in themost sustainable and cost effective manner.• Water from the South Coast Augmentation Pipeline is only expected to be available at theAmanzimoti Water Treatment Works, in ever reducing amounts, until 2020. Therefore, theAmanzimtoti Water Treatment Works will need to remain operational in the short to medium-term.• Complete the construction and commissioning of the South Coast Augmentation Booster PumpStation to ensure that the maximum capacity is achievable through the South Coast AugmentationPipeline .• Rehabilitation and/or replacement of the pipeline from Nungwane Dam to the Amanzimtoti WaterTreatment Works will need to be undertaken.• The long-term strategy is to develop a regional bulk water supply scheme that will receive raw waterfrom the lower Mkomazi River for treatment and distribution into the South Coast Pipeline. Potablewater would be fed northwards to the Upper South Coast region and Amanzimtoti, and southwards tothe Middle South Coast region.• The South Coast Pipeline is to be extended southwards in two phases. The South Coast Pipeline Phase2a project (SCP-2a), is to be implemented towards the end of 2011. This project will provide somerelief for the Umzinto and Mtwalume Water Treatment Workss. The South Coast Phase 2b project willtie into the end of SCP-2a and will link to the Ugu District Municipality supply system from theMzimkhulu River to add a measure of flexibility and a contingency for drought situations in eithersystem. The timing of SCP-2b is dependent on the development of the regional BWS on the lowerMkomazi River.• The Umzinto Water Treatment Works will continue to function in order to supply potable water tocommunities in the adjacent inland areas of Ugu District Municipality.• To augment the supply from Umzinto Water Treatment Works, especially during low rainfall periodsas experienced during the period from March 2010 to October 2010, the supply to Umzinto WaterTreatment Works must be supplemented from the South Coast pipeline via Scottburgh South andEllingham reservoirs.North Coast RegionThe primary source of potable water supplied to the North Coast Supply System (NCSS) is from the 45 000 cubicmetres per day Hazelmere Water Treatment Works. With the current demand regularly exceeding the capacity ofthe plant, the operation of the plant is difficult and routine maintenance on components of the plant is nearimpossible. The comparatively high supply from the Water Treatment Works when compared to the plant capacityand the expected increase in future demand has necessitated the upgrading the Water Treatment Works from45 000 cubic metres per day to 75 000 cubic metres per day (98% assured yield of the raised Hazelmere Dam).The town of KwaDukuza is supplied from the Mvoti Water Treatment Works via the Mvoti Balancing Reservoirs.The average demand placed on the Water Treatment Works over the past year was 16 950 cubic metres per day.The design capacity of the Water Treatment Works was 12 500 cubic metres per day.The strategic development 30-year plan for the region, that would utilise the available resources from theHazelmere, Thukela and Mvoti systems (as discussed in Chapter 7) in the most sustainable and cost effectivemanner, is presented below.• DWA to raise the full supply level of Hazelmere Dam to increase its firm yield and Umgeni Water to upgradethe Hazelmere Water Treatment Works to supply up to 75 000 cubic metres per day to the NCSS. Inaddition to the upgrade of the Water Treatment Works, pump stations and pipelines within the NCSS willhave to be augmented to ensure the demand placed on the system does not exceed the capacity of theinfrastructure. Pipelines that are constructed as part of this augmentation process will be built with theUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 51

Chapter| Bulk Potable Water Supply Planability to allow for bi-directional flow to ensure that in the future water can be brought south from a WaterTreatment Works situated at the uThukela River or the Mvoti River.• Construct an abstraction works on the uThukela River with a regional Water Treatment Works andassociated infrastructure to supply water south to KwaDukuza Local Municipality and north to MandiniLocal Municipality. This system would link into the NCSS. The Water Treatment Works would beconstructed to initially serve 55 000 cubic metres per day and when demands dictate it would be upgradedto 110 000 cubic metres per day.• Develop water resource infrastructure on the Mvoti River, either at Welverdient or Isithundu with a regionalWater Treatment Works and associated supply infrastructure to further augment the NCSS. At some stagein the future, the long-term water demands to the north of the uThukela River may require the full (ormajority of) allocation from the Lower Thukela Water Treatment Works. In this scenario potable water mayneed to be supplied northwards from the NCSS (i.e. towards the Lower Thukela Water Treatment Works) tomeet the demands on the southern side of the uThukela River.Page 52 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| BulkPotable Waterr Supply PlanChapter8.4.33Newareasto be supplieddItt is evidentt in Figure8.33 that there are many areas outsideof Umgeni Water’scurrent supply ‘footprint’ areaa thatcontainnotable populations. These areas either receivee noo waterservices,(thusclassifiedas ‘backlog’),, orr theyreceivewaterdirectlyfromthewater servicesauthority. Manyy of theselatter areas are supplied at a loww levelofservice throough small stand-aloneschemes thatt are unsustainable.Thefollowingstrategicprojects will w potentially expandd UmgeniWater’s currentsupplyy ‘footprint’ areaa too thatshown in Figure 8.8by providingbulk potablewaterto WaterService Authoritiesin outlying rurall areasthat willenable themm too reduce watewer service backlogs or improvee thee levelof watewer servicess in these areaaas :• Maphumulo BulkWater Supply Schemee Phasee 1 - constructionstage.• Mhlabatshane BulkWaterSupplyy Scheme- constructionn stage.• SouthCoast Pipeline Phase 2aa – construction stage.• Greater Estonn Bulk Water Supplyy Scheme – constructionn stage.• Richmondd Pipeline –detailed desdign stage.• Greater MpofMfanaa Bulk WaterSupplyy Scheme – preliminarydesignn stage.• Ozwathini Bulk Watter SupplyScheme – preliminary desdign stage.• LowerThukela Bulkk WaterSupplyy Scheme– preliminaryy designstage.Figure 8.8:ProposedExtensions too Umgeni Water’s Supply ‘Footprint’Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201653Page 5

Chapter| Bulk Potable Water Supply Plan8.4.4 Bulk Water Supply Infrastructure Projects per MunicipalityTable 8.3: Planned Infrastructure per Municipality over Five-Year Business Plan Period.Customer Project Description InvestmentR'000iLembe DM Maphumulo Bulk Water Supply (BWS) Phase 1 153 120iLembe DM Maphumulo BWS Phase 2 138 006iLembe DM Honolulu to Mvoti Balancing Reservoir Pipeline (7km) 14 120iLembe DM Lower Thukela BWS 15 700iLembe DM Lower Thukela Water Treatment Works (WTW) 11 500iLembe DM, uMgungundlovu DM Ozwathini Sikoto WTW 24 000iLembe DM, uMgungundlovu DM Ozwathini BWS Scheme 149 200iLembe DM, uMgungundlovu DM Wartburg to Dalton pipeline augmentation Phase 2 7 976iLembe DM, uMgungundlovu DM Claridge to Wartburg pipeline augmentation incl. pumpstation - Phase 1 10 000uMgungundlovu DM Greater Eston 146 678uMgungundlovu DM Richmond Pipeline (30km) 120 956uMgungundlovu DM Greater Mpofana Regional Scheme 47 025uMgungundlovu DM Spring Grove WTW 40 200uMgungundlovu DM Howick Reservoir Upgrade (6 500 cubic metre) 19 000uMgungundlovu DM Bruyns Hill Reservoir upgrade (6 000 cubic metre) 7 162uMgungundlovu DM Manyavu Pipeline 2 000Ugu DM Mhlabatshane Sub-Regional Scheme 138 799Ugu DM Scottburgh South Link 35 000Ugu DM South Coast Augmentation Booster Pump Station 29 012Ugu DM South Coast Phase 2a (Park Rynie to Kelso) 22 558Ugu DM Mzinto link (Ellingham Reservoir to Mzinto WTW) 1 000Msunduzi LM Darvill WWW: Plant Capacity Increase (85000 cubic metre / day) 168 000Msunduzi LM Darvil Sludge Handling Facility 17 500Msunduzi LM Darvill Aerators 15 500eThekwini MM Durban Heights WTW: Filter Upgrade 85 400eThekwini MM 57 Pipeline Augmentation (Umlaas Road to eThekwini Point M) 5 000eThekwini MM Durban Heights Various Projects 38 350eThekwini MM Nagle Aqueduct 3 and 4 Refurbishment 3 550eThekwini MM Durban Heights WTW: Reservoir 3 Roof Rehabilitation & Dam Safety 28 000eThekwini MM Mapaphethwa WTW: Upgrade (5 000 cubic metre / day) (incl. reservoir) 24 048eThekwini MM Wiggins Various Projects 21 750eThekwini MM Durban Heights WTW: Candy Filters and Actuators upgrade 20 500eThekwini MM Ozone Plant Rehabilitation and Element Replacement (every ten years) 20 000eThekwini MM Darvill Various Projects 2 060eThekwini MM Wiggins Dam Safety: Concrete Rehab 10 000eThekwini MM, iLembe DM Hazelmere to Bifurcation Pipeline Augmentation (700dia x 10km) 94 296eThekwini MM, iLembe DM Hazelmere WTW: Upgrade (45 000 to 75 000 cubic metre/day) 75 098eThekwini MM, iLembe DM Hazelmere WTW pumpstation upgrade 19 500eThekwini MM, iLembe DM Hazelmere WTW: Raw Water Pipeline 17 790eThekwini MM, Ugu DM Nungwane Raw Water Aqueduct (450dia x 18km) 69 640eThekwini MM, Ugu DM New Lower Mkomazi WTW (50 000 cubic metre/day) 65 000eThekwini MM, Ugu DM Lower Mkomazi BWS Scheme 22 000eThekwini MM, uMgungundlovu DM Umlaas New Water Project 57 000eThekwini MM, uMgungundlovu DM Mkomazi Water Project (Baynesfield WTW) 24 000eThekwini MM, uMgungundlovu DM Mkomazi Water Project (water supply) 20 000eThekwini MM, uMgungundlovu DM '61 Pipeline Extension (ED4 to Umlaas Road) 171 555eThekwini MM, uMgungundlovu DM Lower Mkomazi WTW (150 000 cubic metre / day) 15 000eThekwini MM, Msunduzi LM, uMgungundlovu DM 251 Raw Water Pipeline to Midmar WTW duplication 62 000eThekwini MM, Msunduzi LM, uMgungundlovu DM 61 Pipeline Extension (ED2 to ED4) 25 921eThekwini MM, Msunduzi LM, uMgungundlovu DM Midmar WTW: Upgrade Phase 2 (250 000 to 375 000 cubic metre / day) 224 750eThekwini MM, Msunduzi LM, uMgungundlovu DM Midmar Dam RWPS - New Standby Pumpset & Manifolds 20 000eThekwini MM, Msunduzi LM, uMgungundlovu DM New Raw Water Pipeline '251/'51 (Dam – Raw Water Pumpstation) 19 000Page 54 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| BulkPotable Waterr Supply PlanChapter8.5Statuss of BulBlk SupplyAgreements withMajorCustomersUmgeniWater has signned Bulk SupSpply Agreementss withfivee ofthe six WaterServicee Authoritiesit supplies,notablyeThekwiniMetropolitanMunicipality,iLembeDistrictMunicipality,UguuDistDtricttMunicipality,uMgungundlovu Districtt Municipalityy and Sisonkee District MunMnicipality.Thee agreementwith the MsunduziLocalMunicipality has stillnott been concluded. The municipality iss currentlyy awaitinga responsee fromDWA.These agreements cover obligationsof bothUmgeniWaterr and its customers for the management ofbulk waterinn respect of planning andimplementationof thee quality andquantity of treatedwater,, assetmanagement andmetering.Umgeni Watter’ss levelss of servicewill continue to be regulated andmonitored at a a microlevel at thewater works where thefinal treatedwateris distributed, ass well as at a a macrolevelwhereregional systems areintegratedfor watersupply. Monitoringg frameworkshave been formulatedin response to the t formalagreementand areincorporatedinto operating rules, schedules andplans.Quarterly operational liaison meetings withthee municipalities willcontinue to ensurethat customer requirementsare continuously metand responses to newrequirementss aree provided.UmgeniWater will continue tooperateandmaintainn the thirty-seven water schemes within the iLembee DistrictMunicipality ass ann interim annexure agreementt too thee existingBulk WateWer Supply Agreement. Thee objectivee is tooperatethesee smallstand-alonelocalwaterschemes,whilstt the regironal schemes arebeingdevelopedd andphasedin. In theinterim, the small schemes are subject to t the t same watewer qualityandd quantitystandardss and thisrequireson-goingg rehabilitation off thee existinginfrastructure.8.66Managementt andd Operations ArrangementssThemanagementt and opeorationss arrangements of projectss and programme inthe planaree the responsibilityofUmgeniWater.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201655Page 5

Chapter| Bulk Potable Water Supply PlanPage 56 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Bulk Wastewater Treatment andd DisposalChapterChapter 9.BulkWastewaterTreatmentandDissposalUmgeniWater ownsand operates theDarvillWastewaterTreatment Worksandd Ixopoo WastewaterTreatmentWorks.9.1Darvill WasstewaterTreatmentWorrksCurrentcapacityandworkss conditionnThe current averagedaily flowoff thee Darvill Wastewater TreaTtmentWorkss is 82 0000 cubicmetres per day. d ThecurrentAverageDryWeatherFlow(ADWF) iss 699 500 cubicic metresperr day. Thee design capacityy ofthe DarvillWWWW is 7500 00 cubicmetrmes per dayy ADWF.Flowsare projectedto increase at approximatelyy 1. 5 % per annumover thenextfivee years. Challengess are experienced during wetweather,requiringtemporary storagee of peakflows in theexisting storrm containment dam.CapacityDevelopmentCapitalrenewal iss requiredin order too prevent disruptions too operations, accommodatee the increasinglyhighflowsenteringthe workks afterr rains whichare abovenormal expected peakk flows,and avoidd rivercontamination.Theplansincludemembrane pilot plantt andaeration systemm investigationsas measuress too increasethee work’scapacityand improvethe effluentquality.UmgeniWater intendsto improve thecompliance fromitss currentperformanceprogressivelyy too 95%over thefive-year which, the compliance will conctinue to deteriorate.businesss plan period.Achievingg this compliance is, however, subject to upgradee off thee aerationn system,failing EffluentqualityThe year todate (Jul-2010 damoverorflowdue to external highinflowvolumesduringthesummermonths, overload of theaerationsystemandon-goingillegal vegetable oil discharges.DWA is continuingto assistUmgeni Waterinworkingwith the MsunduziMunicipalityto resolvetheseon-goingproblems.to Feb-2011) percent effluentcompliance is 77.4 %.Most of the non-n-compliancesweredue to thestormUmgeniWaterhas beenissuedwith a licence (No.210655611 dated24 June 2010), validd forr 200 years,but renewableeveryfive years. Thepermitteddischargee is 32 millioncubic metresperr annumm or 877 00 00 cubicc metres per dayd.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201657Page 5

Chapter| Bulk Wastewater Treatment and Disposal9.2 Ixopo Wastewater Treatment WorksCurrent capacity and works conditionThe average daily flow for the Ixopo Wastewater Treatment Works is approximately 900 cubic metres per day.The Average Dry Weather Flow is extremely unpredictable as it is dependent on maintenance work done by theSisonke District Municipality. For a dry period during October and November 2010, the works inflow averaged1 300 cubic metres per day, exceeding the works design capacity.Capacity DevelopmentThe current capacity of the Ixopo WWW is 1 000 cubic metres per day ADWF and the projected 2013 inflow willexceed this if the District Municipality continues with reticulation maintenance. Upgrade of the works capacity istherefore necessary.Effluent qualityThe year to date (Jul-2010 to Feb-2011) per cent effluent compliance is 94.1%. This compliance will be improved to95% compliance.The wastewater treatment works, is currently below 2 000 cubic metres per day and is operated under a GeneralAuthorisation.9.3 Agreements With CustomersThe Darvill and Ixopo Wastewater Treatment Works’ are owned and operated by Umgeni Water. Managementfees and/or tariffs are based on bulk wastewater agreements.Page 58 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| RetailSupplyChapterChapter 10.Retail SupplyUmgeniWaterdoes notprovide any section29 retail supplies.Umgeni Water Five-YearBusiness Plan | 2011/20122 too 2015/201659Page 5

Chapter| Retail SupplyPage 60 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| OtheOer Activitiess (Sectionn 30)ChapterChapter 11.OtherActivities (Section30)11. 1Implementing Agent forBulk Water SupplyInfrastructuree DevDvelopmentinORTamboo District Municipality.UmgeniWaterwill continuee toprovide implementingg agency servicess too ORR Tambo Districtt Municipalityy forr bulkwater services. Workwill be undertakenn in termsof theinfrastructuree fundingagreement thatwas signed by theDepartment of Water AffaAirs (Eastern Cape Region),, the OR O Tamboo District Municipality andaUmgeni WaterinFebruary 2008.Projectprogress andplanned activities are as follows:11.1.1The Greater Mbizana RegionalBulk Waterr Supply SchemeThe Greater Mbizana RegiRonal BulkBWaterSupply Scheme iss currentlyy beingimplemented,with a numberofcomponents under construction. ConCntractshave beenn awardedfor:1.2.3.The LudekeDam,a 40m high,Category3, clay-core rock-filll dam on the Ludekee River, a tributary of theMtamvuna Riveer;The raw waterpumpstation and13. 2 km long, 5005mmm diameter rising mainn too the Nomlacu WaterTreatment Plannt; andThe civilandmechanicalandd electrical works requiredforPhasee 1 of the upgradingg and extension of theNomlacuu Waterr Treatment Works to provideup to 10 000cubic metresperr day.Detaileddesign workonn Phase1 of o the bulktreated water suppsply systemm withinthe MbizMzanaa LocalMunicipalityiscomplete, andtenders are a dueto be invitedin March//April 201121. The targett date for completionn off Phasee 1 of theSchemee is towards the end e of 20122 att a total capital costof appraroximatelyy R450millionn (includingg VAT).11.1.2The purpose of the projeect is toultimately suppply 20 0000 cubicmetress per day of potablewaterto a populationof266 0000 people, allowingg for anincreasein the average consumption per p capita fromm 25 litresperr person per dayto75 litresperperson per day d over a 30-year timehorizon.Thee targetedcategories off consumers to be suppliedd withpotablewateraree domestic water users throughoutt the region,andd commercial and light industrial userss andinstitutional userss mainnly withinthee townof Bizana.Thee estimatedtotal capitalcost of o theentirescheme,including all phasesof thee bulkwatersupplyy systemandd the linkss too the villagereticulation,is in exceeess ofR1.1 billionover a multi-year development period.IngquzaHill RegionalBulk WaterSupply SchSemeUmgeniWateris awaiting instructions too proceedwith the detailed feasibility study and preliminary design of theIngquzaHill Regional BulkWaterSupplyy Scheme.Oncee approvalto proceed has been received, it is anticipatedthatthis study willtake between eighteen andd twenty four monthsto complete.Thee OR O Tamboo DistrictMunicipality has allocated R10millionn fromits MIGG fundsforr this project.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201661Page 6

Chapter| Other Activities (Se(ection30) )11.2Supportforthe ImIplementationof oa BulkStrategyinn ORTamboo DistrictMunicipalityWatWerServicesTurnaroundTheOR Tamboo DistrictMunicipality hasrequestedd UmgeniWaterto providee supportfor thee implementationn ofaturnaroundd strategyfor WaterServicesUnit (WSU) 1 ass shown inFigure 11.1below.WSU1 comprisesthe KingSabataDalindyebo (KSD) Local Municipalityand NyanNndeni LocaLal Municipality.Figure11.1: ORTamboo District Munnicipality WatWer Services Units.Theprofiless off thee Water ServicesUnits areas follows:11.2.1The King SabSataa DalindyeboLocal MunicipalityTheKing Sabata Dalindyeboo Local Municipalityy extends overor 3 027km2 , consistss of 32 wards and a hass a populationof 44 44 830 of which 81%% is in ruralareas and19% % urban.Keyy centres of o economic activityare Mthatha,MqanduliandLibode, the rest beinng rural. The T LM has26% water backbklogs (Stats SA communityy survey, 2007).TheLocal Municipality watewer and waswstewater infrastructurecomprises:1. Sixx waterr treatment works: Mthatha – 60 0000 cubicmetresper day,Coranaa – 1 00 00 cubicc metres per p day,Mhlahlane – 1 0000cubic metmres perday, Mqanduli – 1 000cubic metresperr day, Coffee Bayy – 1 000 cubicmetres per day,, Qhingqolo – 1 000 cubbic metresperr day.2. Eighteenn operational schemes predominantlyy served via boreholes.Thesee worksand boreholes serve about 172 757 yardyd connectionss and the balancee of thee population withaccess beingserved throughcommunal standpipes..3. Theree is onewaterbornetreatmentworkss in thee city off Mthathawith a capacity of 12 00 00 cubic metrmresper day.Pagee 62Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Other Activities (Section 30) Chapter11.2.2 The Nyandeni Local Municipality.Nyandeni is 2 474 km 2 in extent, consists of 23 wards and a population of 314 273 people. The municipal populationis 79% rural, and 21% urban informal. The two main urban nodes of the Nyandeni LM are Libode and Ngqeleni.The LM has 43% water backlogs (Stats SA community survey, 2007).The Local Municipality water and wastewater infrastructure comprises:1. Four water treatment works: Libode – 3 000 cubic metres per day, Mhlanga – 1 000 cubic metres per day,Ngqeleni – 500 cubic metres per day, and Lutsheko – 1 000 cubic metres per day.2. Seven operational schemes served via boreholes.These plants and boreholes serve about 36 758 yard connections and the balance of the population withaccess being served through communal standpipes.3. There is one water borne sanitation treatment works in Ngqeleni. The sanitation services in the otherurban areas are through septic tanks.11.2.3 Scope of ServicesThe scope of services that Umgeni Water will provide is:1. Systems operations with particular reference to: operations of bulk raw water dams operations,maintenance of raw water transfer infrastructure, water and wastewater treatment works operation,major bulk distribution to command reservoirs, and reticulation network.2. Infrastructure maintenance.3. Metering.4. Water and wastewater quality monitoring.The contract for the implementation of a turnaround strategy for OR Tambo District Municipality Water ServicesUnit 1 has only just been secured, and as a result, the financial plan of this business plan does not reflect theimpact of this contract. However, the contract is formulated to be cash positive at all times and is on a full costrecovery basis with no expectation of a negative impact on Umgeni Water.11.3 Implementing Agent: DWA Working-for-WaterUmgeni Water has been appointed by DWA as its Implementing Agent for the control of terrestrial alien invasiveplants in selected catchments in the Mvoti to Mzimkhulu Water Management Area for 2011/2012 renewable forthe three-year period to 2014/2015. The programme will hire and train people from within the community ascontractors or to be employed as part of the contractor’s team. The teams use approved working for waterclearing methods and apply herbicide as per the working for water herbicide policy. The contractors employed bythe programme are provided with functional and developmental training to ensure that they can either becomecontractors on exit from the programme or join the formal job market in other capacities. This will contribute tothe social economy by creating jobs through clearing of alien vegetation in Umgeni Water raw water supplycatchments as shown in Table 11.1.Table 11.1: Working-for-Working Programme for 2011/2012Project Name Total Hectares Total Person Days Max People Employed per projectKZN Karkloof 1 081 6 033 60KZN Lions River 1 891 10 337 60KZN Midmar 990 5 250 36KZN Nagle 1 800 9 150 96KZN Mgeni Valley 1 905 10 170 84KZN Upper Mvoti 1 520 5 002 60Total 9 187 45 942 396Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 63

Chapter| Other Activities (Se(ection30) )11.4ImplementingAgent: DWAA RegionalManagementt SupporttBulkk InfrastructureProgrammeTheDepartmentof Water Affairshas extendedd Umgenii Water’sproject managementsupport for systemsdevelopmentandd enhancementof theregionalbulk infrastructuregrantfor a furtherr 12-month period,from1 April 20111 to 31 March2012. Thee budget estimate is R122 million.11.5OperationandMaintenanceContractfor WaWastewaterr workssUmgeniWaterr has anOperationsandd Maintenance Contractt with the uMgungundlovuu District MunMicipality for theHowickWW WW, for the 2011/2012 to t 2013/2014 periodof this t business plan.11.6Laboratoryy ServicessUmgeniWaterr will continuee to provide water quality monitoringg and relatrted services supportt to municipalities andiss targetingg Ugu, Sisonkee and uMgungundlovu municipalitiess for the 2011//2012 year.11.7Operation,Administrationn andd Maintenancee of DamssUmgeniWater signed anagreement for the operation, administrationn and maintenanceof damswith DWA,effectivefrom1 July2010 too 30June 2011. This encompasses:• MidmarDam,• Albert Fallss Dam,• Inanda Damm,• HazelmereDam,andd• TheMearns Diversionn Weir,Mearns Pumping Station,TransferPipeline and ReceivingStreams.Pagee 64Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| HumanResources PlanChapterChapter 12.HumanResourcesPlan12. 1Implementation of o Humann ResRsourcesStrategyyUmgeniWatercontinues too face skilsls shortage challengesandd in responsecontinuess to deepen implementationof it HumanResources StratStegy with w the followingsevenfocus areas:1.2.3.4.5.6.7.WorkforcePlanning: Too continually assess prespsentt andfuturee workforce needss and alignn thesewithbusinesss needss in an effecective manner.Recruitment,Retentionn and Engagement: To ensureeffectiveattraction,retentionandd engagementofstaffwithh expertise, experience andskills, withhin a framework thatt ensures equity and diversity.RewardManagement: To implementt a pay andad rewardmanamagement system thatt supportsachievement off goalsto ensurethe organisationhass theskilled, competent,motivatedd and committedworkforce its needs.EmploymentPracticesandd Systems: Too ensure that the organisation’ss human resources systemsareefficientand effectivee and respondto its strategies.Work/life BalaBance: To T provide a safe,healthyy and supportiveworking environment whichwh meetss theorganisation’sdutyoff care towardss its staff and a encourages ann appropriatework/life balance.StaffSkillss Development:To developp staff to t excell in their individual and organisationall roles andfunctions inn orderto delivdver on the organisation’ss strategy.Communication andd Consultation: To ensure effective channelss ofcommunication which enable allviews tobe heardandd considered and information too begatheredthat wouldd informm the organisation’shuman resoources strategies,plans andd servicee delivery.The organisation’s Workkforce Plan, Employment Equity,Training andDevelopment, HIV/AIDS and Wellness, andEmployee Relations planns are described furtherr in thiss plan.12. 2WorkforceProfileeUmgeniWaterwill continuee to maintainandenhanceits core businesss systems,shownn in Table12. 1, insupportofimplementation of this business planp. Thedearthof professionals, notablyin the engineering fields, continuestoimpact on the organisation’’s planss and iss beingaddressedd byy thee trainingandd development programmes descdcribedfurtherin this plan.The currentandd projected workforcenumbersandd diversityy in support of thisis showninTable 12.2andTable12.3,respectively.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201665Page 6

Chapter| Human Resources PlanTable 12.1: Umgeni Water Core Business Systems1. Water and Wastewater Operations2. Water Infrastructure Asset Management3. Water Infrastructure Planning4. Water Infrastructure Development5. Environmental Management6. Billing and Metering7. Financial and Treasury Management8. Human Resources Management9. Research and Development10. Water Quality Management11. Water Quality Monitoring12. Laboratory Analysis13. Supply Chain Management14. Information & Communications Technology15. Legal and Statutory Compliance & Governance16. Risk Management and Fraud Prevention17. Strategy and Organisational Performance18. Stakeholder Relationship ManagementTable 12.2: Current Workforce Profile (projected to 30 th June 2011)Occupational Levels Male Female TotalA C I W A C I WTop management 2 0 0 0 1 0 0 1 4Senior management 2 2 8 3 3 1 3 1 23Professionally qualified and experienced specialists 19 2 7 18 15 1 19 5 86and mid-managementSkilled technical and academically qualified workers, 179 11 56 34 100 9 27 7 423junior management, supervisors, foremen, andsuperintendentsSemi-skilled and discretionary decision making 152 1 3 0 3 0 4 0 163Unskilled and defined decision making 28 0 0 0 7 0 0 0 35TOTAL PERMANENT 382 16 74 55 129 11 53 14 734Table 12.3: Projected Workforce Profile to 2015/2016 (includes contract employees)Occupational Levels Male Female TotalA C I W A C I WTop management 3 0 0 0 1 0 0 1 5Senior management 3 2 8 3 4 1 4 1 26Professionally qualified and experienced specialists 51 6 34 23 48 4 15 8 189and mid-managementSkilled technical and academically qualified workers, 142 11 42 26 93 10 26 10 360junior management, supervisors, foremen, andsuperintendentsSemi-skilled and discretionary decision making 158 1 3 0 3 2 7 2 176Unskilled and defined decision making 31 0 0 0 6 0 0 0 37TOTAL PERMANENT 388 20 87 52 155 17 52 22 793During this business plan period, four per cent of the workforce is anticipated to retire normally from theorganisation (Figure 12.1). The make-up of this component of the workforce has been analysed. The organisationcurrently has policies and plans in place, including a succession policy and leadership / employee developmentplans and programmes that will mitigate the loss of skills and institutional memory due to normal retirement.Page 66 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| HumanResources PlanChapterFigure12.1: WorkforceAgeProfile40% 430% 3Age Anaalysis as at 28 Febrruary 201131%Employee %20% 210% 12%20%20% 215%9%4%0%0-2526-3536-4546-5051-5556-6061-65Age12.3Employmentt EquityyUmgeniWaterr will continueto diversify its workforceover the five-year planning.Thee currentandprojeectedworkforce by racee and gender are depicted in Figure 12.22 and Figure 12.33, respectively.Figure12.2:Five-YearWorkforceProjection by Raceperiod throughopportunities presented byrecruitment, retention,staffdevelopment, turnover andasuccessionRacee Profile as at28February2011Projected RaceProfile too 2015//2016ACIWACIW4%5% 569% 617%68%18%9% %10%Figuure 12. .3: Gennder ProfileGender ProfPfile as at 28 February 20111Projected GenderProfilee 2015//2016MaleFemmaleMaleFemale27%31%73%69%Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201667Page 6

Chapter| Human Resources Plan12.3.1 Development and Advancement of Women EmployeesIt is intended to develop and advance women employees in the organisation, and increase the womencomplement over the next five years from 26% to 31% (Figure 12.3). Higher targets are set for the more skilledworkforce categories as indicated below.• Top Management + Senior Management: In the combined levels of Top and Senior Management, it is plannedto increase the women complement: from 37% women to 39% women.• In the Professionally qualified and experienced specialists and mid-management + Skilled technical andacademically qualified workers, junior management, supervisors, foremen, and superintendents, it is plannedto increase the women complement: from 34% women to 39% women.• In the combined levels of Semi-skilled and discretionary decision making + Unskilled and defined decisionmaking, it is planned to increase the women complement: from 6% women to 9% women.12.4 Training programmesStaff skills development is essential to enable staff to excel in their individual and organisational roles andfunctions and deliver on the organisation’s strategy. The organisation’s recruitment and retention interventionsare intended to ensure the organisation has sufficient flexibility to obtain the skills that it needs to implement itsbusiness plan. The approach will include options for buying, making, converting and creating skills, whilstcontinuing to ensure diversity is increased in under-represented areas. The convert strategy will focus on core,scarce and critical skills through retraining. This will be achieved through learnerships, training interventions andrecognition of prior learning. Umgeni Water will develop strong partnerships with universities, FET colleges,vocational institutions and SETAs in support of its skills development initiatives.12.4.1 Learnerships and ApprenticeshipsDuring this business plan period Umgeni Water will:• Continue to develop and complete thirty-seven external learnerships and fifteen internal staff learnerships, inWater and Wastewater treatment, and• Develop and send for trade test 12 Apprentices in the fields of Mechanical: Fitting and Turning and Boilermaking,Electrical Engineering and Instrumentation• Extend its programmes to a total of seventy learners enrolled in the fields of Electrical, Instruments,Mechanical Engineering and Water and Wastewater Treatment.The Learnerships programme will utilise forty per cent (40%) of the training and development budget.12.4.2 Bursary and Graduate ProgrammeA create strategy will be used to create a skills pool that would address future skills demands in the organisation.This will be achieved through:• Continuing with the current bursary programme and awarding further bursaries to achieve a total of tenbursaries for skills identified, namely, civil engineering, mechanical engineering and financial accounting.• More vigorously ring fencing eighteen positions in the structure for implementation of graduate developmentprogrammes as mechanisms for addressing the core, critical and scarce skills needed by the organisation. Afurther twenty six trainees is envisaged to be enrolled to the fields of chemistry, chemical engineering,microbiology and mechanical engineering upon receipt of funding for the Energy SETA (ESETA)12.4.3 Training and Development and Assisted Education ProgrammesTraining and development and assisted education programmes will be improved by better alignment of the skillsand competency needs of the business plan to individual’s development plan, as well as, the workplace skills plan.Page 68 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Human Resources Plan ChapterThe staff skills development plan for the Five-Year Period is summarised in Table 12.4.Table 12.4: Staff Skills Development Plan for 2011/2012 to 2015/2016Baseline 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016Learnerships52 learners enrolledas water andwastewater processcontrollers andartisans.70 learners enrolledas water andwastewater processcontrollers andartisans.70 learners enrolledas water andwastewater processcontrollers andartisans.70 learners enrolledas water andwastewater processcontrollers andartisans.70 learners enrolledas water andwastewater processcontrollers andartisans.70 learners enrolledas water andwastewater processcontrollers andartisans.Graduate development18 graduates/internsdeveloped inengineering, scienceand other requiredprofessional fields.18 graduates/internsdeveloped inengineering, scienceand other requiredprofessional fields.43 graduates/internsdeveloped inengineering, scienceand other requiredprofessional fields.43 graduates/internsdeveloped inengineering, scienceand other requiredprofessional fields.50 graduates/internsdeveloped inengineering, scienceand other requiredprofessional fields.50 graduates/internsdeveloped inengineering, scienceand other requiredprofessional fields.Bursary3 students enrolledin engineering fields.10 students enrolledin engineering andfinancial fields.10 students enrolledin engineering andfinancial fields.10 students enrolledin engineering andfinancial fields.10 students enrolledin engineering andfinancial fields.10 students enrolledin engineering andfinancial fields.Training and Development492 Health andSafety ComplianceTraining74 TechnicalTraining104 Soft andGeneric.Training anddevelopment will beinformed byIndividualDevelopment Plans.Training anddevelopment will beinformed byIndividualDevelopment Plans.Training anddevelopment will beinformed byIndividualDevelopment Plans.Training anddevelopment will beinformed byIndividualDevelopment Plans.Training anddevelopment will beinformed byIndividualDevelopment Plans.Assisted Education6 OperationalProcess Control3 ProjectManagement2 SupplychainManagement10 Water Quality,Water Resources,Safety, Health andEnvironment.1 Information andCommunicationsTechnology.1 Finance andTreasury.17 Management andLeadershipDevelopment.8 OperationalProcess Control5 ProjectManagement2 SupplychainManagement12 Water Quality,Water Resources,Safety, Health andEnvironment.2 Information andCommunicationsTechnology.2 Finance andTreasury.17 Management andLeadershipDevelopment.10 OperationalProcess Control7 ProjectManagement2 SupplychainManagement14 Water Quality,Water Resources,Safety, Health andEnvironment.2 Information andCommunicationsTechnology.3 Finance andTreasury.17 Management andLeadershipDevelopment.10 OperationalProcess Control7 ProjectManagement2 SupplychainManagement14 Water Quality,Water Resources,Safety, Health andEnvironment.2 Information andCommunicationsTechnology.3 Finance andTreasury.17 Management andLeadershipDevelopment.10 OperationalProcess Control7 ProjectManagement2 SupplychainManagement14 Water Quality,Water Resources,Safety, Health andEnvironment.2 Information andCommunicationsTechnology.3 Finance andTreasury.17 Management andLeadershipDevelopment.10 OperationalProcess Control7 ProjectManagement2 SupplychainManagement14 Water Quality,Water Resources,Safety, Health andEnvironment.2 Information andCommunicationsTechnology.3 Finance andTreasury.17 Management andLeadershipDevelopment.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 69

Chapter| Human Resources Plan12.5 HIV/AIDS and Wellness ProgrammeOccupational health remains vitally important for Umgeni Water to ensure effective water service delivery tocustomers. Umgeni Water will therefore continue to deliver a comprehensive occupational health service toemployees, which includes a HIV/AIDS programme and employee wellness programme.The organisation’s HIV/AIDS programmes will continue to include:• Access to Voluntary, Counselling and Testing programmes.• Access of HIV positive employees to Anti-retroviral Treatment, enabled through the Medical AidFund HIV/AIDS Programme.• Strengthening of HIV/AIDS awareness in the organisation.The programmes are and will continue to be facilitated through two occupational health nursing practitioners andone part-time occupational health medical consultant. These qualified practitioners will further perform dutiesthat include regular medical screening along with other medical surveillance programmes, including, hearing,lung-function testing and biological monitoring.Umgeni Water’s HIV/AIDS Management Forum plays a significant role and will further be utilised to encourageemployees to participate in the World AIDS day and Wellness Programme events, amongst others.Implementation of HIV/AIDS programmes and wellness programmes will be achieved through collaboration withother organisations and partnerships with Umgeni Water’s medical aid fund and associated institutions.Publicly available information (Department of Health), estimates that HIV prevalence levels in the general adultpopulation in areas of primary operations population is 20%, compared with 7% at Umgeni Water, as derived fromthe organisation’s medical aid health profile.Awareness of HIV/AIDS will be strengthened, by supporting national campaigns including World AIDS Day, thesixteen days of Activism Campaign for no violence against women and children, as well as all national health daysin the National Departments of Health Calendar.Umgeni Water will continuously review its HIV/AIDS Policy to align it with “best practice” and the developments inHIV/AIDS management. The policy will address issues of stigma and prejudice against persons living withHIV/AIDS. Umgeni Water will also review its HIV/AIDS risks and ensure relevant information is captured in riskregisters to enable HIV/AIDS to be better managed, monitored and mitigated through sustainable long terminitiatives.12.6 Employee RelationsUmgeni Water will maintain a sound employee relations environment which will bear positive results and providevalue for the organisation. Formal employee relations are and will continue to be governed by collectivebargaining and recognition agreements underpinned by the applicable legislation.Sixty-five per cent (65%) of the total workforce are members of the majority union NEHAWU (National EducationHealth and Allied Workers Union) and the relationship is subject to a collective bargaining agreement. UmgeniWater will continue to negotiate salaries and conditions of employment with NEHAWU in order to maintain ahealthy working relationship.Page 70 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| HumanResources PlanChapter12.7Governance StructureeThe organisationis goveerned by a Boardcomprising fifteenmembers(fourteennon-executive and one executive,namely,theChiefExecutive).The Boardhas established three committees toassistit inn dischargingits responsibilities:• AuditandRisk committee,• Capital Expenditure, Procurement andInfrastructure committee,and• Human ResourcesandRemuneration Committee.The ExecutiveCommittee comprisestheChiefExecutive,, General Manager Operations, GeneralManagerFinance,GeneralManagerEngineering andScientificServices andd General Manager CorporateServices.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201671Page 7

Chapter| Human Resources PlanPage 72 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Environmental ManaMagementt Programmesandd PlansChapterChapter 13.andPlansEnvironmentalMaanagementProgrammes13. 1EnvironmentalSustainabilityy ProgrammessInsupportof its vision andd mission,Umgeni Waterhas developed an a environmental sustainability policy whichstates commitment to:• Protecting dimminishing natunurall resources and redurucing pollution in all areass off involvement.• Developingsustainable solusutionsthat utilise resources more efficiently..• Mitigating envvironmental externalitiesand societal costss at all timess and report,in an integratedmanner,on environmental,socialand financial issues.Emanatingfrom thepolicytheorganisationhas in placean environmental sustainability frameworkk whichh focuseson the indicators andvariablesas shoswn in Table 13.1.Table 13.1:: Environmental Sustainabilityy Indicators and VariablesKey IndicatorsVariables1.Environmentall Systems andReducing Environmental Stressess1.2.Air Quality, Reducing Air Pollutionandd Energyy ImpactsBiodiversityand Reducing EcosystemStress3. Landandd ReducingPopulationPressure4. Reducingg Wastee & Consumption Pressures5. Reducingg Waterr Stress6.Water Quality Manaagement2.Reducing Human Vulnnerability tooEnvironmentall Stresses7.8.Environmental HealthReducingg Environmental Related NaturalDisaster Vulnerability3.Institutional Capacity to Responddto Environmental Challenges9.10.Environmental GoveernanceEco-Efficiency11. Science & Technology4.Environmentall Stewardship12. Participationn in CollaCaborative EfforErts13. GreenhouseGass EmissionsUmgeniWaterthroughthee implementationoff thee environmentalsustainabilityframeworkplans to contribute tothe developmentof a greenn economy inn Southh Africa. This T will bedonethrough resource conservation,reducingits carbonfootprintas wellas creating shoort-termm employmentopportunitiess throughitss CAPEXprogramimplementation.Plans forthenext fiveyearsincludee monitoringselectedvariablesrelatedd too the sustainabilityindicators highlightedabove.13.1.1Greenhouse gasemissions managementThe quarterly trend indicates thatthee carbon emittedd byy thee organisationn increased fromm 29,4144 tonnes to 32,401tonnes of CO e 2 . The orgaanisation planpns too reduce thisto realrise a reduction inn the carbon footprint.It is anticipatedthattheimplementationn of energyy efficientstrategiess will assistt in achievingthisreduction.13.1.2Eco——efficiencyThe main business ofthee organisationn is thesupplyy off bulk potapablewaterandd this iss accomplished throughh the useof variousnatural resources.Thereforee it is imperativee for the sustainabilityof theorganisationn to conducttoutilise thesee natural resoources in a sustainable manner. Eco-efficiencyfor organisationrelatess to energy, watewer andmaterials usedper kilolitre of treatedwaterproducedandd changesthereof overtime.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201673Page 7

Chapter| Environmental Management Programmes and Plans13.1.3 EnergyAn energy efficiency strategy will be finalised with inputs from the energy audits planned for the year 2010-2011. Itis envisaged that the strategy will identify areas where the organisation can reduce resource consumption.Current energy efficiency improvements include:• Replacement of light bulbs with energy efficiency bulbs• Investigations into renewable energy alternatives13.1.4 WaterWater consumption refers to the total freshwater purchased or abstracted in cubic metres per kilolitre of waterproduced. On-going measures are currently being implemented to improve water use efficiency. These include• Refinement of Water Balances of raw and potable water conveyance and distribution systems.• Reduction measures with regards to unaccounted for water through conveyance system audits to identifyleaks and illegal connections in the system, repairs and adequate maintenance of the pipelines in thereticulation system.Sustainability of the Umgeni Water’s main business, which is supply of potable water, is dependent uponsustainable raw water resources. Thus it is imperative to engage and undertake initiatives to alleviate water stress.Over the years the organisation has continued to be part of various Catchment Management Forums to furtherinfluence resource quality and quantity objectives in order to safeguard consumer water quality.13.1.5 Chemical UsageChemical usage efficiency is the amount of chemical used per kilolitre of water produced. The organisations hasmeasures in place to improve chemical usage efficiency and one of these is stipulated under the environmentalsustainability framework which is to evaluate a baseline for chemical usage and going forward set a target forchemical consumption per kilolitre of water produces that will aid in improving chemical consumption efficiency.13.1.6 Biodiversity, Land Degradation and Reducing Ecosystem StressThe organisation continues to apply Integrated Environmental Management (IEM) principles in the entire life cycleof all infrastructure projects in order to ensure environmental sustainability. This includes, as further outlined insection 13.2, conducting Environmental Impact Assessments for proposed projects, development ofEnvironmental Management Plans to minimise impacts on the environment as well as continuous environmentalmonitoring. One of the additional new initiatives currently being undertaken is the development of theBiodiversity Management Strategy. Progress of the study is about 10%. The EKZN has updated its Minset and C-plan data in 2011 and as soon as this is finalized and communicated it will be used to define critical conservationtargets for UW area. The study is anticipated to be finalised by June 2011.13.1.7 Reducing Waste and Consumption PressuresUmgeni Water has waste management plans for all operational sites and will continue to implement these.Specific plans include:• Waste Separation and Paper Recycling at all sites.• Collaboration with Municipalities, IT industry, responsible suppliers, retailers and other institutions,to Improve Management of Electronic Waste (e-Waste).• Plans for waste management in the next five years will be extended to include water treatment residuesand wastewater sludge management such that the impact of these on the environment is minimisedand mitigated.Umgeni Water is always striving for improvement and alignment with regards to the recycle, recover, reuse and/oravoid waste principles. One of the new initiatives currently being undertaken is the development of the wastemanagement strategy that will identify opportunities for improvement and measures to align with the waste actPage 74 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Environmental Management Programmes and Plans Chapterand he principles stipulated therein. This will also include measures for appropriate disposal and handling of watertreatment residues. Progress with regards to development of the strategy is about 30% and the study is proposedto be finished by June 2011.13.1.8 Water Quality DeteriorationUmgeni Water has set resource quality objectives for abstractions for water treatment that it will continue to useas alert triggers for mitigation against increased public health risks and higher treatment costs.Specific plans include.• Continuing to Monitor Quality of Raw Water Resources in order to assess source quality as well asmitigate risks associated with the raw water abstracted.• Continuing to assess the risks associated with trends in eutrophication, chemical contaminants,pathogens and suspended solids, and effectiveness of Raw Water Quality Objectives.• Engaging Catchment Management Stakeholders to further influence resource quality and quantityobjectives to safeguard consumer water quality.• In addition, Umgeni Water will continue to Improve Quality of Waste Discharges from its own sites andwill further quantify the impact of the Darvill waste discharge.13.1.9 Environmental Health and Reducing Environmental Related Natural DisasterVulnerabilityUmgeni Water will continue to safeguard public health as well as protect the natural environment, through itswater, health and hygiene education awareness programmes and through implementing its disaster managementprogrammes for floods, drought and water quality and environmental incidents.Specific plans include:• Running Water Classrooms for Learners of all age groups at the Midmar, Darvill and Durban Heightssites.• Implementing planned Rural Community Outreach programmes, targeting vulnerable communities.• Implementing the Adopt a School program for the four adopted schools• Growing Awareness through Collaboration with Municipalities, DWA, DEA, Community and CivilSociety Groupings, Business Groupings, and others, for events coinciding with special environmentaldays, including, Wetlands Day, Arbor Day, Water Week, Environmental Week, Biodiversity Day, MarineWeek, and others.• Improving Management of Servitudes.13.1.10 Environmental GovernanceUmgeni Water will maintain its institutional capacity and knowledge to ensure it adequately responds toenvironmental sustainability challenges, as well as continues to implement its environmental management systemfor the organisation.Specific plans include:• Improved Integration of Quality Management Systems for environmental management, productquality management, occupational health and safety management over the business plan period, alignedto OHSAS 18001, ISO 9001 and ISO 14001, amongst others.13.2 Environmental Impact AssessmentsUmgeni Water interacts with the water value chain from source-to-tap and will continue to ensure its Bulk WaterInfrastructure is Developed and Maintained in a Sustainable Manner. At a project level, Umgeni Water willcontinue to apply Integrated Environmental Management (IEM) principles to its projects to ensure it undertakesenvironmentally responsible planning, design, construction, operation, decommissioning and maintenance of itsassets and activities.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 75

Chapter| Environmental Management Programmes and PlansSpecifically this would entail:• Undertaking relevant Environmental Impact Assessments and required mitigation during project planning,design, construction and commissioning phases,• Development and implementation of sound Environmental Management Plans, and• Undertaking Environmental Monitoring and Auditing at all relevant project life-cycle phases.The timing and sequencing of these assessments are aligned to and integrated with Umgeni Water’s capitalinfrastructure development programme and day-to-day operational business.Page 76 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Waterr Conservationandd Demand ManagementChapterChapter 14.Water ConservationandManagementDemandd14. 1WaterrConservationActivitiesanddDemanddManagementtProgrammesorUmgeniWaterhas beenn ann advocatee of waterconservationandd water demandmanagement for manyyears, andhashada WaterConservation PolicPcy in placee sincee 1999.. Theorganisationhas developeda WaterDemandManagementStrategy that providess directionn too the initiatives thatt the organisation willembark upon in thefuture in termsof promotingwatewer demandd managementpracticeswithinits region.The WaterDemandManagementStrategyidentifiesthirteenwaterdemandmanagementt initiatives ( both internal and external)which havebeenprioritisedd intermss off theirpotentialeffectiveness. An internal WateWer DemDmandd ManagementCommitteee has beenformed toco-ordinatethee activitiess around thesee initiatives.The Greater Swayimanaa areawithinn the uMgungundlovu Districtt Municipalityhas beenn earmarkedby UmgeniWater for a pilotstudy using a new real-time computer-basedan applicationn to thee DevelopmentBank of SouthAfrica (DBSA)forr grantfunding for f thiss pilotstudy fromits Water Demand ManagementProgrammeto assistwater servicesproviderss with the implementationof approvedwaterdemand managementinitiatives. The DBSAhas subsequentlyapprovedgrant funfdingg in thee amountof US$115000 for this 1-year water demdmandd managementproject.This study will involveon-line monitoringto detectleaks and anyy irregularr flow patterns, and to thenn pro-activelyaddress thesituationwith theuMgungundlovuu District Municipality.This will w allow Umgeni WateWer theopportunitytogainfirst-handexperiencein thecapabilities of thesoftwareandd the analysiss techniquesused.These can then bee applied to the remainderof f thee organisation’s supplynetwork,andd the skillslearntcann also bemethodologyy tolocatee leakss and other sourcesofnon-revenue water.In Julyy 2010,UmgeniWatersubmittedtransferredto thee various municipalitiesin the area.UmgeniWater will conttinue withh itss education andpublicc awareness programmesthrough theenvironmentaleducationunit targeting schoolss andencouraginglearnersandeducecatorsto visit theorganisation’s watertreatment works.The water servicee authorities withh whomm UmgeniWateris contctractedd forr bulk potablee waterr supplyy are at variousstages regaardingthee implementation of water conservationanddemandmanagement meaasureswithintheirrespective areas.There are no knowninitiativescurrentlyunderwayy in thee uMgungundlovu, Uguand Sisonkee municipal areas. TheiLembeDistrict Municipalityy is implementing a number of o watewer demandd management initiatives within thetownof KwaDukuza(Stanger) and itestimates thatsavings fromtheseinitiativess will offset the growgwth in sales for thearea. TheMsunduziLocalMunicipalityy has recentlyy embarkedon an extensivee watewer demandd managementprogrammeconsisting of a numberof differentinitiatives. It hasinstituted an aggressivee creditt control policywhich isexpectedd to have an impact on water sales. During 201121, itis expeeected thatt its pressure reductioninitiativeinthe reticulationn systemm will contributeto reduucing water losses.Overthe pastfew years theeThekwini MetropolitanMunicipalityimplementedd a significant WaterDemandManagementProgrammein order too reduce its unaccounted-for-water. in water purchasesfrom Umgeni WateWer overthee pastThe bennefits fromthis programme arestartingto be realised for themwith w a sustained reductionUmgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/201677Page 7

Chapter| Water ConsCservationn and DemmandManagementseven months.The interventionsthat haverecently hadd thee mostmarked impactincludee pressuree management,active leakagecontrol, and a the implementationn of a sewer tarifff whichis linked to water consumption.A reductionn inn waterpurchases fromm Umgeni Waterpartially relievess the stress alreadyimposed on many waterresourceand water supply systems andinfluences UmgeniWater’s capictal expenditureprogramme by defederringsomee ofthee augmentation projects too later datees.Pagee 78Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

C1InpvGmeTwaacTcD2Ft2UwmUpC15npevoGrmaeTTowaattamcoThchDe20Froo20UmwameUmproCh5.terfoluroaiThotaattrmoostheaes01omr01mateemoph.1hefoumwnealteibort oe lrgsp1mem6.geteetgepoa1eormmewthlykwdr cburtiofogeitanm am.enr st tenosapmehy awdircoutasaf pwesenda dmanisehnisinpSpaagrinatinreosabatprowe. DtddeinWervisWngptSuastncron bttrniectstsbletioodrDuhe20ebn bWavisWg ateutceowburibMt cs,eonduleure01btbeaticetrata temfie.wtulbuMecostton oucevrinto12meloteerattetaermvethkutetrostaoofctvengou2 imaower’dteer’arrmeHavabrostsaffRf riolsg tugnanw’seeg’siff1myownolblops af cR8reons othghena0clivgiccf i15ayewdlulepoarco87mtibofheh oxcag0.7apvec oon5ararwevhmtlitreosmcubyf i5opcee7 tpieryobmcr5.ryrsveigmetotafostsm auly rin5 ypeesmtimtaybjemmre.y,ergheso tanors aasatedteyeerssmemalaecmieasUr,h cfthMreansstioduereaatofeneendcttmseFUmgcoorheMuecandetonucesr ptinf Rts.exdtivme fFmgoostr 2wunasd etncinstpengR6poTpeeveenfoFigeints20wanicstenimasngt perg60oiThenlim.ntornenngs o01atcitnempssg cparioco00inhendmt t2nnifof10tepoergpasecoaidodon0mteditminto01aWfop0/1ralingyairtsondd tndmofactunao m12UanWaorwpro11lolitncyrms.ntathditaf vctureatim2 oUmnatwaod1 aostycrecomeTroanhetiolbvitueiomaofmgnctearduanss.eaosenTholldeonbeewalponinf 6gecerrducndmasstsntelahennseitw,l broonta6.1eniah,ctid 2mases.ts,obhigtis tt a, Uboogofai1%niahatho20anbI, worgleghtythatUmorgrabn%Walshen01nabyInwgae chey’shelomrroambatdWacec1/ag1dhiancoers ioowmgowmckhedeatPcoorom/1ge13%ireilsnisstiinorwegewimklesptePonrgm2em%ecstsatsnttergernnmeolopitrlasigambame% ict2atibteeranr lei Wge ogsowteFiastnbinreennc20obyereesnievWleofswee tivanteisnee ent2co01ny 1esstsaveWatevf Rinesthvenntatedexin20st1/h1%stt catelsteveRn rsthe-Ytltiod wxpni10ts/1ha% iicotios ter’l3ruprYeyonwipeti0/in2sinncoveonth’sis4urapoisearnthectat/11nsto2coern sage41alssinarredishtetiv120hoo20omr rstngeex1masibngBdus fhiedvean01owso011merattillaarpemareblg cBuucfaigd tesnd10wom1etiol echrinecteaecousiceachtos ud0/1smanwoexhingcttaascostinedinco runin11aendwiisxpevg,edkes bcot bneingapredndn 21 ared alls apevemdesbynsbassitsapidude20arreextareanctedmetos cy sstass Psataucert01redutefuesntitsd ieaocosetasePlgnealceta1/foucenursuictnasreogettntalaeaewee bak/1orctntrthultipto2suedgntint tnnarwxpbyen2retiochet ipaa0redunizngtad|rinspey 2nbecaonuserinteac10educzagarre2ngseen2.bbyasn osh8sedch0.d aeanasiffed01gtnd6%by1stofhio%sigd tieasfrcesidf idu11leodit%y U19tf 8on% igntoevs troedeinuc1/evftu% aUm.5o8%neinnifo eethomofen rce20vechureanm5%in%ed2ficexstemf tRred| F01lshae.ndmg%;ncdd t20caxcetrdRthR1alwFi12aald 0etcreduth01aneeroeR1hebl twain2 tanle0.niheeauehe2.ntedngbt5e Sbilteatenatonden2%i Wease tim.rd 3gt t17Shlioermerano 2dg%Wmsetomred3 toto7mhaonmr vnc20imes% rWamabo tmpdutimopo emaren osvocia01mpsreteainbythpaucmpeeqinehorholual15/prinspern cy 2hectctmeraqunhor 3asumP/2ron tper’sco27ct oios.atiit20old33smePla20oveteecs mos7%coofon.inty01de3%bean01edermctimst% womf isngra10er%eesan6dmveajdwmpncocat0 tr’soenaleitmseljorihplcrofcatiotos mofnestsoyorveicetreansho,o Rmitacs.CoofacerhtioasnehisR1matschChPopnancursisonseetfls f1 1ndChiehaPapenedstas mnesfiofo12daCaevapageraegttoremoininwore24atpeveptgeatathome rmafnnawsec4mteexedte7tintivismerainththncfocamfox td ber79ngveiser,awnlyheheceforastinfortoby9ges,wyeeertnroy

Chapter| Financial Plan15.2 Financial Planning Assumptions15.2.1 Macro-Economic AssumptionsTable 15.1: Macro-Economic AssumptionsActual Budget ForecastF'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16CPIPer BER 11.50% 7.10% 4.20% 5.70% 4.70% 5.70% 5.30% 5.70% 5.40% 5.40%% AdjustmentRevised calendar average 11.50% 7.10% 4.20% 5.70% 4.70% 5.70% 5.30% 5.70% 5.40% 5.40%PPIPer BER 14.30% (0.10%) 9.40% 6.10% 5.80% 5.00% 4.80% 5.20% 4.90% 4.90%% Adjustment 0.00% 0.00% 2.50% 2.50% 2.00% 2.00% 2.00% 2.00% 2.00%Revised calendar average 14.30% (0.10%) 9.40% 8.60% 8.30% 7.00% 6.80% 7.20% 6.90% 6.90%Interest Rate - Borrowings *Short-term - - - 6.53% 6.23% 5.84% 6.56% 7.18% 7.61% 7.91%Spread - - - 2.50% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%- - - 9.03% 6.83% 6.44% 7.16% 7.78% 8.21% 8.51%Long-term - - 9.10% 9.08% 8.29% 9.05% 9.27% 9.32% 9.39% 9.39%Spread - - 1.60% 2.00% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%- - 10.70% 11.08% 9.89% 10.65% 10.87% 10.92% 10.99% 10.99%European Investment Bank = Fixed rate - - - 9.48% 9.10% 9.10% 9.10% 9.10% 9.10% 9.10%Weighted average cost of capital - - 9.50% 9.51% 9.33% 9.42% 9.52% 9.69% 9.86% 10.02%Interest Rate - Investments - - 4.64% 6.75% 5.00% 4.44% 5.16% 5.78% 6.21% 6.51%Reference was made to the following publications in order to arrive at the macro-economic factors for 2011 to 2016:- Bureau for Economic Research (BER) Inflation Forecast - 06 December 2010- BER Interest Forecast - 06 December 2010* Interest Rate:(a) The short-term (three-month) rates are based on the average of:(i) Banker's Acceptance (BA) forecast by the Bureau for Economic Research, and(ii) The Local Money Markey average, obtained from the mid-rate between 3m Banker's Acceptance (BA) from Forward RateAgreement (FRA) bid, and 3m BA from FRA (offer), converted to NACM and the swap rates per Inet Bridge.(b) The long-term (ten-year) rate was based on the forecast of the R204 obtained from the Bureau for Economic Research.The 70% fixed to 30% floating interest ratio was applied to all new debt.Page 80 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Financial Plan Chapter15.2.2 Staff CostsTable 15.2: Staff CostsActual Budget ForecastAnnual Salary Increase F'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16Basic pay (% increase) 7.2% 12.0% 9.0% 7.8% 8.0% 8.3% 7.9% 7.9% 7.7% 7.6%[Based on nominal wage rate forecast by BER]Staff Complement (No.)Permanent Staff 724 733 771 841 734 734 734 734 734 734Contract Staff - General 51 66 30 22 27 27 27 27 27 27Contract Staff - Recoverable 10 10 29 29 21 21 21 21 21 21Trainees 14 16 15 18 16 16 16 16 16 16Sub-Total 799 825 845 910 798 798 798 798 798 798Vacancies - budgeted - - - - 56 122 122 122 122 122Sub-total 799 825 845 910 854 920 920 920 920 920Vacancies - not included in forecast - - - - 60 - - - - -Total establishment 799 825 845 910 914 920 920 920 920 920Staff Costs (R'000)- Direct staff costs 79 497 82 666 92 618 104 436 101 731 118 896 128 289 138 424 149 083 160 413- Total Indirect staff costs 118 658 142 960 163 864 212 271 192 732 229 668 247 811 267 388 287 977 309 864- Indirect staff costs 79 948 99 715 114 995 212 271 140 573 167 683 180 929 195 223 210 255 226 234- Maintenance Payroll 38 710 43 245 48 869 - 52 159 61 985 66 882 72 165 77 722 83 629Payroll costs 198 155 225 626 256 482 316 707 294 463 348 564 376 100 405 812 437 060 470 276- Less WIP Recoveries - F13 onward (2% of capex WIP) (3 637) (8 806) (11 998) (18 756) (7 698) (8 545) (10 967) (12 558) (13 801) (14 099)Total staff costs 194 518 229 384 260 517 297 951 286 765 340 019 365 134 393 254 423 259 456 177- % Increase before recoveries 14.4 13.9 13.7 23.5 14.8 18.4 7.9 7.9 7.7 7.6- % Increase after recoveries 13.0 17.9 13.6 13.6 10.1 18.6 7.4 7.7 7.6 7.8- Average pay 248.0 273.5 303.5 348.0 344.8 378.9 408.8 441.1 475.1 511.2- % increase average pay - 10 11 15 14 10 8 8 8 8Productivity - kl'000 per employee 505.32 504.19 503.96 468.11 453.59 449.90 450.30 455.47 462.31 469.24Retirement benefit costs(included in other operating costs) R'000- Post-retirement medical aid 31 646 24 640 27 646 25 000 27 888 25 319 15 000 5 000 5 000 5 000- Pension top up 14 044 13 422 4 990 27 125 9 223 20 493 5 000 5 000 5 000 5 000- Pension - cost of conversion DB to DC - - - - - 36 000 46 000 - -Total retirement benefit costs 45 690 38 062 32 636 52 125 37 111 45 812 56 000 56 000 10 000 10 000- % Increase 10.6 7.4 10.3 18.7 13.7 23.4 50.9 22.2 (82.1) -Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 81

Chapter| Financial Plan15.2.3 Operating CostsTable 15.3 (a): Operating Costs - EnergyActual Budget ForecastF'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16Energy (R'000)- Forecast Price increase* 30.0% 24.8% 25.8% 25.9% 12.0% 12.0% 7.9%- Cost 39 442 45 401 59 398 90 127 90 425 109 958 138 438 155 051 173 658 187 376- Direct: S29 36 905 42 620 56 127 84 135 84 451 94 934 ** 119 522 133 865 149 929 161 773- Direct: S30 386 526 836 1 078 1 078 8 916 ** 11 226 12 573 14 082 15 194Indirect 2 151 2 255 2 435 4 914 4 896 6 108 7 690 8 613 9 647 10 409- % Increase in cost 31.0 15.1 30.8 26.0 52.2 21.6 25.9 12.0 12.0 7.9* As per the Bureau for Economic Research.The increase in energy costs in F’11 by 52.2% compared to prior years is mainly due to:1. Price increase per Eskom of 24.8%.2. Increased pumping compared with the prior years at pump stations most notably the shaft pump and the booster pump station.** The energy costs relating to the DWA owned dams no longer form part of the energy operating costs of S29 but are now recognised aspart of raw water charges. The energy costs of the dams equate to R7.8m for F'12. Refer to section 15.4 for further analysis of unit costs.Table 15.3 (b): Operating Costs - ChemicalsActual Budget ForecastF'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16Chemicals (R'000)- Forecast Price increase 20.0% 8.3% 7.0% 6.8% 7.2% 6.9% 6.9%- Cost 25 175 32 751 32 510 33 947 37 436 39 410 42 090 45 120 48 234 51 562- % Increase in cost 18.8 30.1 (0.7) 4.4 15.2 5.3 6.8 7.2 6.9 6.9Table 15.3 (c): Operating Costs - MaintenanceActual Budget ForecastF'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16Maintenance (R'000)***- Forecast Price increase 7.5% 8.0% 6.0% 6.8% 7.2% 6.9% 6.9%- Total Cost 106 983 115 540 124 117 137 632 121 632 125 977 134 545 144 232 154 184 164 822- Direct: S29 75 936 98 365 106 329 113 911 104 942 104 676 *** 111 794 119 843 128 113 136 952- Direct: S30 1 326 2 460 2 171 1 136 1 673 5 766 *** 6 159 6 603 7 058 7 545Indirect 29 721 14 715 15 617 22 585 15 017 15 535 16 592 17 786 19 013 20 325- % Increase in cost 31.9 29.7 6.3 13.1 (2.0) 3.6 6.8 7.2 6.9 6.9- % of Assets (PPE) 4.6 5.6 6.0 5.3 4.0 3.6 3.4 3.3 3.2 3.0*** Maintenance costs have reduced due to operational efficiencies as well as the fact that R5.1m of costs in F'12 relating to the O&M onDWA dams are now reflected in the raw water costs.Page 82 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Financial Plan Chapter15.2.4 Raw Water PurchasesThe major raw water cost differences between this business plan and the prior year’s business plan are attributableto the following:1. Significant price increases due to the raw water pricing strategy as presented by DWA.2. The additional operation and maintenance charges on the DWA dams previously reflected as UmgeniWater operating costs.Off-Balance Sheet Funding of Water Resources Infrastructure by DWAThis business plan does not reflect the capital unit charge of about 46 c/kl for Spring Grove Dam which may comeinto effect on 01 July 2012 and impact on water costs as from F'13 onward. Once finalised, this will be taken intoaccount in next year’s Business Plan.Table 15.4: Raw Water PurchasesRaw Water Volumes (kl'm)Actual Budget ForecastF'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16Volume Mgeni System 385 396 401 386 383 382 386 390 393 397Volume Mdloti System 14 14 15 26 23 23 23 23 23 24Volume Other 20 20 20 20 21 21 21 21 21 21Total Abstraction Volume 420 430 436 432 427 426 430 434 437 442Raw Water Consumption Charge per System (c/kl)Mgeni SystemTariff existing infrastructure 15.64 15.68 16.15 17.66 18.35 20.91 23.00 25.30 27.83 30.61% Increase - 0.2 3.0 12.9 13.6 14.0 10.0 10.0 10.0 10.0Mdloti systemTariff existing infrastructure 61.13 72.68 83.92 91.45 63.19 70.95 78.05 85.85 94.43 103.88% Increase 11.5 18.9 15.5 12.9 (24.7) 12.3 10.0 10.0 10.0 10.0Consumption charge - New Capex (c/kl)Cost - Raising Hazelmere Dam Wall - - - - - - 21.33 21.12 20.91 20.70% Increase - - - - - - - (1.0) (1.0) (1.0)Operation and maintenance Charge per System (c/kl)Mgeni SystemCost - - - - - 9.57 10.53 11.58 12.74 14.01% Increase - - - - - - 10.0 10.0 10.0 10.0Mdloti systemCost - - - - 30.27 36.40 40.04 44.04 48.45 53.29% Increase - - - - - 20.3 10.0 10.0 10.0 10.0Water Resource Management (WRM) Charge (basedon registered volume) (c/kl)Tariff - existing 1.27 1.35 1.60 1.73 2.11 2.70 3.43 4.07 4.82 5.72% Increase 4.7 6.3 18.7 - 31.8 27.6 27.2 18.8 18.5 18.5Total Raw Water Costs (R'000)Total Consumption Costs 69 077 72 184 76 942 94 273 84 636 95 983 106 638 118 474 131 625 146 235New Capex - - - - - - 4 898 4 898 4 898 4 898Operation and maintenance - - - - 6 874 44 822 49 797 55 325 61 466 68 289Water Resource Management Cost 5 092 5 560 6 928 7 460 9 137 11 825 14 201 17 066 20 520 24 686Total Raw Water Costs 74 169 77 744 83 870 101 733 100 647 152 630 175 534 195 763 218 509 244 108Effective unit cost 17.66 18.08 19.24 - 23.60 35.85 40.85 45.12 49.89 55.21% Increase - 2.4 6.4 - 22.7 51.9 13.9 10.5 10.6 10.7Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 83

Chapter| Financial Plan15.3 Water Sales ProjectionsWater Sales projections for the next 5 to 6 years will be impacted on by the water loss management initiativesundertaken by Umgeni Water’s customers. Hence the projected demands have been revised since the F'11business plan in anticipation of negative growth for F'11 and 0% growth for F'12 to F'13. Post F'16 sales volumesmay be further impacted on by the reclamation projects undertaken by the eThekwini Metropolitan Municipality.Table 15.5: Water Sales ProjectionsActual Budget ForecastF'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16-Bulk (kl’000) 403 754 415 956 425 848 425 978 414 579 413 905 414 273 419 037 425 322 431 702Increase 8.05% 3.02% 2.38% 0.78% (2.65%) (0.16%) 0.09% 1.15% 1.50% 1.50%-Wastewater (kl’000) 211 273 273 273 244 246 246 249 253 257Increase 17.22% 29.38% (0.01%) 0% (10.61%) 0.82% 0.09% 1.15% 1.50% 1.50%Figure 15.1: Water Sales ProjectionsBulk Water Sales Volumekl'ooo435 000430 000425 000420 000415 000410 000405 000400 000395 000390 000385 0008.05%403 754415 956425 848425 978414 579413 905414 273419 037425 322431 70210.00%8.00%6.00%3.02%2.38%0.78%4.00%2.00%(0.16%) 0.09%0.00%(2.65%)-2.00%-4.00%F'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16Growth year-on-year- Bulk (kl’000) IncreasePage 84 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

SalTabCusteTheMsunuMguSizaUguiLemSisonOtheTotales Vble 15tomerekwini Mnduzi LungundWaterDMmbe DMnke DMerlVolum5.6: WMMLMdlovu DMMme pWateDMper Cr SaleVokl’31540Custoes PrF'0ol’m5.557.79.33.85.68.30.82.803.8omerroject08Growt%111(1rtionsth61212816(2)717)eThekMsunuMguSizaUgu DiLembSisonOtherper CAFVolkl’m326.256.510.63.86.08.60.83.4416.0kwiniduziungundDMbe DMke DMrCustoActualF'09Gro%dlovuMMomerowth%3(2)13184323DMrVolkl’m3285811471103425SOther1%F'10lGm.5.5.2.2.9.7.9.0.8iLeSisonk0%r0Growth%1369313610(12Fiembe D3%ke DM%CushVk1 33691602)4igureeThekw76%UDMstomBudgVolkl’m29.558.211.14.18.012.20.92.126.0e 15.2wini%Si1Ugu D2%merget F11Grow%2: Waiza1%MBas1wth%12232(13)2(1)ater SMsu1uMge 20Volkl’m315.460.011.34.48.311.70.92.7414.6Salesunduz14%ungunDM3%011UmF'11Gm403437976ProjeindlovugeniGrowth%(4.02.50.66.05.0(0.2(0.2(9.1ectioWatVkl0) 31612) 12))41ons peter FiF'1Vol’m12.161.511.74.68.711.70.92.713.9er CuSison0ve-Y12Grow%(1245502stomnke DM0%CYear Bwth1.0)2.54.05.05.00.12.1-mereThek75%MOther1%CustBusinVolkl’m312.161.511.84.78.811.80.92.7414.3kwini%iLemtomnessF'13Grombe DM3%er BPlanForeowth%--0.90.90.90.90.90.9S1UMBase| 201ecastVokl’m3156212481102419iza1%Ugu DM2%201|1/201F'14olGm5.72.22.04.78.9.90.92.89.0Msun15uMguM12Fina12 to4Growth%1.21.21.21.21.21.1.1.nduzi5%ngundDM3%anciao 2015hVk2 322221114dlovual Pla5/201FVolkl’m320.463.112.24.89.012.11.02.8425.3an16F'15Grow%wth%1.51.51.51.51.51.51.51.5ChapVolkl’m325.264.012.34.99.112.31.02.9431.7pterPageF'16G203913097e 85rowth%1.51.51.51.51.51.51.51.5

Chapter| Financial PlanVolume Trends by CustomerFigures 15.3 (a) to (h): Volume Trends by Customer330(a) eThekwini MM10.0%65(b) Msunduzi LM15.0%3205.0%6010.0%310315.5326.2328.5315.4312.1312.1315.7320.4325.20.0%5557.756.558.560.061.561.562.263.164.05.0%0.0%300F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth-5.0%50F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth-5.0%15(c) uMgungundlovu DM15.0%6(d) Siza Water10.0%1010.0%459.310.611.211.311.711.812.012.212.35.0%23.83.84.24.44.64.74.74.84.95.0%0F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth0.0%0F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth0.0%10(e) Ugu DM40.0%15(f) iLembe DM300.0%86425.66.07.98.38.78.88.99.09.130.0%20.0%10.0%1058.38.611.711.711.711.811.912.112.3200.0%100.0%0.0%0F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth0.0%0F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth-100.0%1.5(g) Sisonke DM10.0%4.0(h) Other30.0%1.00.50.800.820.900.900.920.930.940.950.965.0%0.0%3.02.01.02.83.43.02.72.72.72.82.82.920.0%10.0%0.0%-10.0%0.0F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth-5.0%0.0F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16Volume Growth-20.0%Page 86 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Financial Plan Chapter15.4 Tariff ProjectionsThe F'12 tariff increase has been approved at 6.1% which is 0.4% higher than the 5.7% forecasted CPI level for F'12.Table 15.7: Tariff ProjectionsActual Budget ForecastBulk Tariff (R/Kl) F'08 F'09 F'10 F'11 F'11 F'12 F'13 F'14 F'15 F'16- Bulk Tariff 1- Base Tariff 2.820 2.960 3.079 3.279 3.279 3.482 3.694 3.890 4.112 4.334- Tariff Increase 0.141 0.118 0.200 0.203 0.203 0.212 0.196 0.222 0.222 0.234- New Tariff - Umgeni Water 2.960 3.079 3.279 3.482 3.482 3.694 3.890 4.112 4.334 4.568- % Increase - UW 5.0 4.0 6.5 6.2 6.2 6.1 5.3 5.7 5.4 5.4- Bulk Tariff 2 - eThekwini- Base Tariff 2.820 2.960 3.019 3.215 3.215 3.414 3.622 3.814 4.031 4.249- Tariff Increase 0.141 0.059 0.196 0.199 0.199 0.208 0.192 0.217 0.218 0.229- New Tariff - Umgeni Water 2.960 3.019 3.215 3.414 3.414 3.622 3.814 4.031 4.249 4.478- % Increase - UW 5.0 2.0 6.5 6.2 6.2 6.1 5.3 5.7 5.4 5.4- Bulk Tariff 3 - Siza Water- Base Tariff 2.820 2.960 3.079 3.279 3.279 3.482 3.726 3.923 4.147 4.371- Tariff Increase 0.141 0.118 0.200 0.203 0.203 0.244 0.197 0.224 0.224 0.236- New Tariff - Umgeni Water 2.960 3.079 3.279 3.482 3.482 3.726 3.923 4.147 4.371 4.607- % Increase - UW 5.0 4.0 6.5 6.2 6.2 7.0 5.3 5.7 5.4 5.4Average Tariff 2.960 3.027 3.226 3.429 3.429 3.638 3.831 4.049 4.268 4.498Other Commercial or Management Fee IncreasesTable 15.8: Other Commercial or Management Fee Increases2009-2010 2010-2011 2009-2010 2011-2012 2011-2012Potable Water - Other R/kl R/kl % R/kl %Siza Water 3.279 3.482 6.2% 3.726 7.0%Sappi - 3.535 - 3.782 7.0%Commercial 7.638 8.111 6.2% 8.638 6.5%Reticulation 8.793 9.338 6.2% 9.945 6.5%Raw WaterPiped water - Umgeni System 1.697 1.917 13.0% 2.205 15.0%Piped water - Mdloti System - - - 2.950 -Dam water - Umgeni System 0.341 0.385 13.0% 0.443 15.0%Dam water - Mdloti System - - - 1.250 -WastewaterIxopo 7.144 7.587 6.2% 8.125 7.1%Management Fee R'000/p.a. R'000/p.a. % R'000/p.a. %Darvill Wastewater 42 724 45 372 6.2% 48 594 7.1%Howick Wastewater 6 043 6 298 4.2% 6 657 5.7%Reticulation - Msunduzi 9 024 6 671 (26.1%) 7 387 10.7%Water Research Levy R.c/kl R.c/kl % R.c/kl %Levy 0.039 0.041 5.8% 0.043 5.7%Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 87

| Financial Plan ChapterTable 15.9: Tariff Cost ComponentsComponents 2007/2008 2008/2009 2009/2010 Budget2010/2011 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016Tariff Change Tariff Change Tariff Change Tariff Change Tariff Change Tariff Change Tariff Change Tariff Change Tariff Change Tariff ChangeR.c/kl % R.c/kl % R.c/kl % R.c/kl % R.c/kl % R.c/kl % R.c/kl % R.c/kl % R.c/kl % R.c/kl %Direct CostsChemicals 0.056 10% 0.070 27% 0.069 (2%) 0.072 11% 0.082 19% 0.087 7% 0.093 6% 0.098 5% 0.103 5% 0.107 5%Depreciation 0.123 (11%) 0.138 12% 0.147 7% 0.195 27% 0.163 11% 0.160 (1%) 0.171 6% 0.180 6% 0.189 5% 0.198 5%Energy * 0.084 27% 0.092 9% 0.118 29% 0.178 39% 0.186 58% 0.209 12% 0.266 27% 0.294 11% 0.324 10% 0.343 6%Maintenance* 0.175 25% 0.219 25% 0.232 6% 0.247 1% 0.235 1% 0.233 (1%) 0.248 6% 0.261 5% 0.273 5% 0.286 5%Raw Water 0.184 (2%) 0.187 2% 0.197 5% 0.239 13% 0.243 23% 0.369 52% 0.424 15% 0.467 10% 0.514 10% 0.565 10%Staff Costs 0.161 1% 0.176 10% 0.193 9% 0.217 13% 0.215 12% 0.236 10% 0.254 8% 0.269 6% 0.284 6% 0.299 5%Other direct operating activities 0.020 87% 0.008 (58%) 0.022 169% 0.022 6% 0.024 0% 0.019 (19%) 0.022 15% 0.025 13% 0.028 13% 0.029 4%Total Direct Costs 0.801 6% 0.890 11% 0.978 10% 1.170 15% 1.148 17% 1.314 14% 1.477 12% 1.595 8% 1.715 8% 1.829 7%Indirect CostsOverheads 0.576 0% 0.491 (15%) 0.596 21% 0.749 18% 0.647 9% 0.698 8% 0.877 26% 0.961 10% 0.895 (7%) 0.947 6%Depreciation 0.031 13% 0.030 (3%) 0.035 16% 0.044 30% 0.050 45% 0.071 41% 0.080 12% 0.110 38% 0.122 11% 0.102 (16%)Amortisation 0.227 (15%) 0.225 (1%) 0.232 3% 0.218 (6%) 0.228 (2%) 0.007 (97%) 0.007 0% 0.007 0% 0.007 0% 0.007 0%Impairments - - 0.005 - 0.023 392% - - 0.210 814% 0.232 10% 0.228 (2%) 0.194 (15%) 0.152 (22%) 0.094 (38%)Total Indirect Costs 0.833 (4%) 0.751 (10%) 0.886 18% 1.011 13% 1.135 28% 1.009 (11%) 1.192 18% 1.272 7% 1.176 (8%) 1.150 (2%)Total Direct & Indirect Cost 1.635 1% 1.641 0% 1.864 14% 2.181 17% 2.283 22% 2.322 2% 2.669 15% 2.867 7% 2.891 1% 2.979 3%Finance Costs 0.386 (32%) 0.260 (33%) 0.169 (35%) 0.107 (37%) 0.107 (37%) 0.134 25% 0.133 (1%) 0.139 4% 0.129 (7%) 0.141 10%Cost-Bulk Water 2.021 (8%) 1.901 (6%) 2.033 7% 2.390 18% 2.390 18% 2.456 3% 2.801 14% 3.005 7% 3.020 0% 3.120 3%Contribution from Wastewater 0.007 (58%) 0.012 88% 0.017 37% 0.011 (36%) 0.011 (36%) 0.010 (7%) 0.008 (18%) 0.008 (3%) 0.005 (32%) 0.004 (30%)Contribution from Section 30 activities 0.018 (38%) 0.060 240% 0.050 (16%) 0.016 (69%) 0.016 (69%) 0.020 27% 0.001 (94%) 0.001 (1%) 0.001 (1%) 0.001 (1%)Total Cost 1.996 (7%) 1.828 (8%) 1.966 8% 2.363 20% 2.363 20% 2.426 3% 2.792 15% 2.996 7% 3.013 1% 3.115 3%Surplus Margin/(Deficit) 0.964 44% 1.199 24% 1.260 5% 1.066 (15%) 1.066 (15%) 1.212 14% 1.039 (14%) 1.053 1% 1.255 19% 1.383 10%Total Average Umgeni Water Tariff 2.960 5% 3.027 2% 3.226 7% 3.429 6% 3.429 6% 3.638 6% 3.831 5% 4.049 6% 4.268 5% 4.498 5%* Impact of the operating and maintenance cost of the DWA Dams now included as a raw water cost from F'12From F'12 onward, the cost of operating and maintaining the DWA Dams will not form part of the operating cost structure of Umgeni Water but will be part of the raw water cost in terms of the raw water pricingstrategy.The most significant movements in the direct cost per kl were analysed as follows:Reduction in:R/klEnergy cost attributable to O&M of dams 0.019Maintenance costs attributable to O&M of dams 0.009Staff cost 0.0170.045This represents 19% of the raw water price increase in F'12Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 88

| Financial Plan Chapter15.5 Subsidy ProjectionsRural Bulk Infrastructure GrantsUmgeni Water's business plan includes a number of projects with a focus on rural development.Based on the letter received from DWA the following grants have been taken into account.Table 15.10: Regional Bulk Infrastructure Grants (R'000)Project Total RBIG Funding F11 F12 F13 F14 F15Richmond 55 950 4 276 19 838 14 879 8 455 8 502Greater Eston 47 956 3 665 17 004 12 753 7 247 7 287Mhlabatshane Sub-Regional Scheme 79 831 10 702 33 319 35 810 - -Total Rural Bulk Infrastructure Grant Funding 183 737 18 643 70 161 63 442 15 702 15 789However, in spite of the grants received as per the above, Umgeni Water's net profit continues to be impacted bythe impairment values as follows:Impairment SummaryTable 15.11: Impairments (R'000)Total Impairment Business Plan F'12 F'11 F'12 F'13 F'14 F'15 F'16 F'17465 000 87 000 96 000 95 000 81 000 65 000 40 000 1 000Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 89

Chapter| Financial Plan15.6 Subsidiaries and AssociatesSubsidiariesMsinsi Holdings (Pty) LtdMsinsi Holdings (Pty) Ltd is a 100% owned subsidiary of Umgeni Water, which provides land and wildlifemanagement of the land surrounding some of Umgeni Water's major dams and treatment works. The entity isprojected to break even over the five year period to 2016 with positive operating cash flows.Refer to Tables 15.19 to 15.21 for the financial statement projections of Msinsi Holdings (Pty) Ltd.Umgeni Water Services (Pty) LtdUmgeni Water Services (Pty) Ltd is a 100% owned subsidiary of Umgeni Water. Its main business is holding of aninvestment (18.5%) in an associate, namely, Durban Water Recycling and carrying out other commercial activities.Thus the main source of income for Umgeni Water Services is the dividend distribution by its associate companyDurban Water Recycling. It is envisaged that Umgeni Water Services will retain its current investment in DurbanWater Recycling at R5.7m for the next 5 years.Refer to Tables 15.22 to 15.23 for the financial statement projections of Umgeni Water Services (Pty) Ltd.Page 90 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Financial Plan Chapter15.7 Challenges in Collection of DebtorsThere have been no significant challenges in terms of collection of amounts due by debtors.outstanding are projected at 38 days.Debtor’s daysUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 91

Chapter| Financial Plan15.8 Financial Statement ProjectionsFinancial statement projections are shown in Tables 15.12 to 15.27.Page 92 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

Table 15.12: Umgeni Water Income Statement| Financial Plan ChapterUMGENI WATERIncome Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16TOTAL Actual Actual Actual Budget ForecastVolume of Bulk treated water sold (in kl'000) 403 754 415 956 425 848 425 978 414 579 413 905 414 273 419 037 425 322 431 702Revenue 1 280 747 1 485 496 1 622 380 1 614 484 1 683 216 1 853 130 1 700 682 1 819 270 1 947 290 2 082 688Water Sales - Bulk 1 190 798 1 259 187 1 373 784 1 460 849 1 422 120 1 506 646 1 587 960 1 697 677 1 816 291 1 942 938Water Sales - Reticulation - - - - - - - - - -Water Sales - Raw Water 246 368 232 384 270 297 308 325 343 361Wastewater Sales 1 348 1 814 1 492 2 071 1 851 1 999 2 107 2 252 2 409 2 578Wastewater Management Fee 33 736 40 116 42 724 45 372 45 372 48 594 51 655 55 116 58 644 62 397Section 30 activities 54 619 184 012 204 148 105 808 213 603 295 594 58 653 63 899 69 602 74 414Cost of sales 393 265 545 025 620 857 619 304 700 409 836 951 692 809 758 061 828 962 899 104Changes in water inventory (1 509) (122) 601 - - - - - - -Chemicals 25 175 32 751 32 510 33 947 37 436 39 410 42 090 45 120 48 234 51 562Depreciation 52 033 59 848 65 190 85 684 70 185 75 324 80 446 86 238 92 188 98 549Energy 37 291 43 145 56 963 85 213 85 529 103 851 130 748 146 438 164 011 176 967Maintenance 77 262 100 825 108 500 115 047 106 616 110 443 117 953 126 446 135 171 144 498Raw Water 74 169 77 744 83 870 101 733 100 647 152 630 175 534 195 763 218 509 244 108Staff Costs 79 497 82 666 92 618 104 436 101 731 118 896 128 289 138 424 149 083 160 413Section 30 activities 38 461 141 132 169 537 82 119 186 373 225 259 5 045 5 141 5 238 5 338Other direct operating activities 10 885 7 035 11 067 11 125 11 892 11 138 12 705 14 491 16 529 17 670Gross profit 887 482 940 471 1 001 523 995 180 982 808 1 016 179 1 007 873 1 061 209 1 118 328 1 183 58469% 63% 62% 62% 58% 55% 59% 58% 57% 57%Other operating income 6 756 30 826 7 762 7 370 (9 961) 6 431 6 594 6 766 6 949 7 141Administration Expenses 337 680 329 163 389 186 446 352 492 584 452 545 519 274 557 817 526 468 524 751Staff Costs (excluding Maintenance Payroll costs) 118 658 112 280 132 871 193 514 140 573 167 683 180 929 195 223 210 255 226 234Energy 2 151 2 255 2 435 4 914 4 896 6 108 7 690 8 613 9 647 10 409Depreciation 12 628 12 869 15 359 19 309 21 482 29 910 33 449 46 879 52 644 44 838Amortisation 91 627 93 504 98 978 93 075 94 510 2 900 2 975 2 975 2 975 2 975Impairments - 1 942 9 790 - 87 126 96 047 94 525 81 229 64 509 40 460Other operating and administrative expenses (net of recoveries) 112 615 106 313 129 753 135 540 143 997 149 897 199 705 222 898 186 440 199 835Operating income before interest 556 559 642 134 620 100 556 198 480 263 570 065 495 193 510 158 598 808 665 974Net interest and finance charges 165 439 116 496 80 076 70 574 51 781 64 936 60 569 64 363 60 373 63 767Interest Paid 270 735 267 571 230 500 140 466 117 800 103 928 106 078 112 420 106 521 103 014Interest Received (105 296) (151 075) (150 424) (69 892) (66 019) (38 992) (45 510) (48 057) (46 148) (39 247)Net Profit (Loss) 391 119 525 638 540 024 485 623 428 481 505 129 434 625 445 795 538 435 602 207Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 93

Table 15.13: Income Statement Bulk Water| Financial Plan ChapterUMGENI WATERIncome Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16BULK WATER Actual Actual Actual Budget ForecastVolume of treated water sold (in kl'000) 403 754 415 956 425 848 425 978 414 579 413 905 414 273 419 037 425 322 431 702Revenue 1 191 044 1 259 555 1 374 016 1 461 232 1 422 390 1 506 943 1 588 267 1 698 002 1 816 634 1 943 299Water Sales - Bulk 1 190 798 1 259 187 1 373 784 1 460 849 1 422 120 1 506 646 1 587 960 1 697 677 1 816 291 1 942 938Water Sales - Reticulation - - - - - - - - - -Water Sales - Raw Water 246 368 232 384 270 297 308 325 343 361Cost of sales 323 587 370 237 417 086 498 298 475 853 543 690 611 678 668 156 729 432 789 511Changes in water inventory (1 509) (122) 601 - - - - - - -Chemicals 22 458 29 294 29 387 30 559 33 959 36 175 38 494 41 037 43 609 46 324Depreciation 49 554 57 358 62 700 83 194 67 450 66 348 70 694 75 518 80 425 85 631Energy 33 828 38 105 50 338 75 878 77 230 86 520 110 157 123 217 137 854 148 080Maintenance 70 761 91 228 98 732 105 413 97 457 96 396 102 578 109 364 116 229 123 477Raw Water 74 169 77 744 83 870 101 733 100 647 152 630 175 534 195 763 218 509 244 108- Without CUC - - - - - - - - - -- CUC - - - - - - - - - -Staff Costs 64 842 73 199 82 022 92 286 89 241 97 606 105 020 112 754 120 807 129 262Other direct operating activities 9 484 3 432 9 436 9 235 9 869 8 015 9 201 10 504 11 999 12 628Gross margin/profit 867 457 889 318 956 930 962 934 946 537 963 253 976 590 1 029 846 1 087 202 1 153 78973% 71% 70% 66% 67% 64% 61% 61% 60% 59%Other operating income 6 155 26 452 3 636 3 178 (14 087) 2 309 3 022 3 194 3 377 3 569Administration Expenses 336 506 312 212 377 167 430 617 470 538 417 478 493 942 533 050 500 182 496 413Staff Costs 118 658 106 246 125 706 186 765 135 122 161 417 174 169 187 928 202 398 217 781Energy 1 856 2 255 2 435 4 914 4 896 6 108 7 690 8 613 9 647 10 409Depreciation 12 378 12 420 14 782 18 684 20 868 29 470 32 979 46 196 51 913 44 057Amortisation 91 627 93 504 98 978 93 075 94 510 2 900 2 975 2 975 2 975 2 975Impairments - 1 942 9 790 - 87 126 96 047 94 525 81 229 64 509 40 460Other operating and administrative expenses 111 986 95 845 125 475 127 179 128 016 121 536 181 604 206 109 168 740 180 732Operating income before interest 537 106 603 558 583 399 535 495 461 912 548 083 485 670 499 990 590 397 660 944Net interest and finance charges 155 764 108 036 72 040 63 650 44 384 55 327 54 966 58 058 54 770 60 881Interest Paid 261 060 259 111 222 464 133 542 110 402 94 319 100 476 106 115 100 918 100 128Interest Received (105 296) (151 075) (150 424) (69 892) (66 019) (38 992) (45 510) (48 057) (46 148) (39 247)Net Profit (Loss) 381 341 495 522 511 358 471 845 417 528 492 756 430 705 441 932 535 627 600 064Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 94

| Financial Plan ChapterTable 15.14: Income Statement WastewaterUMGENI WATERIncome Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16WASTEWATER Actual Actual Actual Budget ForecastRevenue 35 084 41 930 44 216 47 443 47 223 50 593 53 762 57 368 61 053 64 974Wastewater Sales 1 348 1 814 1 492 45 372 1 851 1 999 2 107 2 252 2 409 2 578Wastewater Management Fee 33 736 40 116 42 724 45 372 45 372 48 594 51 655 55 116 58 644 62 397Cost of sales 20 570 26 149 26 534 31 246 29 995 34 379 38 263 43 505 49 335 55 946Chemicals 2 683 3 357 3 071 3 257 3 399 3 153 3 509 3 989 4 524 5 130Depreciation 2 479 2 490 2 490 2 490 2 736 3 682 4 098 4 660 5 284 5 992Energy 3 077 4 515 5 789 8 257 7 221 8 414 9 365 10 648 12 075 13 693Maintenance 5 175 7 137 7 597 8 498 7 485 8 281 9 217 10 479 11 883 13 476Staff Costs 6 094 5 388 6 297 7 130 7 564 8 721 9 706 11 036 12 515 14 191Other direct operating activities 1 062 3 262 1 290 1 361 1 591 2 128 2 369 2 693 3 054 3 463Gross margin/profit 14 514 15 780 17 682 16 197 17 228 16 214 15 498 13 863 11 718 9 02841% 38% 40% 34% 36% 32% 29% 24% 19% 14%Other operating income - 3 572 3 572 3 572 3 572 3 572 3 572 3 572 3 572 3 572Administration Expenses 2 186 5 747 6 001 6 458 8 890 9 051 10 047 7 767 7 379 8 071Staff Costs - - - - - - - - - -Energy 295 - - - - - - - - -Depreciation 197 381 385 379 428 207 221 417 445 476Amortisation - - - - - - - - - -Impairments - - - - - - - - - -Other operating & administrative expenses 1 694 5 366 5 616 6 080 8 462 8 844 9 826 7 351 6 934 7 595Operating income before interest 12 328 13 605 15 252 13 311 11 910 10 735 9 023 9 668 7 911 4 530Net interest and finance charges 9 672 8 460 8 032 6 924 7 397 6 544 5 603 6 305 5 603 2 886Interest Paid 9 672 8 460 8 032 6 924 7 397 6 544 5 603 6 305 5 603 2 886Interest Received - - - - - - - - - -Net Profit (Loss) 2 656 5 145 7 221 6 387 4 512 4 190 3 420 3 363 2 308 1 643Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 95

Table 15.15: Income Statement Other| Financial Plan ChapterUMGENI WATERIncome Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16OTHER (S30) Actual Actual Actual Budget ForecastRevenue 54 619 184 012 204 148 105 808 213 603 295 594 58 653 63 899 69 602 74 414Other 54 619 184 012 204 148 105 808 213 603 295 594 58 653 63 899 69 602 74 414Cost of sales 49 107 148 639 177 236 89 760 194 560 258 882 42 868 46 399 50 195 53 647Chemicals 34 101 51 131 78 82 88 94 100 107Depreciation - - - - - 5 294 5 654 6 061 6 479 6 926Energy 386 526 836 1 078 1 078 8 916 11 226 12 573 14 082 15 194Maintenance 1 326 2 460 2 171 1 136 1 673 5 767 6 159 6 603 7 058 7 545Staff Costs 8 561 4 078 4 300 4 838 4 927 12 570 13 563 14 634 15 761 16 959Projects/WIP costs 38 461 141 132 169 537 82 119 186 373 225 259 5 045 5 141 5 238 5 338Other direct operating activities 339 341 342 459 432 995 1 135 1 294 1 476 1 578Gross margin/profit 5 511 35 373 26 911 16 049 19 043 36 712 15 785 17 500 19 408 20 76710% 19% 13% 15% 9% 12% 27% 27% 28% 28%Other operating income 601 803 555 620 554 550 - - - -Administration Expenses (1 012) 11 205 6 018 9 277 13 156 26 015 15 285 17 000 18 908 20 267Staff Costs - 6 034 7 165 6 749 5 451 6 266 6 761 7 295 7 857 8 454Energy - - - - - - - - - -Depreciation 53 68 192 246 187 233 249 267 285 305Amortisation - - - - - - - - - -Impairments - - - - - - - - - -Other operating and administrative expenses (1 065) 5 102 (1 339) 2 282 7 519 19 516 8 275 9 438 10 766 11 508Operating income before interest 7 125 24 971 21 448 7 392 6 441 11 247 500 500 500 500Net interest and finance charges 3 - 4 - - 3 064 - - - -Interest Paid 3 - 4 - - 3 064 - - - -Interest Received - - - - - - - - - -Net Profit (Loss) 7 122 24 971 21 445 7 392 6 441 8 182 500 500 500 500Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 96

| Financial Plan ChapterTable 15.16: Balance SheetUMGENI WATERBalance Sheet (in R'000)As at June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastASSETSNon-current assets 2 975 452 2 660 142 2 816 639 3 709 255 3 128 476 3 561 409 3 996 875 4 445 415 4 903 197 5 568 943Property, plant and equipment 2 305 767 2 471 835 2 681 063 3 682 753 3 078 970 3 517 860 3 959 832 4 415 392 4 875 166 5 543 073Other non-current assets 229 031 165 826 116 954 12 034 30 156 28 671 26 978 25 142 23 150 20 988Investments 440 286 22 481 18 622 14 468 14 468 9 998 5 183 - - -Investments in subsidiaries - - - - 4 882 4 882 4 882 4 882 4 882 4 882Employee loans 368 - - - - - - - - -Current Assets 677 448 1 413 580 1 480 766 968 617 1 316 906 1 254 852 1 317 119 1 220 646 1 177 146 981 721Inventories 10 251 9 129 8 607 9 129 8 060 7 482 6 874 6 231 5 553 4 839Accounts receivable 140 656 174 766 256 764 191 626 201 335 223 393 205 179 219 336 234 235 249 805Sundry Debtors 7 381 7 781 6 964 8 181 6 964 6 964 6 964 6 964 6 964 6 964Current portion of employee loans 397 431 510 - - - - - - -Short-term investments 501 029 1 213 416 1 178 673 759 030 1 083 297 999 297 1 080 297 970 297 913 297 702 297Interest Receivable 5 616 3 282 12 314 14 14 14 14 14 14 14Assets held for sale - - 16 934 - 16 934 16 934 16 934 16 934 16 934 16 934Bank balances and cash 12 118 4 775 - 638 303 767 857 870 149 869Total assets 3 652 900 4 073 722 4 297 405 4 677 872 4 445 382 4 816 261 5 313 994 5 666 061 6 080 343 6 550 664RESERVES AND LIABILITIESReservesAccumulated reserves 1 018 734 1 542 116 2 082 143 2 533 093 2 510 625 3 015 754 3 450 378 3 896 173 4 434 608 5 036 815Non-current liabilities 2 141 153 1 105 046 1 606 873 1 639 076 1 439 629 1 343 283 1 409 572 1 308 309 1 168 179 1 076 924Interest bearing borrowings 1 976 784 917 449 1 400 167 1 502 949 1 277 109 1 223 295 1 356 972 1 262 160 1 124 197 1 035 397Post-retirement medical benefit obligations 164 369 187 597 206 707 136 127 162 519 119 988 52 600 46 149 43 982 41 526Provisions - - - - - - - - - -Current liabilities 493 013 1 426 559 608 389 505 704 495 129 457 225 454 043 461 578 477 556 436 925Accounts payable (including accruals & leases) 232 840 273 818 370 832 273 818 274 958 232 880 230 993 239 695 252 295 263 367Provisions 118 340 58 120 61 978 58 120 58 978 58 978 58 978 58 978 58 978 58 978Current portion of interest bearing loans 101 554 1 061 455 117 282 134 937 123 058 129 746 130 856 132 052 137 963 88 800Other payables/loans 40 279 33 166 40 876 38 829 38 135 35 621 33 217 30 853 28 319 25 780Bank overdrafts - - 17 421 - - - - - - -Total reserves and liabilities 3 652 900 4 073 722 4 297 405 4 677 872 4 445 382 4 816 261 5 313 994 5 666 061 6 080 343 6 550 664Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 97

| Financial Plan ChapterTable 15.17: Statement of Changes in EquityUMGENI WATERStatement of Changes in Equity (in R'000)For the Year ended June 30,AccumulatedCapital Revaluation ProfitContributions Reserve (Loss) TotalBalance at 30 June 2008 442 847 2 256 573 631 1 018 734Net movement - (2 256) 525 638 523 381Balance at 30 June 2009 442 847 - 1 099 269 1 542 116Net movement - - 540 024 540 027Balance at 30 June 2010 442 847 - 1 639 293 2 082 143Net movement - - 428 481 428 481Balance at 30 June 2011 442 847 - 2 067 774 2 510 625Net movement - - 505 129 505 129Balance at 30 June 2012 442 847 - 2 572 903 3 015 754Net movement - - 434 625 434 625Balance at 30 June 2013 442 847 - 3 007 528 3 450 378Net movement - - 445 795 445 795Balance at 30 June 2014 442 847 - 3 453 323 3 896 173Net movement - - 538 435 538 435Balance at 30 June 2015 442 847 - 3 991 758 4 434 608Net movement - - 602 207 602 207Balance at 30 June 2016 442 847 - 4 593 965 5 036 815Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 98

Table 15.18: Umgeni Water Cash Flow Statement| Financial Plan ChapterUMGENI WATERCash Flow Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastOPERATING ACTIVITIESOperating profit before working capital changes 712 456 798 051 827 129 754 265 753 566 774 246 706 588 727 479 811 123 852 797Changes in working capital 129 871 (54 893) 18 854 (72 444) (88 832) (108 172) (52 335) (12 921) (5 193) (7 355)Net cash from operating activities 842 327 743 157 845 983 681 821 664 734 666 074 654 252 714 558 805 930 845 442INVESTING ACTIVITIESAdditions to property, plant and equipment (108 391) (233 371) (327 197) (815 969) (548 327) (627 925) (690 062) (704 964) (643 884) (835 032)Additions to intangible assets (1 043) (2 774) (4 917) - - - - - - -Proceeds on disposal of Property, plant & equipment 1 630 14 157 641 - - - - - - -Transfer to financial asset - - - - - - - - - -Grant Funding - - 21 946 - - 18 642 70 162 63 442 - -Disposal of investments 3 556 2 389 1 278 - - - - - -Net cash used in investing activities (104 247) (219 600) (308 249) (815 969) (548 327) (609 282) (619 900) (641 522) (643 884) (835 032)FINANCING ACTIVITIESNet change in long-term borrowings (112 533) (107 964) (486 095) 120 301 (117 282) (47 126) 134 786 (93 616) (132 052) (137 963)Net Investments - LTI & RED (378 895) (251 882) (41 198) 105 154 99 531 88 470 (76 185) 115 183 57 000 211 000Proceeds from (repaid to) short-term borrowings (12 997) (14 222) - - - - - - - -Interest received 23 410 102 456 150 424 69 892 66 019 38 992 45 510 48 057 46 148 39 247Deferred interest amortized - - 47 034 (20 385) (29 151) (32 735) (32 295) (30 227) (27 342) (18 960)Interest paid (264 593) (259 288) (230 095) (140 466) (117 800) (103 928) (106 078) (112 420) (106 521) (103 014)Net cash used in financing activities (745 609) (530 900) (559 930) 134 497 (98 683) (56 327) (34 263) (73 023) (162 768) (9 690)CASH AND CASH EQUIVALENTSNet increase/(decrease) in cash and cash equivalents (7 528) (7 343) (22 196) 349 17 724 465 89 13 (722) 720At beginning of year 19 647 12 118 4 775 289 (17 421) 303 767 857 870 149At end of year 12 118 4 775 (17 421) 638 303 767 857 870 149 869Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 99

Table 15.19: Msinsi Holdings Income Statement| Financial Plan ChapterMsinsi Income Statement (R'000) AS PER AFSFor the year ended June 30, F08 F09 F10 F11 F12 F13 F14 F15 F16TOTAL Actual Actual Actual ForecastRevenue 24 906 25 821 25 896 26 245 28 636 30 546 32 609 34 646 36 897Environmental Management Fee 14 917 14 217 14 000 13 160 13 160 14 016 14 927 15 897 16 930Eco-Tourism & Other Revenue 9 989 11 603 11 895 13 085 15 476 16 530 17 682 18 749 19 967Cost of sales - - - - - - - - -Gross profit 24 906 25 821 25 896 26 245 28 636 30 546 32 609 34 646 36 897Other operating income - - - - - - - - -Administration Expenses 23 246 24 658 25 752 26 245 28 618 30 508 32 589 34 621 36 871Staff Costs 15 040 16 177 16 497 17 079 18 274 19 462 20 727 22 074 23 509Energy - - - - - - - - -Depreciation 570 649 636 670 670 690 710 730 700Amortisation - - - - - - - - -Impairments - - - - - - - - -Other Operating & Administrative Expenses (Net of Recoveries) 7 635 7 832 8 620 8 497 9 674 10 356 11 151 11 817 12 661Operating income before interest 1 661 1 163 143 - 18 38 21 24 27Net interest and finance charges 9 (156) (230) - 18 38 21 24 27Interest Paid 94 18 21 - 18 38 21 24 27Interest Received (85) (174) (251) - - - - - -Net Profit (Loss) 1 652 1 319 374 - - - - - -Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 100

Table 15.20: Msinsi Holdings Balance Sheet| Financial Plan ChapterMsinsi Balance Sheet (in R'000)As at June 30, F08 F09 F10 F11 F12 F13 F14 F15 F16Actual Actual Actual ForecastASSETSNon-current assets 5 451 5 827 7 592 7 452 8 906 8 256 8 956 8 856 8 756Property, plant and equipment 1 187 1 239 2 944 3 844 4 757 4 107 5 007 5 207 4 707Other non-current assets 4 159 4 589 4 649 3 609 4 149 4 149 3 949 3 649 4 049Investments 105 - - - - - - - -Employee loans - - - - - - - - -Current Assets 2 086 3 505 2 109 2 964 2 875 3 436 4 672 6 177 7 848Inventories 32 16 35 40 45 50 55 60 65Accounts receivable 367 78 67 75 133 163 208 216 246Sundry Debtors 5 20 11 50 70 34 45 25 50Current portion of employee loans 163 78 60 70 80 90 85 79 73Inter - Company Loan - 285 141 - - - - - -Interest Receivable - - - - - - - - -Assets held for sale - 105 105 105 105 105 105 105 105Bank balances and cash 1 519 2 923 1 690 2 624 2 443 2 995 4 175 5 693 7 310Total assets 7 537 9 332 9 701 10 416 11 781 11 691 13 628 15 033 16 604RESERVES AND LIABILITIESReserves 2 973 4 292 4 665 4 665 4 665 4 665 4 665 4 665 4 665Accumulated reserves 2 973 4 292 4 665 4 665 4 665 4 665 4 665 4 665 4 665Non-current liabilities - - - - - - - - -Interest bearing borrowings - - - - - - - - -Post-retirement medical benefit obligations - - - - - - - - -ProvisionsCurrent liabilities 4 565 5 041 5 036 5 751 7 116 7 026 8 963 10 368 11 939Accounts payable (including accruals & leases) - - - - - - - - -Provisions 1 447 2 322 2 038 2 517 2 814 3 095 3 405 3 745 3 987Inter - Company Loan Account 421 - - - 1 409 1 338 1 465 2 130 3 782Other payables/loans 2 697 2 719 2 998 3 234 2 893 2 593 4 093 4 493 4 169Bank overdrafts - - - - - - - - -Total reserves and liabilities 7 537 9 332 9 701 10 416 11 781 11 691 13 628 15 033 16 604Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 101

Table 15.21: Msinsi Holdings Cash Flow Statement| Financial Plan ChapterMsinsi Cash Flow Statement (R'000)For the year ended June 30, F08 F09 F10 F11 F12 F13 F14 F15 F16Actual Actual Actual ForecastOPERATING ACTIVITIESOperating profit before working capital changes 1 904 1 316 267 1 149 985 1 010 1 040 1 095 969Changes in working capital (5) 112 442 315 (434) (309) 1 444 413 (378)Net cash from operating activities 1 898 1 428 709 1 464 551 701 2 484 1 508 591INVESTING ACTIVITIESAdditions to property, plant and equipment (886) (831) (2 343) (1 570) (1 583) (40) (1 610) (930) (200)Additions to intangible assets - - - - - - - - -Proceeds on disposal of Property, plant & equipment 3 24 - - - - - - -Transfer to financial asset - - - - - - - - -Grant Funding - - - - - - - - -Biological Assets 1 364 1 049 170 1 040 (540) -- 2000 300 (400)Net cash used in investing activities 481 241 (2 173) (530) (2 123) (40) (1 410) (630) (600)FINANCING ACTIVITIESNet change in long-term borrowings (2 363) (421) - - 1 409 (71) 127 665 1 652Net Investments - LTI & RED - - - - - - - - -Proceeds from (repaid to) short-term borrowings - - - - - - - - -Interest received 85 174 251 - - - - - -Deferred interest amortized - - - - - - - - -Interest paid (94) (18) (21) - (18) (38) (21) (24) (27)Retirement benefits - OFF B/S - - - - - - - - -Net cash used in financing activities (2 372) (265) 230 - 1 391 (109) 106 640 1 626CASH AND CASH EQUIVALENTSNet increase/(decrease) in cash and cash equivalents 7 1 404 (1 233) 934 (181) 552 1 180 1 518 1 617At beginning of year 1 512 1 519 2 923 1 690 2 624 2 443 2 995 4 175 5 693At end of year 1 519 2 923 1 690 2 624 2 443 2 995 4 175 5 693 7 310Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 102

Table 15.22: Umgeni Water Services Income Statement| Financial Plan ChapterUmgeni Water Services Income Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastRevenue 639 345 - - - - - - - -Cost of sales 564 321 - - - - - - - -Gross profit 75 24 - - - - - - - -Other operating income 28 7 - - - - - - - -Administration Expenses 16 18 23 - - - - - - -Operating income before interest 87 13 (23) - - - - - - -Net interest and finance charges (7) (45) (72) (64) (64) (45) (25) (4) - -Interest Paid - - - - - - - - - -Interest Received (7) (45) (72) (64) (64) (45) (25) (4) - -Share of profit from associate 936 1 264 2 985 - - - - - - -Net Profit (Loss) 1 030 1 322 3 034 64 64 45 25 4 - -Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 103

Table 15.23: Umgeni Water Services Balance Sheet| Financial Plan ChapterUmgeni Water Services Balance Sheet (in R'000)As at June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastASSETSNon-current assets 4 982 4 634 6 239 6 110 6 110 5 963 5 795 5 703 5 703 5 703Other non-current assets 853 640 536 407 407 260 93 - - -Investments in subsidiaries and associates 4 129 3 994 5 703 5 703 5 703 5 703 5 703 5 703 5 703 5 703Current Assets 4 - - - - - - - - -Total assets 4 986 4 634 6 239 6110 6 110 5 963 5 795 5 703 5 703 5 703ReservesAccumulated reserves (3 160) (1 838) 1 196 1 260 1 260 1 305 1 330 1 333 1 333 1 333Non-current liabilities 8 128 6 445 5 023 4 831 4 831 4 630 4 438 4 342 4 342 4 342Other Non-Current Liabilities 8 128 6 445 5 023 4 831 4 831 4 630 4 438 4 342 4 342 4 342Current liabilities 18 28 20 20 20 28 28 28 28 28Accounts payable (including accruals & leases) 18 28 20 20 20 28 28 28 28 28Total reserves and liabilities 4 986 4 634 6 239 6 110 6 110 5 963 5 795 5 703 5 703 5 703Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 104

| Financial Plan ChapterTable 15.24: Group Income StatementGroup Income Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastVolume of Bulk treated water sold (in kl'000) 403 754 415 956 425 848 425 978 414 579 413 905 414 273 419 037 425 322 431 702Revenue 1 289 035 1 492 688 1 633 043 1 614 484 1 696 301 1 868 605 1 717 212 1 836 952 1 966 038 2 102 655Water Sales - Bulk 1 190 798 1 259 188 1 373 786 1 460 849 1 422 120 1 506 646 1 587 960 1 697 677 1 816 291 1 942 938Water Sales - Reticulation - - - - - - - - - -Water Sales - Raw Water 246 368 232 384 270 297 308 325 343 361Wastewater Sales 1 348 1 814 1 492 2 071 1 851 1 999 2 107 2 252 2 409 2 578Wastewater Management Fee 33 736 40 116 42 724 45 372 45 372 48 594 51 655 55 116 58 644 62 397Section 30 activities 62 907 191 203 214 810 105 808 226 688 311 070 75 183 81 582 88 351 94 382Cost of sales 393 283 545 011 620 858 619 304 700 409 836 951 692 809 758 061 828 962 899 104Changes in water inventory (1 509) (122) 601 - - - - - - -Chemicals 25 175 32 751 32 510 33 947 37 436 39 410 42 090 45 120 48 234 51 562Depreciation 52 033 59 848 65 190 85 684 70 185 75 324 80 446 86 238 92 188 98 549Energy 37 291 43 145 56 963 85 213 85 529 103 851 130 748 146 438 164 011 176 967Maintenance 77 262 100 825 108 500 115 047 106 616 110 443 117 953 126 446 135 171 144 498Raw Water 74 169 77 744 83 870 101 733 100 647 152 630 175 534 195 763 218 509 244 108Staff Costs 79 497 82 666 92 618 104 436 101 731 118 896 128 289 138 424 149 083 160 413Section 30 activities 38 462 141 132 169 537 82 119 186 373 225 259 5 045 5 141 5 238 5 338Other direct operating activities 10 902 7 022 11 067 11 125 11 892 11 138 12 705 14 491 16 529 17 670Gross profit 895 752 947 677 1 012 186 995 180 995 893 1 031 654 1 024 403 1 078 891 1 137 076 1 203 55169% 63% 62% 62% 58% 55% 59% 58% 57% 57%Other operating income 8 577 31 707 8 529 7 370 (9 961) 6 431 6 594 6 766 6 949 7 141Administration Expenses 347 116 337 338 403 216 446 352 505 669 468 003 535 766 575 479 545 192 544 692Staff Costs 128 822 152 395 170 989 193 514 157 651 185 957 200 392 215 950 232 329 249 744Energy 2 151 2 255 2 435 4 914 4 896 6 108 7 690 8 613 9 647 10 409Depreciation 11 616 13 517 15 995 19 309 22 152 30 580 34 139 47 589 53 374 45 538Amortisation 93 208 94 218 98 978 93 075 94 510 2 900 2 975 2 975 2 975 2 975Impairments 5 700 2 072 9 806 - 87 126 96 047 94 525 81 229 64 509 40 460Other operating & administrative expenses (net of recoveries) 105 619 72 881 105 013 135 540 139 333 146 411 196 045 219 123 182 359 195 566Operating income before interest 557 213 642 046 617 499 556 198 480 263 570 082 495 231 510 179 598 832 666 001Net interest and finance charges 165 440 116 296 79 773 70 574 51 781 64 953 60 607 64 384 60 397 63 794Interest Paid 270 751 267 489 230 341 140 466 117 800 103 931 106 087 112 422 106 524 103 018Interest Received (105 311) (151 93) (150 68) (69 892) (66 019) (38 977) (45 480) (48 039) (46 126) (39 224)Share of profit from associate 1 092 1 264 2 985 - - - - - - -Net Profit (Loss) 392 865 527 014 540 711 485 623 428 481 505 129 434 625 445 795 538 435 602 207Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 105

Table 15.25: Group Balance Sheet| Financial Plan ChapterGroup Balance Sheet (in R'000)As at June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastASSETSNon-current assets 2 980 099 2 666 523 2 825 051 3 709 255 3 137 207 3 570 239 4 005 150 4 454 267 4 911 284 5 575 277Property, plant and equipment 2 306 954 2 473 075 2 684 007 3 682 753 3 082 814 3 522 617 3 963 939 4 420 399 4 880 373 5 547 780Other non-current assets 228 225 166 973 116 719 12 034 34 172 33 079 31 219 29 091 26 798 25 037Investments - Financial Instruments 440 286 22 481 18 622 14 468 14 468 9 998 5 183 - - -Investments in subsidiaries and associates 4 234 3 994 5 703 - 5 753 4 545 4 808 4 777 4 113 2 460Employee loans 400 - - - - - - - - -Current Assets 680 760 1 417 441 1 483 271 968 617 1 319 870 1 257 727 1 320 554 1 225 318 1 183 323 989 569Inventories 10 283 9 145 8 642 9 129 8 100 7 527 6 924 6 286 5 613 4 904Accounts receivable 142 348 175 407 257 269 191 626 201 410 223 526 205 342 219 544 234 451 250 050Sundry Debtors 7 381 7 781 6 964 8 181 7 014 7 034 6 998 7 009 6 989 7 014Current portion of employee loans 466 606 680 - 70 80 90 85 79 73Short-term investments 501 029 1 213 416 1 178 673 759 030 1 083 297 999 297 1 080 297 970 297 913 297 702 297Interest Receivable 5 616 3 282 12 314 14 14 14 14 14 14 14Assets held for sale - 105 17 039 - 17 039 17 039 17 039 17 039 17 039 17 039Bank balances and cash 13 637 7 699 1 690 638 2 927 3 210 3 851 5 045 5 842 8 179Total assets 3 660 859 4 083 964 4 308 322 4 677 872 4 457 077 4 827 966 5 325 704 5 679 585 6 094 607 6 564 846RESERVES AND LIABILITIESReservesAccumulated reserves 1 022 534 1 547 292 2 088 004 2 533 093 2 516 550 3 021 724 3 456 373 3 902 172 4 440 607 5 042 814Non-current liabilities 2 143 273 1 105 045 1 606 873 1 639 076 1 439 629 1 343 283 1 409 572 1 308 309 1 168 179 1 076 924Interest bearing borrowings 1 978 904 917 448 1 400 166 1 502 949 1 277 109 1 223 295 1 356 972 1 262 160 1 124 197 1 035 397Post-retirement medical benefit obligations 164 369 169 472 189 742 136 127 162 519 119 988 52 600 46 149 43 982 41 526Other Non-Current Liabilities - 18 125 16 965 - - - - - - -Current liabilities 495 052 1 431 627 613 445 505 704 500 899 462 959 459 759 469 103 485 821 445 109Accounts payable (including accruals & leases) 235 552 276 562 374 201 273 818 274 978 232 908 231 021 239 723 252 323 263 396Provisions 119 788 60 444 63 664 58 120 61 495 61 792 62 073 62 383 62 723 62 965Current portion of interest bearing loans 99 432 1 061 455 117 282 134 937 123 058 129 746 130 856 132 052 137 963 88 800Other payables/loans 40 280 33 166 40 877 38 829 41 369 38 513 35 809 34 946 32 812 29 948Bank overdrafts - - 17 421 - - - - - - -Total reserves and liabilities 3 660 859 4 083 964 4 308 322 4 677 872 4 457 077 4 827 966 5 325 704 5 679 585 6 094 607 6 564 846Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 106

Table 15.26: Group Cash Flow Statement| Financial Plan ChapterGroup Cash Flow Statement (in R'000)For the year ended June 30, F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastOPERATING ACTIVITIESOperating profit before working capital changes 792 898 799 545 827 017 754 265 754 715 775 230 707 597 728 519 812 218 853 766Changes in working capital 51 414 (54 267) 19 604 (72 444) (88 517) (108 606) (52 644) (11 477) (4 780) (7 733)Net cash from operating activities 844 312 745 278 846 621 681 821 666 198 666 624 654 953 717 043 807 438 846 033-INVESTING ACTIVITIES -Additions to property, plant and equipment (109 276) (234 203) (329 540) (815 969) (549 897) (629 508) (690 102) (706 574) (644 814) (835 232)Additions to intangible assets (1 043) (2 774) (4 917) - - - - - - -Proceeds on disposal of Property, plant & equipment 1 633 14 180 641 - - - - - - -Transfer to financial asset - - - - - - - - - -Grant Funding - - 21 946 - - 18 642 70 162 63 442 - -Proceeds on disposal of Biological Assets 1 364 879 170 -Investments in Subsidiaries and Associates 1 098 1 402 1 278 - 1 040 (540) - 200 300 (400)Net cash used in investing activities (106 224) (220 516) (310 422) (815 969) (548 857) (611 406) (619 940) (642 932) (644 514) (835 632)-FINANCING ACTIVITIES -Net change in long-term borrowings (112 533) (107 964) (486 095) 120 301 (117 282) (47 126) 134 716 (93 489) (131 387) (136 311)New Debt proposed - - - - - - - - - -Capital contributions - - - - - - - - - -Net Investments - LTI & RED (378 895) (251 882) (41 198) 105 154 99 531 89 879 (76 185) 115 183 57 000 211 000Proceeds from (repaid to) short-term borrowings (12 997) (14 222) - - - - - - - -Interest received 23 425 102 573 195 295 69 892 66 019 38 974 45 510 48 057 46 148 39 247Deferred interest amortized - - - (20 385) (29 151) (32 735) (32 295) (30 227) (27 342) (18 960)Interest paid (264 610) (259 205) (227 631) (140 466) (117 800) (103 928) (106 117) (112 440) (106 546) (103 041)Net Repo & Market-making - - - - - - - - - -Retirement benefits - OFF B/S - - - - - - - - - -Net cash used in financing activities (745 610) (530 700) (559 629) 134 497 (98 683) (54 935) (34 372) (72 916) (162 127) (8 064)-CASH AND CASH EQUIVALENTS -Net increase/(decrease) in cash and cash equivalents (7 522) (5 938) (23 430) 349 18 658 283 641 1 194 797 2 337At beginning of year 21 159 13 637 7 699 289 (15 731) 2 927 3 210 3 851 5 045 5 842At end of year 13 637 7 699 (15 731) 638 2 927 3 210 3 851 5 045 5 842 8 179Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 107

Table 15.27: Segmental Report| Financial Plan ChapterSEGMENTAL REPORT (R'000)For the year ended June 30, F08 F09 F10 F11 F12Primary Primary Primary Primary PrimaryBulkWaterWasteWater S30 TotalBulkWaterWasteWater S30 TotalBulkWaterWasteWater S30 TotalBulkWaterWasteWater S30 TotalBulkWaterWasteWater S30 TotalVolume bulk water sold (kl’000) 403 754 211 - 403 965 415 956 273 - 416 229 425 848 273 - 426 121 414 579 439 - 415 018 413 905 439 - 414 344Revenue 1 191 044 35 084 62 907 1 289 035 1 259 555 41 930 191 203 1 492 688 1 374 017 44 216 214 810 1 633 043 1 422 390 47 223 226 688 1 696 301 1 506 943 50 593 311 070 1 868 605Cost of sales (323 395) (20 571) (49 316) (393 282) (370 235) (26 151) (148 625) (545 011) (417 085) (26 535) (177 236) (620 856) (475 853) (29 995) (194 560 (700 409) (543 690) (34 379) (258 882 (836 951)Changes in water inventory 1 509 - - 1 509 122 - - 122 (601) - - (601) - - - - - - - -Chemicals (22 458) (2 683) (34) (25 175) (29 293) (3 357) (101) (32 751) (29 387) (3 071) (52) (32 510) (33 959) (3 399) (78) (37 436) (36 175) (3 153) (82) (39 410)Depreciation (49 554) (2 479) - (52 033) (57 358) (2 490) - (59 848) (62 699) (2 491) - (65 190) (67 450) (2 736) - (70 185) (66 348) (3 682) (5 294) (75 324)Energy (33 828) (3 077) (386) (37 291) (38 104) (4 515) (526) (43 145) (50 338) (5 789) (836) (56 963) (77 230) (7 221) (1 078) (85 529) (86 520) (8 414) (8 916) (103 851)Maintenance (70 761) (5 175) (1 326) (77 262) (89 194) (9 171) (2 460) (100 825) (98 732) (7 597) (2 171) (108 500) (97 457) (7 485) (1 673) (106 616) (96 396) (8 281) (5 767) (110 443)Raw water (74 169) - - (74 169) (77 744) - - (77 744) (83 870) - - (83 870) (100 647) - - (100 647) (152 630) - - (152 630)Section 30 activities - - (38 462) (38 462) - - (141 132) (141 132) - - (169 537) (169 537) - - (186) 373 (186 373) - - (225 259) (225 259)Staff costs (64 842) (6 094) (8 561) (79 497) (73 200) (5 388) (4 078) (82 666) (82 022) (6 297) (4 299) (92 618) (89 241) (7 564) (4 927) (101 731) (97 606) (8 721) (12 570) (118 896)Other direct operating expenses (9 292) (1 063) (547) (10 902) (5 464) (1 230) (328) (7 022) (9 436) (1 290) (341) (11 067) (9 869) (1 591) (432) (11 892) (8 015) (2 128) (995 (11 138)Gross profit 867 649 14 513 13 591 895 753 889 320 15 779 42 578 947 677 956 932 17 681 37 574 1 012 187 946 537 17 228 32 128 995 893 963 253 16 214 52 188 1 031 654Other income 6 155 - 2 422 8 577 26 452 3 572 1 683 31 707 3 636 3 572 1 321 8 529 (14 087) 3 572 554 (9 961) 2 309 3 572 550 6 431Other operating andadministration expenses (336 505) (2 186) (8 425) (347 116) (312 212) (5 748) (19 378) (337 338) (377 167) (6 001) (20 048) (403 216) (470 538) (8 890) (26) 241 (505 669) (417 478) (9 051) (40 634) (468 003)Amortisation - - - (94 218) - - (94 218) (98 978) - - (98 978) (94 510) - - (94 510) (2 900) - - (2 900)Impairments and write-offs - - - 22 372 - (131) 22 242 (9 790) - (16) (9 806) (87 126) - - (87 126) (96 047) - - (96 047)Depreciation - - - (12 420) (381) (717) (13 518) (14 782) (385) (828) (15 995) (20 868) (428) (857) (22 152) (29 470) (207) (903) (30 580)Other expenses (336 505) (2 186) (8 425) (347 116) (227 946) (5 367) (18 530) (251 844) (253 617) (5 616) (19 204) (278 437) (268 034) (8 462) (25) 384 (301 881) (289 061) (8 844) (39 731) (338 476)Profit from operations 537 299 12 327 7 588 557 214 603 560 13 603 24 883 642 046 583 401 15 252 18 847 617 500 461 912 11 910 6 441 480 263 548 083 10 735 12 104 570 082Interest income 105 311 - - 105 311 151 075 - 118 151 193 150 424 - 144 150 568 66 019 - - 66 019 38 992 - (15) 38 977Finance costs (261 076) (9 672) (3) (270 751) (259 011) (8 460) (18) (267 489) (222 464) (8 032) 155 (230 341) (110 402 (7 397) - (117 800) (94 319) (6 544) (3 067) (103 931)Share of profit from associate - - 1 092 1 092 - - - - - - 2 985 2 985 - - - - - - - -Profit for the year 381 534 2 655 8 677 392 866 495 624 5 143 26 247 527 014 511 361 7 220 22 131 540 712 417 528 4 512 6 441 428 481 492 756 4 190 9 022 505 129- -Capital expenditure 105 819 2 571 886 109 276 230 805 2 571 827 234 203 291 768 26 832 15 856 334 457 540 327 8 000 1 570 549 897 621 685 6 240 1 583 629 508Segment assets 2 343 537 97 058 10 834 2 451 428 2 507 557 91 066 57 791 2 656 414 2 782 577 88 245 85 079 2 955 901 3 342 736 93 081 11 695 3 447 512 3 802 085 90 700 11 704 3 904 489Interest in associate - - 4 234 4 234 - - 4 099 4 099 - - 5 703 5 703 - - 4 882 4 882 - - 4 882 4 882Unallocated - - - 1 205 196 - - - 1 423 451 - - - 1 346 718 - - - 1 004 683 - - - 918 595Consolidated total assets - - - 3 660 859 - - - 4 083 964 - - - 4 308 322 - - - 4 457 077 - - - 4 827 966- -Segment liabilities 2 006 047 41 801 30 488 2 078 335 1 900 697 39 351 38 856 1 978 904 1 388 058 33 624 95 766 1 517 448 657 648 - 11 695 669 343 577 212 - 11 704 588 917Unallocated - - - 559 990 - - - 557 768 - - - 702 870 - - - 1 271 184 - - - 1 217 325Consolidated total liabilities - - - 2 638 325 - - - 2 536 672 - - - 2 220 318 - - - 1 940 528 - - - 1 806 242Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 108

| Financial Plan Chapter15.9 Capital Expenditure Programme15.9.1 Capital Expenditure PlanTable15.28 shows a summary of the Capex programmes for Umgeni Water and its subsidiary. Table 15.29provides the main motivation categories for undertaking the projects.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 109

| Financial Plan ChapterTable 15.28: Summary of the Capex ProgrammeCASHFLOWS UNESCALATEDCAPEX CATEGORY (R’000) Actual F08 Actual F09 Actual F10 Budget F11Revised ForecastF'11Total2012 - 2016ForecastF12 F13 F14 F15 F16Augmentation 77 398 136 557 273 909 350 698 224 999 1 299 985 221 054 205 719 284 459 284 077 304 676Expansion 24 467 5 582 22 500 - - - - - - -Upgrade 9 507 1 664 15 300 132 685 82 788 322 355 80 020 111 560 64 575 25 250 40 950Rehabilitation 837 17 562 593 11 610 15 252 107 443 5 683 8 120 21 640 13 000 59 000Development Projects 1 165 36 660 19 795 227 219 173 796 964 604 220 039 231 162 191 303 147 000 175 100IMMOVABLE 88 907 216 910 315 180 744 712 496 835 2 694 387 526 796 556 561 561 977 469 327 579 726Business Plan 2010/11 742 712 2 449 159 602 817 382 891 359 208 346 924 757 320% Increase / (Decrease) (33%) 10% (13%) 45% 56% 35% (23%)Equipment & Vehicles 10 690 3 817 3 960 9 320 22 312 41 253 11 473 12 040 2 610 13 930 1 200Equipment & Vehicles - Umgeni Water 9 804 2 985 1 617 7 750 20 742 36 890 9 890 12 000 1 000 13 000 1 000Equipment & Vehicles - Msinsi 886 832 2 343 1 570 1 570 4 363 1 583 40 1 610 930 200Information & Communication Technology 8 920 1 705 8 683 11 100 17 378 74 256 26 206 16 000 10 800 9 550 11 700Laboratory & Process Services 760 11 771 6 607 10 455 13 373 51 182 25 053 15 919 3 300 1 180 5 730MOVABLE 20 370 17 293 19 250 30 875 53 062 166 691 62 732 43 959 16 710 24 660 18 630Business Plan 2010/11 31 305 76 354 12 445 26 319 12 590 5 000 20 000% Increase / (Decrease) 70% 118% 404% 67% 33% 100% 100%TOTAL CAPITAL BUDGET 109 277 234 203 334 430 775 587 549 897 2 861 078 589 528 600 520 578 687 493 987 598 356Business Plan 2010/11 774 017 2 525 513 615 262 409 210 371 798 351 924 777 320Increase / (Decrease) (224 120) 335 565 (25 734) 191 310 206 889 142 063 (178 964)% Increase / (Decrease) (29%) 13% (4%) 47% 56% 40% (23%)CASHFLOWS ESCALATEDSUMMARY OF ESCALATED BUDGET F11Total2012 - 2016 F12 F13 F14 F15 F16Immovable Budget 496 835 3 310 925 562 618 639 591 686 518 612 895 809 303Movable Budget 53 062 195 305 66 890 50 511 20 056 31 919 25 928TOTAL CAPITAL BUDGET 549 897 3 506 230 629 508 690 102 706 574 644 814 835 232Escalation % 0% 23% 7% 15% 22% 31% 40%Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 110

| Financial PlanChapterFigure 15. .4: Five-Year Business Plan Capitaal ExpenditureAllocationCapital ExpenditureSummary ( R'000)UpgradeR 405143(12%)RehabilitationR 1222 695(3%)DevelopmentProjectsR 1, 138, 400(33%)AugmmentationR 1 524 984(45%)EquipmentandVehiclesR 128,120( 4%)InformationCommunicationandTechnologyR 91 633(3%)UmgeniWater Five-Year BusinessPlan| 2011/2012 to2015/2016Page 111

| Financial Plan ChapterTable 15.29: Major Capex Projects (R’000)Project Cat.EIB Funded ProjectsUmgeni SystemProject DescriptionUmgeni Water StrategicOutcomesCustomerCASH FLOWS 2012 – 2016 (R’000)2012 - 2016 F'12 F'13 F'14 F'15 F'16AUG EIB Hazelmere Hazelmere WW: Raw Water Pipeline Meeting Customer Requirements eThekwini MM, iLembe DM B1 18 780 321 669 17 790 16 790 1 000AUG EIB Hazelmere Hazelmere WW: Upgrade (45 to 75Ml/day) Meeting Customer Requirements eThekwini MM, iLembe DM B1 76 390 292 1 000 75 098 47 124 15 974 12 000AUG EIB Hazelmere Honolulu-Mvoti Balancing Res Pipeline Meeting Customer Requirements iLembe DM A1 77 300 36 297 26 883 14 120 14 120AUG EIB Hazelmere Hazelmere-Bifurcation P/line Augment Meeting Customer Requirements eThekwini MM, iLembe DM A2 97 400 3 104 94 296 39 169 25 127 30 000AUG Hazelmere Avondale-Honolulu P/line Ph1 Meeting Customer Requirements iLembe DM O 146 869 133 869 13 000AUG Lower Thukela Lower Thukela WW Meeting Customer Requirements iLembe DM B2 360 000 11 500 2 500 9 000 348 500AUG Lower Thukela Lower Thukela BWS Meeting Customer Requirements iLembe DM B2 664 182 5 082 3 500 15 700 9 200 6 500 639 900AUG Lower Umgeni Mapaphetwa WW: Upgrade (5.0 Ml/d) (incl reservoir) Meeting Customer Requirements eThekwini MM A1 39 800 2 807 12 945 24 048 22 164 1 884AUG Mkomazi Lower Mkomazi BWS Scheme Meeting Customer Requirements eThekwini MM, Ugu DM C1 347 000 22 000 1 000 3 000 3 000 15 000 325 000AUG Mkomazi Lower Mkomazi WW (150 Ml/day) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM C1 450 000 15 000 5 000 10 000 435 000AUG South Coast Umzinto link (Ellingham Reservoir to Umzinto WW) Meeting Customer Requirements Ugu DM A1 24 221 23 221 1 000 1 000AUG South Coast Scottburg South Link Meeting Customer Requirements Ugu DM B2 35 000 35 000 2 500 30 800 1 700AUG EIB South Coast South Coast Ph. 2a (Park Rynie to Kelso) Meeting Customer Requirements Ugu DM A2 38 315 4 15 753 22 558 14 922 7 636AUG South Coast South Coast Augmentation Booster Pump Station Meeting Customer Requirements Ugu DM A1 77 812 24 126 24 674 29 012 20 012 9 000AUG South Coast New Lower Mkomazi WW (50 Ml/day) Meeting Customer Requirements eThekwini MM, Ugu DM C1 130 000 65 000 15 000 50 000 65 000AUG Upper Mkomazi Mkomazi water project (Baynesfield WW) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM C2 1 331 500 24 000 5 000 8 000 11 000 1 307 500AUG Upper Mkomazi Mkomazi water project (water supply) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM C2 1 522 000 20 000 3 500 4 000 6 000 6 500 1 502 000AUG Upper Umgeni Bruyns Hill Reservoir upgrade (6Ml) Meeting Customer Requirements uMgungundlovu DM A2 14 970 22 7 786 7 162 6 402 760AUG Upper Umgeni Howick Reservoir Upgrade (6.5 Ml) Meeting Customer Requirements uMgungundlovu DM, B2 19 000 19 000 500 16 500 2 000AUG Upper Umgeni Midmar Dam RWPS - New Standby Pumpset & Manifolds Operational Resiliency eThekwini MM, Msunduzi LM, uMgungundlovu DM B1 20 000 20 000 1 000 19 000AUG Upper Umgeni New Raw Water Pipeline '251/'51 (Dam - RW P/S) Operational Resiliency eThekwini MM, Msunduzi LM, uMgungundlovu DM B1 20 000 19 000 1 000 18 000 1 000AUG Upper Umgeni 251 Raw Water Pipeline to Midmar WW duplication Operational Resiliency eThekwini MM, Msunduzi LM, uMgungundlovu DM B2 70 000 62 000 2 000 40 000 20 000 8 000AUG EIB Upper Umgeni 61 pipeline extension (ED2 to ED4) Meeting Customer Requirements eThekwini MM, Msunduzi LM, uMgungundlovu DM A1 84 000 21 493 36 586 25 921 24 111 1 810AUG EIB Upper Umgeni '61 p/l: DVH - Worlds View Reservoir + cross connections Meeting Customer Requirements eThekwini MM, Msunduzi LM, uMgungundlovu DM O 92 000 81 182 10 818AUG EIB Upper Umgeni 57 Pipeline Augmentation (Umlaas Road to Point M) Meeting Customer Requirements eThekwini MM A1 128 660 93 809 29 851 5 000 5 000AUG Upper Umgeni '61 p/l: extension (ED4 to Umlaas Road) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM B1 181 915 6 919 3 441 171 555 47 000 62 055 55 000 7 500AUG Upper Umgeni Claridge-Wartburg p/l augmentation incl. p/station - PH 1 Meeting Customer Requirements uMgungundlovu DM, iLembe DM B1 199 752 1 663 645 10 000 10 000 187 444AUG EIB Upper Umgeni Midmar WW: Upgrade Ph 2 (250 to 375Ml/d) Meeting Customer Requirements eThekwini MM, Msunduzi LM, uMgungundlovu DM B1 225 100 108 242 224 750 2 150 82 600 80 000 55 000 5 000AUG Upper Umgeni Umlaas New Water Project Water Resources Adequacy eThekwini MM, uMgungundlovu DM C1 237 000 57 000 7 000 50 000 180 000AUG Upper Umgeni Darvill WWW: Capacity Increase (85Ml/d) Meeting Customer Requirements Msunduzi LM C2 280 000 168 000 2 000 2 000 44 000 60 000 60 000 112 000AUG Upper Umgeni Wartburg to Dalton p/l augmentation PH 2 Meeting Customer Requirements uMgungundlovu DM, iLembe DM B2 285 683 7 976 7 976 277 707AUG Various Other Projects Beyond 5 Years 1 106 367 47 690 13 985 24 475 4 549 7 950 11 976 1 020 217Sub-Total Augmentation 8 115 333 458 788 224 999 1 299 985 221 054 205 719 284 459 284 077 304 676 6 131 561Project StageProject Total30-Year (R’000)Work In Progress30/06/2010 (R’000)Forecast F'11 (R’000)Cash flows Beyond5 Years F'17 - F'40DEV Mooi Spring Grove WW Meeting Customer Req. & Community Sustainability uMgungundlovu DM C1 107 200 40 200 5 000 5 000 30 200 67 000DEV Mooi Greater Mpofana Regional Scheme Meeting Customer Req. & Community Sustainability uMgungundlovu DM C1 123 020 3 995 500 47 025 2 000 5 025 40 000 71 500DEV EIB South Coast Mhlabatshane Sub-Regional Scheme Meeting Customer Req. & Community Sustainability Ugu DM A1 195 000 701 55 500 138 799 60 000 62 799 16 000DEV EIB Upper Mvoti Ozwathini Sikoto WW Meeting Customer Req. & Community Sustainability uMgungundlovu DM, iLembe DM B2 24 000 24 000 1 000 10 600 10 000 2 400DEV Upper Mvoti Maphumulo BWS PH 2 Meeting Customer Req. & Community Sustainability iLembe DM B1 143 926 5 920 138 006 40 000 60 368 37 638DEV EIB Upper Mvoti Ozwathini BWS Scheme Meeting Customer Req. & Community Sustainability uMgungundlovu DM, iLembe DM B2 149 300 100 149 200 5 000 29 700 60 000 54 500DEV EIB Upper Mvoti Maphumulo BWS PH 1 Meeting Customer Req. & Community Sustainability iLembe DM A1 224 776 10 437 61 219 153 120 69 516 53 604 30 000DEV Upper Umgeni Manyavu Pipeline Meeting Customer Req. & Community Sustainability uMgungundlovu DM B1-A1 20 000 93 17 907 2 000 2 000DEV Upper Umgeni Greater Eston Meeting Customer Req. & Community Sustainability uMgungundlovu DM B1 157 408 10 730 146 678 35 903 43 366 35 409 32 000DEV EIB Upper Umgeni Richmond P/L-30km's Meeting Customer Req. & Community Sustainability uMgungundlovu DM B1 181 064 8 895 1 213 120 956 1 000 26 956 45 000 48 000 50 000DEV Various Other Projects Beyond 5 Years 344 440 33 613 20 707 4 620 3 620 1 000 285 500Sub-Total Development Projects 1 670 134 57 734 173 796 964 604 220 039 231 162 191 303 147 000 175 100 474 000Sub-Total Expansion 879 000 879 000Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 112

| Financial Plan ChapterProject Cat.EIB Funded ProjectsUmgeni SystemProject DescriptionUmgeni Water StrategicOutcomesCustomerProject StageProject Total30-Year (R’000)Work In Progress30/06/2010 (R’000)Forecast F'11 (R’000)CASH FLOWS 2012 – 2016 (R’000)2012 - 2016 F'12 F'13 F'14 F'15 F'16Cash flows Beyond5 Years F'17 - F'40REH Lower Umgeni Nagle Aqueduct 3 & 4 - Refurbish Infrastructure Stability eThekwini MM B1-A1 8 500 4 950 3 550 3 150 400REH Lower Umgeni Dbn Hts WW: Reservoir 3 Roof Rehab & Dam Safety Infrastructure Stability eThekwini MM B1 28 000 28 000 3 000 15 000 10 000REH South Coast Nungwane Raw Water Aqueduct (450dia x 18km) Infrastructure Stability eThekwini MM, Ugu DM B2 76 220 69 640 1 000 6 640 3 000 59 000 6 580REH Upper Umgeni Darvill Various Projects Infrastructure Stability eThekwini MM B1-A2 7 900 5 840 2 060 1 940 120REH Various Other Projects Beyond 5 Years 18 502 1 847 4 462 4 193 593 3 600 8 000Sub-Total Rehabilitation 139 122 1 847 15 252 107 443 5 683 8 120 21 640 13 000 59 000 14 580UPG Aircon Renewal:Head Office Operational Resiliency AI 30 306 23 306 7 000 7 000UPG Refurbishment Head Office Operational Resiliency AI 25 000 10 000 15 000 10 000 5 000UPG EIB Hazelmere Hazelmere WW pumpstation upgrade Infrastructure Stability eThekwini MM, iLembe DM B2 19 500 19 500 1 000 18 500UPG Lower Umgeni Wiggins Various Projects Infrastructure Stability eThekwini MM B1-A2 25 765 3 215 21 750 12 150 9 600 800UPG Lower Umgeni Wiggins Dam Safety: Concrete Rehab Infrastructure Stability eThekwini MM 10 000 10 000 10 000UPG Lower Umgeni Dbn Hts WW: Candy Filters and Actuators upgrade Infrastructure Stability eThekwini MM B1-A2 20 500 20 500 500 20 000UPG Lower Umgeni Ozone Plant Rehb & Element Replace (every 10 years) Infrastructure Stability eThekwini MM 60 000 20 000 1 000 10 000 9 000 40 000UPG Lower Umgeni Dbn Hts WW: Filter Upgrade Infrastructure Stability eThekwini MM C1 85 400 85 400 2 700 2 700 20 000 20 000 40 000UPG Lower Umgeni Dbn Heights Various Projects Infrastructure Stability eThekwini MM B1-A2 60 911 10 561 38 350 20 865 10 810 2 675 3 500 500 12 000UPG Upper Umgeni Darvill Aerators Infrastructure Stability Msunduzi LM 15 500 15 500 500 15 000UPG Upper Umgeni Darvil Sludge Handling Facility Infrastructure Stability Msunduzi LM 17 500 17 500 500 7 000 10 000UPG Various Other Projects Beyond 5 Years 216 232 3 821 35 706 51 855 24 805 20 450 4 400 1 750 450 124 850Sub-Total Upgrade 586 614 3 821 82 788 322 355 80 020 111 560 64 575 25 250 40 950 177 650TOTAL IMMOVABLES 11 390 203 522 190 496 835 2 694 387 526 796 556 561 561 977 469 327 579 726 7 676 791OTHER Movables - Head Office Operational Resiliency 14 378 2 488 11 890 6 890 2 000 3 000ICT Information Communication & Technology Operational Resiliency 187 646 1 012 17 378 74 256 26 206 16 000 10 800 9 550 11 700 95 000OTHER Scientific Services Operational Resiliency 66 751 2 196 13 373 51 182 25 053 15 919 3 300 1 180 5 730OTHER Plant & Vehicles Operational Resiliency 49 187 19 824 29 363 4 583 10 040 2 610 10 930 1 200TOTAL MOVABLES 317 962 3 209 53 062 166 691 62 732 43 959 16 710 24 660 18 630 95 000TOTAL UW CAPEX BUDGET AS PER 2011/12 BUSINESS PLAN 11 708 164 525 398 549 897 2 861 078 589 528 600 520 578 687 493 987 598 356 7 771 791CASH FLOWS AS PER 2010/11 BUSINESS PLAN 12 266 002 241 124 774 017 2 525 513 615 262 409 210 371 798 351 924 777 320 8 725 349INCREASE / (DECREASE) (557 838) (224 120) 335 565 (25 734) 191 310 206 889 142 063 (178 964) (953 558)UPG = Upgrade, EXP = Expansion, REH = Rehabilitation, AUG = Augmentation, DEV = Development Projects, ICT = Information & Communication Technology Other = Equipment & VehiclesA1 = In Construction, A2 = In Tender, B1 = In Detailed Design, B2 = In Preliminary Design, C1 = In Detailed Feasibility, C2 = In Pre-Feasibility, O = CommissionedEIB = EIB Funded ProjectsUmgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 113

| Financial Plan ChapterTable 15.30: Capital Project Movement Analysis between 2010/11 and the 2011/12 Business Plan.Business Plan 2011-2012Total: F'11 - F'16Business Plan 2010-2011Total: F'11 - F'16Increase /(Decrease)CAPEX CATEGORYR'000 % of Total R'000 % of Total R'000 %Augmentation R 1 524 984 45% R 1 704 331 52% (R 179 347) (11%)Expansion R 0 0% R 107 000 3% (R 107 000) (100%)Upgrade R 405 143 12% R 293 071 9% R 112 072 38%Rehabilitation R 122 695 3% R 108 660 3% R 14 035 13%Development Projects R 1 138 400 33% R 980 808 30% R 157 591 16%Information Communication & Technology R 91 633 3% R 46 100 1% R 45 533 99%Equipment and Vehicles R 128 120 4% R 59 559 2% R 68 561 115%Total Umgeni Water Capex 3 410 975 100% 3 299 530 100% 111 446 3%The major movements between 2011 Business Plan and 2012 Business Plan are:Augmentation: Decrease of R179m• Phase 1: Claridge to Wartburg pipeline delayed due to the implementation of the Ozwathini Project (R187m)Expansion: Decrease of R107m• Bhobhoyi Upgrade removed from capex programme due to O&M contract not being awarded to Umgeni Water (R75m)• Blythedale Pipeline Ext. (Shayamoya) removed from capex programme to be implemented by iLembe DM (R18m)• Zinkwazi Pipeline Link removed from capex programme to be implemented by iLembe DM (R14m)Upgrade: Increase of R112m• Darvill Aerators to meet customer requirements (R16m)• Dbn Hts WW: Candy Filters and Actuators upgrade due to assets requiring upgrade for sustainability and treatment of water quality (R20m)• Dbn Hts WW: Filter Upgrade due to treatment of water quality (R10.4m)• Ozone Plant Rehabilitation and Element Replacement Every ten years (R20m)• Refurbishment of buildings including air conditioners (R53.3m)Development Projects: Increase of R158m• Greater Eston project brought forward to meet client requirements (R157.4m)Information Communication & Technology: Increase of R46m• Information Communication Technology increase due to upgrade of Servers and ERP Business Systems(JD Edwards), Asset maintenance system (Maximo), Billing and metering (EDAMS) (R37m)Equipment & Vehicles: Increase of R69m• Laboratory Equipment upgrades and replacements (R40m)• Plant and Vehicles : replacement of vehicles (R13m)Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 114

| Financial PlanChapterTable 15.31:FinancialIndicatorsFinancial Indicators and RatiosF'08F'09ActualF'10F'111ActualF'11F'12ActualF'13F'14BudgetF'15F'16ForecastUmgeniWaterTargetRandWaterReturn on Assets(Income before interest & taxes divided by total assets excluding investments)20.53%22.63%20.00%14.25%14.35%14.98%11.71%10.86%11.59%11.39%15%to 20%4.63%Fixedassett turnover (Revenuedividedd by fixed assets)0.5550.6010.6050.4380.5470.5270.4290.4120.3990.376--Asset turnover (Revenuee divided by total assets excludinginvestments)0.4720.5230.5230.4140.5030.4870.4020.3870.3770.356- 0.7491Figure15.5: Asset TurnoverFigure 15. .6: Returnon Asset0. .650. 60FixedassetturnoverAssetturnover25.0%Return onAssets0. .5520.0%0. .5015.0%0. .450. 4010.0%0. .35F'08F'09F' 10F'111 F'12F'13F'14F' 15F'165.0%F'08F'09F'10F'11F'12F'13F'14 F'15F'16ActualsForecastActualsForecastUmgeniWater Five-Year BusinessPlan| 2011/2012 to2015/2016Page115

| Financial Plan ChapterDelivery and Elimination of Backlogs in Rural Areas:• R1.1bn spend over five years in rural areas representing 33% of the five-year capex.• Estimated total social component of these projects in five-year capex is R649m to be funded as follows:o R184m of rural Bulk infrastructure grant (RBIG) forecast as a contribution toward social component of the projects.o Umgeni Water’s unfunded social component thus estimated at R465m (resulting in an impairment).Table 15.32: Technical and financial data of projects addressing the elimination of backlogs in rural areasProject Maximum Volume Uptake Base Tariff Break-Even TariffRichmond 24.5 3.482 3.680Greater Eston 6 3.482 11.588Mhlabatshane 8 3.482 15.875Ozwatini BWS 6.5 3.482 14.556Maphumulo BWS Scheme (Phase1) 4 3.482 11.487Maphumulo BWS Scheme (Phase 2) 8 3.482 10.874Ncegbo BWS (phase 1) 1 3.482 13.214* Break-even tariff calculated after taking into account the receipt of Rural Bulk Infrastructure Grants.Rural Bulk Infrastructure Grants:Based on the letter received from DWA the following grants have been taken into account.Table 15.33: RBIG FundingProjectTotal RBIG Funding F11 F12 F13 F14* F15*R'000 R'000 R'000 R'000 R'000 R'000Richmond R 55 949 R 4 276 R 19 838 R 14 879 R 8 455 R 8 502Greater Eston R 47 957 R 3 665 R 17 004 R 12 753 R 7 247 R 7 287Mhlabatshane Sub-Regional Scheme R 79 831 R 10 702 R 33 319 R 35 810 - -Total Rural Bulk Infrastructure Grant Funding R 183 737 R 18 642 R 70 162 R 63 442 R 15 702 R 15 789* Awaiting confirmation for the receipt of R15m in F’15 and R15m in F’16.Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 116

Table 15.34: Rural Project EvaluationCustomerProjectTotal capitalcostRBIGexcl VATInterestcapitalisedEscalationTotal projectafter RBIGEconomicvalueR'm R'm R'm R'm R'm R'mRBIGR'mSocial ValueFunded as follows:UWR'm| Financial Plan ChapterTotalR'mConstruction CommencementDateUmgungundlovu Greater Eston / Richmond 338 (104) 98 72 404 222 104 78 182 31/03/2012Ugu Mhlabatshane BWS Scheme 195 (80) 47 45 207 58 80 69 149 30/09/2010iLembe Ozwathini BWS Scheme 174 - 53 44 271 151 - 120 120 31/03/2010iLembe Maphumulo BWS Scheme (Phase 1) 225 - 60 20 305 177 - 128 128 30/09/2009iLembe Maphumulo BWS Scheme (Phase 2) 136 - 40 61 237 186 - 51 51 30/09/2009iLembe Ncgebo BWS Phase 1 35 - 2 - 37 18 - 19 19 28/02/2009TOTAL 1103 (184) 300 242 1461 812 184 465 649(A) Economic Value: Defined as the future economic benefits which will flow to Umgeni Water with an existing affordable tariff structure over a 20-year repayment term.(B) Social Component reflects the amount that cannot be recovered through the affordable tariff structure.Table 15.35: Impairment of Assets Arising From the Unfunded Social ComponentProject Total Business Plan F'12 F'11 F'12 F'13 F'14 F'15 F'16 F'17R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000Greater Eston / Richmond 78 000 5 268 16 901 20 387 17 242 16 038 1 060 1 105Mhlabatshane BWS Scheme 69 000 19 887 21 231 22 221 5 662 - - -Ozwathini BWS Scheme 120 000 69 4 155 - 27 905 48 471 39 400 -Maphumulo BWS Scheme (Phase 1) 128 000 40 805 39 586 30 525 17 084 - - -Maphumulo BWS Scheme (Phase 2) 51 000 2 098 14 174 21 391 13 337 - - -Sub-Total Work in Progress 446 000 68 126 96 046 94 525 81 229 64 509 40 460 1 105Commissioned 2010Ncgebo scheme 19 000 19 000 - - - - - -Total Impairments 465 000 87 126 96 046 94 525 81 229 64 509 40 460 1 105Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 117

Table 15.36: Summary of Major Movements in the 30-Year Capital Expenditure Programme between 2010/11 and 2011/12 Business Plan.| Financial Plan ChapterProject Cat.EIB FundedProjectsUmgeniSystemProject Description Umgeni Water Strategic Outcomes Customer% R'000 R'000 R'000AUG Mkomazi Lower Mkomazi WW (150 Ml/day) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM C1 100% 450 000 450 000 -AUG Upper Umgeni Darvill WWW: Plant Capacity Increase (85Ml/d) Meeting Customer Requirements Msunduzi LM C2 180% 180 000 280 000 100 000AUG Upper Umgeni Wartburg to Dalton p/l augmentation PH 2 Meeting Customer Requirements uMgungundlovu DM, Ilembe DM B2 156% 174 000 285 683 111 683AUG Lower Mvoti Fawsley Park WW Meeting Customer Requirements iLembe DM C2 128% 168 400 300 000 131 600AUG Upper Umgeni 251 Raw Water Pipeline to Midmar WW duplication Operational Resiliency eThekwini MM, Msunduzi LM, uMgungundlovu DM B2 100% 70 000 70 000 -AUG South Coast Scottburg South Link Meeting Customer Requirements Ugu DM B2 100% 35 000 35 000 -AUG Hazelmere Honolulu Reservoir Upgrade (15 Ml) Meeting Customer Requirements iLembe DM C1 76% 26 000 60 000 34 000AUG South Coast Umzinto link (Ellingham Reservoir to Umzinto WW) Meeting Customer Requirements Ugu DM A1 100% 24 221 24 221AUG Lower Thukela Lower Thukela BWS Meeting Customer Requirements iLembe DM B2 2% 24 182 1 024 182 1 000 000AUG Upper Umgeni New Raw Water Pipeline '251/'51 (Dam - RW P/S) Operational Resiliency eThekwini MM, Msunduzi LM, uMgungundlovu DM B1 100% 20 000 20 000 -AUG Hazelmere Avondale to Honolulu Pipeline Ph1 (1000d x 10km + 800d x 7km) Meeting Customer Requirements iLembe DM O (7%) (10 391) 146 869 157 260AUG South Coast Umzinto Water Works Customer Satisfaction Ugu DM C1 (100%) (11 100) - 11 100AUG EIB South Coast South Coast Ph. 2a (Park Rynie to Kelso) Meeting Customer Requirements Ugu DM A2 (25%) (12 685) 38 315 51 000AUG EIB Upper Umgeni 61 pipeline extension (ED2 to ED4) Meeting Customer Requirements eThekwini MM, Msunduzi LM, uMgungundlovu DM A1 (20%) (21 000) 84 000 105 000AUG Upper Umgeni DVH - Claridge Reservoir Pipeline Meeting Customer Requirements Msunduzi LM, uMgungundlovu DM, Ilembe DM C2 (61%) (31 000) 20 000 51 000AUG Upper Umgeni '61 p/l: extension (ED4 to Umlaas Road) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM B1 (18%) (39 045) 181 915 220 960AUG Lower Mvoti Fawsley Park-Mvoti Balancing Res Pipeline (9km) Meeting Customer Requirements iLembe DM C2 (50%) (54 500) 54 500 109 000AUG Upper Umgeni Umlaas Road Reservoir No.2 (45Ml) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM B2 (90%) (72 950) 7 700 80 650AUG Upper Umgeni Darvill WWW: Recycling Plant Water Resources Adequacy eThekwini MM, uMgungundlovu DM C2 (100%) (119 900) - 119 900AUG Upper Mkomazi Mkomazi water project (water supply) Meeting Customer Requirements eThekwini MM, uMgungundlovu DM C2 (14%) (454 500) 2 853 500 3 308 000AUG Various Other Projects 0% (7 234) 2 179 448 2 186 682Sub-Total Augmentation 4% 337 498 8 115 333 7 777 835ProjectStageRankingCash flowIncrease /(Decrease)ProjectTotalBusinessPlanF'12ProjectTotalBusinessPlanF'11DEV Upper Umgeni Manyavu Pipeline Meeting Customer Req. & Community Sustainability uMgungundlovu DM B1-A1 (20%) (5 000) 20 000 25 000DEV South Coast Mzintlava Sub-Regional Scheme Ph1 Meeting Customer Req. & Community Sustainability Sisonke, Ugu DM C2 (100%) (500 000) - 500 000DEV South Coast Mzintlava Sub-Regional Scheme Ph2 Meeting Customer Req. & Community Sustainability Sisonke, Ugu DM C2 (100%) (500 000) - 500 000DEV Upper Umgeni Dalton to Ozwathini p/l PH 3 Meeting Customer Req. & Community Sustainability uMgungundlovu DM, Ilembe DM B2 6% 12 986 220 500 207 514DEV Upper Umgeni Greater Eston Meeting Customer Req. & Community Sustainability uMgungundlovu DM B1 100% 157 408 157 408 -DEV South Coast Mhlabatshane Sub-Reg Scheme Ph 2 - Mkimkhulu River abstr Meeting Customer Req. & Community Sustainability Ugu DM C1-B2 100% 65 000 65 000 -DEV EIB Upper Mvoti Maphumulo BWS PH 1 Meeting Customer Req. & Community Sustainability iLembe DM A1 24% 44 030 224 776 180 746DEV EIB Upper Mvoti Ozwathini Sikoto WW Meeting Customer Req. & Community Sustainability uMgungundlovu DM, iLembe DM B2 200% 25 600 173 300 147 700DEV Upper Mvoti Maphumulo BWS PH 2 Meeting Customer Req. & Community Sustainability iLembe DM B1 6% 7 971 143 926 135 955DEV Mooi Spring Grove WW Meeting Customer Req. & Community Sustainability uMgungundlovu DM C1 100% 107 200 107 200 -DEV Mooi Greater Mpofana Regional Scheme Meeting Customer Req. & Community Sustainability Umgungundlovu DM C1 (54%) (145 792) 123 020 268 812DEV Mooi Greater Mpofana Regional Scheme Meeting Customer Req. & Community Sustainability Umgungundlovu DM C1 (14%) (38 592) 230 220 268 812DEV South Coast Greater Vulamehlo Sub-Regional Scheme Meeting Customer Req. & Community Sustainability Ugu DM C2 (100%) (51 000) - 51 000DEV Upper Mkomazi Greater Bulwer/Donnybrook BWSS Meeting Customer Req. & Community Sustainability Sisonke C1 (96%) (66 900) 3 000 69 900DEV Various Other Projects 0% (1) 432 004 432 005Sub-Total Development Projects (34%) (848 498) 1 670 134 2 518 631Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 118

| Financial Plan ChapterProject Cat.EIB FundedProjectsUmgeniSystemProject Description Umgeni Water Strategic Outcomes Customer% R'000 R'000 R'000EXP Lower Thukela Zinkwazi Pipeline Link (300dia x 10km) Meeting Customer Requirements iLembe DM C2 (100%0 (14 000) - 14 000EXP Hazelmere Blythedale Pipeline Ext (Shayamoya): (450dia x 3km & res) Meeting Customer Requirements iLembe DM C2 (100%) (18 000) - 18 000EXP South Coast Bhobhoyi Upgrade (subject to Exco go ahead (R100m)) Infrastructure Stability Ugu DM (100%) (75 000) - 75 000EXP Various Other Projects 0% 3 606 879 000 875 394Sub-Total Expansion (11%) (103 394) 879 000 982 394ProjectStageRankingCash flowIncrease /(Decrease)ProjectTotalBusinessPlanF'12ProjectTotalBusinessPlanF'11REH Lower Umgeni Dbn Hts WW: Reservoir 3 Roof Rehabilitation & Dam Safety Infrastructure Stability eThekwini MM 117% 15 100 28 000 12 900REH Various Other Projects (2%) (2 621) 111 122 113 743Sub-Total Rehabilitation 10% 12 479 139 122 126 643UPG Lower Umgeni Ozone Plant Rehab and Element Replacement (every ten years) Infrastructure Stability eThekwini MM 100% 60 000 60 000 -UPG Lower Umgeni Dbn Hts WW: Candy Filters and Actuators upgrade Infrastructure Stability eThekwini MM B1-A2 4000% 20 000 20 500 500UPG Upper Umgeni Darvil Sludge Handling Facility Infrastructure Stability Msunduzi LM 100% 17 500 17 500 -UPG Upper Umgeni Darvill Aerators Infrastructure Stability Msunduzi LM 100% 15 500 15 500 -UPG Refurbishment Head Office Operational Resiliency A1 150% 15 000 25 000 10 000UPG Lower Umgeni Wiggins Various Projects Infrastructure Stability eThekwini MM B1-A2 76% 11 165 25 765 14 600UPG Upper Umgeni Darvill WWW - PLC Upgrades (10-yr upgrade cycle) Infrastructure Stability eThekwini MM, Msunduzi LM, uMgungundlovu DM 257% 10 800 15 000 4 200UPG Lower Umgeni Wiggins Dam Safety: Concrete Rehab Infrastructure Stability eThekwini MM 100% 10 000 10 000 -UPG Lower Umgeni Dbn Heights Various Projects Infrastructure Stability eThekwini MM B1-A2 19% 9 511 60 911 51 400UPG Upper Umgeni Midmar PLC Upgrades (10-yr upgrade cycle) Infrastructure Stability eThekwini MM, Msunduzi LM, uMgungundlovu DM B1-A2 (33%) (10 000) 20 165 30 165UPG South Coast Amanzimtoti Reservoir upgrade (20Ml) Infrastructure Stability eThekwini MM, Ugu DM C2 (100%) (40 000) - 40 000UPG Upper Umgeni Stuckenberg Tunnel Extension Infrastructure Stability eThekwini MM, Msunduzi LM, uMgungundlovu DM C2 (100%) (55 400) - 55 400UPG Lower Umgeni Wiggins High lift Pumpstation (Incl. Surge Anticipator) Infrastructure Stability eThekwini MM (92%) (58 800) 5 000 63 800UPG Various Other Projects 1% 3 313 311 273 307 960Sub-Total Upgrade 1% 8 589 586 614 578 025TOTAL IMMOVABLES (5%) (593 326) 11 390 203 11 983 528OTHER Movables - Head Office Operational Resiliency 2% 328 14 378 14 050ICT Information Communication & Technology Operational Resiliency 7% 12 019 187 646 175 627OTHER Scientific Services Operational Resiliency 37% 18 167 66 751 48 584OTHER Plant & Vehicles Operational Resiliency 11% 4 974 49 187 44 213TOTAL MOVABLES 13% 35 488 317 962 282 474TOTAL CAPITAL EXPENDITURE (5%) (557 838) 11 708 164 12 266 002UPG = Upgrade, EXP = Expansion, REH = Rehabilitation, AUG = Augmentation, DEV = Development Projects, ICT = Information & Communication Technology Other = Equipment & VehiclesA1 = In Construction, A2 = In Tender, B1 = In Detailed Design, B2 = In Preliminary Design, C1 = In Detailed Feasibility, C2 = In Pre-Feasibility, O = CommissionedEIB = EIB Funded Projects,Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 119

Figure 15.7: Thirty-Year Capital Expenditure Programme Movement between 2010/11 and 2011/12 Business PlanThirty-Year Capital Expenditure Programme| Financial Plan Chapter1 000900800700600Rand (Millions)500400300200100F'11 F'12 F'13 F'14 F'15 F'16 F'17 F'18 F'19 F'20 F'21 F'22 F'23 F'24 F'25 F'26 F'27 F'28 F'29 F'30 F'31 F'32 F'33 F'34 F'35 F'36 F'37 F'38 F'39 F'40Financial YearBusiness Plan 2012 Business Plan 2011Umgeni Water Five-Year Business Plan| 2011/2012 to 2015/2016 Page 120

| Financial PlanChapterFigure15.8: Thirty-YearProgramme by CategoryThirty-YearCapital Expenditure Programme byNature1 825 0001 675 0001 525 0002011-2016 - R3,410mF'11 to F'14 - Mhlabatshane Scheme - R194mF'11 to F'15 - Greater Eston - R157mF'11 to F'15 - 61 Pipelinee -R248mF'11 to F'16 - Midmar WW - R225mF'11 to F'16 - NorthCoast Supply System - R191mF'11 to F'16 - OzwathiniBWSScheme - R173mF'11 to F'16 - RichmondPipeline - R122m2017-2026 - R5,363mF' '17 to F'19 - WartburgSystem - R311mF' '17 to F'21 - Lower Mkomazi System-R825mF' '17 to F'23 - MkomaziBWSScheme - R1,901mF' '17 to F'25 - South Coast System-R226mF' '17 to F'26 -Lower ThukelaBWS-R988mDWA- R6,170mF'111 to F' 13 - HazelmereDam Rising - R116mF'111 to F' 14 - SpringGrove Dam - R1,604mF'17to F' 19 -LowerMkomazi Dam R200mF'24to F'27 - Mvoti Port Dam -R400mF'27to F' '31 - LowerMvoti Dam-R550mF'16to F' '34 - Mkomazi Water ResourceProject - R3,300m1 375 0001 225 0001 075 000925 000775 000625 000475 000325 000175 00025 000F'111 F'12 F'13 F' 14 F'15 F'16F'17F'18F'19F'20 F'21 F' 22 F'23 F'24F'25F'26F'27F'28F'29 F'30 F'31 F'32 F'33F'34F'35F'36F'37 F'38 F' 39 F'40AugmentationExpansionUpgradeRehabilitationDevelopment ProjectsDWAUmgeniWater Five-Year BusinessPlan| 2011/2012 to2015/2016Page121

Chapter| DebtManagementandd Fundingg RequirementsChapter 16.DebtRequiremmentsManagement andFundingg16. 116.1.1Long Termm Cash FloFow andOutstandingDebtt ProjectionsIntroductionBasedonn thedebt maturity profileandd cumulativedebtcurve,thefollowing key k issueshavebeenidentifiedd andare takeninto account inn termss off creatingthee short, mediumm and long-termfundingstrategy::1.Capital structureeA keyprinciple to t managingthe outstandingdebt is too target the optimum capitalstructureof70 % fixedd and30 % floatingg interestrate so as too minimise volatility of o bothh the tarifff andincomee statement.2. Asset/liabilitymatcmchingA furtherkeyprinciplee to managingg Umggeni Water’s debt is to matchh the matumuritydatess andquantum of debtt outstandingin anyy year too the freecash generated by operationss after servicinginterest and operational expenditure.Therestill existss a mismatchbetweenliabilitiesandd freecash. Thiss needss to be pro-actively managed on an on-gogoing basis.Figure16. 1: Asseet-Liabilityy Matching1 5001 00 00500Asset LiabilityMatching(Based on BalanceSheet ValuVues)R'm--500'08'09'10'11' 12'13'14' 15'16-1 00 00-1 500-2 00 00-2 500LiabiitiesAsset3.Optimal DebtLevellThekey driver in determining theoptimal level off debtfor Umgeni Waterwass the abiliaity toservicee debtgiven thecash flows generatedafter capitalexpenditure.. A best-casescenarioisthat for every R1 R of debttoo bee repaid, there is R1.4R40 of operational cashflow after capitalexpenditure to fundd thee repayment.Pagee 122Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Debt Management and Funding Requirements Chapter4. Redemption portfolioHaving debt with large bullet repayments, such as the UG21 bond, exposes Umgeni Water toforward starting interest rate and refinancing risk. These risks can be eliminated throughredemption portfolio management.16.1.2 Funding StrategyTable 16-1: Funding requirements (2010/11 to 2015/16)FUNDING REQUIREMENTS Short-term Medium-Term Long-TermFinancial Year (R'm) F11 F12 F13 F14 F15 F16Operational Cash flows 665 666 654 715 806 845Capex - Gross (Escalated) (548) (628) (690) (705) (644) (835)Net Operating and Capex cash flow 117 38 (36) 10 162 10Capex - Grants - 19 70 63# #Refinance - Capital (existing Debt net of asset capital) (113) (119) (121) (108) (112) (118)EIB * - 76 261 20 (20) (20)Refinance - Finance costs (existing Debt) (81) (98) (79) (64) (56) (52)EIB - - (14) (30) (32) (30)Net Incremental Funding (77) (84) 81 (109) (58) (210)Requirement p.a.Net (Funding) Investing requirementsOpening Balance Call investments 924 847 763 844 735 677Net Investing (Funding) requirements ^ 847 763 844 735 677 467* European Investment Bank# awaiting confirmation for the receipt of R15m in F’15 and R15m in F’16.^ The net investing (funding) portion excludes the R 200 million liquidity buffer as reflected in the balance sheet.Short-term funding strategy: FY10 to FY12• All surplus cash is to be invested in short-term financial assets or longer dated if not needed in the short-term.• Early repayment of existing annuity loans to be evaluated and if evaluation yields favourable results thenterms of repayment to be negotiated with the relevant lender. The loans identified as potentially favourablein terms of early settlement are shown in Table 16.2.Table 16-2: Loans identified as potentially favourable in terms of early settlementLender Loan Number Maturity Interest rate Capital outstandingDBSA 27 30 Sept 2012 14.5% R11.5mDBSA 47 30 Sept 2017 9.79% R19.5mMedium-term: FY13 to FY16The medium term funding requirements indicate that Umgeni Water will not require additional borrowings abovethe EIB drawdown in F’14 and that it holds sufficient funds to cover any incremental funding.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 123

Chapter| Debt Management and Funding RequirementsLong-term: FY16 onwardsTable 16-3: Funding requirements (2015/16 to 2020/21)FUNDING REQUIREMENTS L/Term L/Term L/Term L/Term L/Term L/TermFinancial Year (R'm) F16 F17 F18 F19 F20 F21Operational Cash flows 845 801 740 810 855 948Capex - Gross (Escalated) (835) (1 189) (1 406) (1 220) (1 177) (964)Net Operating and Capex cash flow 10 (388) (666) (410) (321) (16)Capex - GrantsRefinance - Capital (existing Debt net of asset capital) (118) (69) (65) (65) (4) (605)EIB* (20) (20) (20) (20) (20) (20)Refinance - Finance costs (existing Debt) (52) (67) (118) (178) (234) (295)EIB (30) (28) (27) (25) (23) (21)Funding Requirements (210) (572) (896) (697) (603) (957)Redemption Portfolio - New bond (65) (155) (195) 415Net Incremental Funding (210) (572) (961) (852) (798) (542)Requirement p.a.Net (Funding) Investing requirementsOpening Balance Call investments 677 467 (105) (1 066) (1 919) (2 717)Closing Balance 467 (105) (1 066) (1 919) (2 717) (3 259)* European Investment BankThe current projections reflect that Umgeni Water will in the long term require significant additional long termfunding to provide for its next phase of high capital expenditure and the redemption of the UG21 bond and that itstariff increase will have to be above projected CPI levels if the organisation is to maintain an optimal gearing level.16.1.3 Terms and Conditions on which money is borrowedThe terms and conditions on which money is borrowed differ according to loan agreements and bond issues. Bankcommitted facilities offered can be for a full twelve months or for a specified seasonal period. This committedfacility would attract a facility fee on any unutilised balances during the agreed period only. Accessing theuncommitted facility will be subject to Umgeni Water giving the relevant banks at least forty-eight hours’ notice inorder that the bank may obtain the necessary credit approval to make the funds available to Umgeni Water.A summary of the various funding facilities that Umgeni Water currently has and major conditions relating tothose facilities are as per Table 16.4.1. Bank FundingTable 16.4: Bank Funding FacilitiesBank Type of facility Committed UncommittedFNB Working capital facility R50 millionRMB Multipurpose Treasury Facility R100 millionStandard Bank General banking facility R50 millionInvestec General credit facility R50 millionABSA Overnight facility R30 millionNedbank General banking facility R 49.9 millionFirst National BankInstruments available under the short-term direct facility are:• Overdraft – prime less 1% up to R10 million, thereafter prime;• Corporate term loans – negotiable rate;• Bankers acceptances (Acceptance credits) – negotiable rate;• Promissory Notes – negotiable rate;• Offshore Finance – negotiable rate; and• Call loans – negotiable rate.Page 124 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Debt Management and Funding Requirements ChapterStandard BankInstruments available under the general short-term bank facility are:• Overdraft – prime;• Call loans – negotiable rates;• Short-term loans – negotiable rates;• Revolving acceptance credit facility and foreign currency finance facility;• Offshore trade and working capital loans; and• Other instruments – as offered by the bank.Investec BankInstruments available under the general credit facility are:• Bank call facility – negotiable rates;• Foreign financing facility – negotiable rates; and• Foreign exchange dealing facility – negotiable rates.ABSA BankInstruments available under the general credit facility are:• Bank call facility – negotiable rates; and• Call bonds – negotiable rates.2. Annuity LoansTerms, conditions and maturity are specific to each loan agreement. The most significant loans and thebalances as at 30 June 2011 (forecast) are: DBSA loan 71, part of which is a variable interest rate fifteen-yearloan at, R 400 million and part (R86m) at a fixed interest rate; and DBSA loan 73, which is a fixed interest rateten-year loan, at R 211 million.3. Capital Market BondsDomestic Medium Term Note (DMTN) ProgrammeThe DMTN Programme was established to fund long term capital expenditure requirements and to fund shortterm working capital requirements. The DMTN Programme was completed and signed off on25 November 2009.Under this DMTN Programme, Umgeni Water may from time to time issue unsecured or secured registerednotes of any kind, in an aggregate outstanding nominal amount which will not exceed R 3 billion.• Notes may comprise without limitation:Fixed rate, floating rate, mixed rate, zero coupon notes or a combination of such foregoing notes or anyother type of notes determined by Umgeni Water and the relevant dealers.• Interest rateThe interest rate will be determined at the time of issuance of notes and will be specified in the ApplicablePricing Supplement.• MaturityThe Notes are not subject to any minimum or maximum maturity.• Issuance of UG21 bond under the DMTN ProgrammeOn 02 March 2010, after a very successful road show, Umgeni Water issued a R 600 million unsecuredfixed rate bond, the UG21, at an interest rate of 10.70 %, under the DMTN Programme.The UG21 falls due on 02 March 2021 and interest payments are due on 02 March and 02 September eachyear.The UG21 was oversubscribed at the time of issuance.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 125

Chapter| Debt Management and Funding Requirements4. Development Funding InstitutionsProposed European Investment Bank (EIB) LoanThe due diligence for Umgeni Water was completed during 2009 and the Board of the EIB, in principle,approved the R 400 million twenty-year loan, on the 7 December 2009. The Contract Agreement is stillbeing finalised.The liability will be denominated in ZAR and thus will have no foreign currency exposure to UmgeniWater.16.1.4 Maturity Profile of DebtThe maturity profile (Table 16.5) indicates the short and long term borrowings.Table 16.5: Maturity profile of debt (Balance Sheet)Maturity Profiles - Investment and DebtInvestment maturity structure (R'm) F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16< 1year 501 1 213 1 179 1 083 999 1 080 970 913 70253% 98% 98% 99% 99% 100% 100% 100% 100%1-5 years 440 22 19 14 10 5 - - -47% 2% 2% 1% 1% 0% 0% 0% 0%5-10 years - - - -0% 0% 0% 0% 0% 0% 0% 0% 0%+10 Years - - -0% 0% 0% 0% 0% 0% 0% 0% 0%Total Investments 941 1 236 1 197 1 098 1 009 1 085 970 913 702Debt maturity structure (R'm) F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16< 1year 102 1 061 117 123 130 131 132 138 895% 54% 8% 9% 10% 9% 9% 11% 8%1-5 years 1 433 592 593 538 496 517 420 906 83869% 30% 39% 38% 37% 35% 30% 72% 75%5-10 years 470 312 808 739 693 698 704 99 9723% 16% 53% 53% 51% 47% 51% 8% 9%+10 Years 74 13 - 34 142 138 119 1004% 1% 0% 0% 3% 10% 10% 9% 9%Total Borrowings 2 079 1 979 1 517 1 400 1 353 1 488 1 394 1 262 1 124Net Borrowings 1 137 743 320 302 343 402 424 349 422Long - term debt (>1 year) 1 977 917 1 400 1 277 1 223 1 357 1 262 1 124 1 035Movement (4.0%) (53.6%) 52.6% (8.8%) (4.2%) 11.0% (7.0%) (10.9%) (7.9%)Short - term debt (

| DebtManagement andd Fundingg RequirementsChapterTable 16.6: Fixedd versus Floating DebttFixedvsFloatingF'08F'099F'10F'11F'122F'13F'14F'155F' '16Fixed1 561 5071 503 5431 0677 4491 000 1671 003 0411 187 8271 144 2121 0622 159974 19774.10%75.00%70. .34%71.44%74.12%79. 81%82.09%84.16%86.64%Floating564 222500 00 004500 0000400 000350 00 00300 000250 0002000 0000150 00025.90%25.00%29. .66%28.56%25.88%20. 19%17.91%15.84%13.36%Total2 125 7302 003 5431 5177 4491 400 1671 353 0411 4877 8281 394 2121 2622 1601 124 197Figure 16.2: DebtMaturity structureDebt MaturityStructures(R'm)R'm2 5002 0001 5001 000+10 Yearrs5-10 years1-5 years< 1year500-F'08F' 09F'10F' 11F'122F' 13F'14F'15F'16Financial Yearr Ending30 JuneUmgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 127

Chapter| Debt Management and Funding Requirements16.1.5 Analysis of Funding Against Approved Borrowing LimitsIn preparing the funding strategy, cognisance was taken of the level of gross debt against the unconditionalborrowing limit set by the Department of Water Affairs and National Treasury which is based on R 1,800 million forF’11. A 3 year application for 2012 to 2014 borrowing limits has been made to DWA and National Treasury asfollows:• F’12 – R2 000m• F’13 – R2 000m• F’14 – R2 000mFigure 16.3: Analysis of funding against approved borrowing limits4 500 000Debt curve - Funding against limits4 000 0003 500 0003 000 0002 500 0002 000 000Redemption Portfolio*Gross DebtNet DebtFunding RequirementsBorrowing Limit1 500 0001 000 000500 000-'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32Table 16.7: Gross Borrowings (R’m)Borrowing Limit F11 F12 F13 F14 F15 F16Gross Borrowings 1 400 1 353 1 488 1 394 1 262 1 124At PeakContingencies 200 300 300 300 300 300TOTAL GROSS BORROWINGS 1 600 1 653 1 788 1 694 1 562 1 424Approved borrowing Limit 1 800(Over) Under utilisation 200 1 653 1 788 1 694 1 562 1 424Page 128 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

16.1.6 Debt Curve| Debt Management and Funding Requirements ChapterThe shift in long-term borrowings arises primarily from the reduction in volumes sales and the thirty-yearincrease in Capex.Figure 16.4: Comparison of gross Debt Budget F’11 to Budget F’12Gross Borrowings4 0003 5003 0002 500Borrowing LimitBudget F'12Budget F'11R'm2 0001 5001 000500-'08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30 '32 '34 '36 '38Figure 16.5: Comparison of net Debt Budget F’11 to Budget F’12Net Debt CurveR'm4 0003 5003 0002 5002 0001 5001 000500Budget F'12Budget F'110'08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30 '32 '34 '36Financial Year ending 30 JuneUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 129

Chapter| Debt Management and Funding Requirements16.2 Proposed Borrowings16.2.1 Borrowings Domestic and ForeignShort-term borrowings consist mainly of the portion of long term debt falling due within one year. In F’09,there is a significant increase in the short-term borrowings due to the UG65 bond redemption in thefollowing year (F’10).Table 16.8: Proposed total borrowingsTOTALDATE OFTOTAL PORTIONGROSSBORROWING BORROWING LONG TERM SHORT-TERMActualActualActualTotal Short termShort-term portionof long term debtShort-termborrowings2007/2008 2 078 337 303 1 976 783 560 101 553 743 101 553 743 -2008/2009 1 978 904 300 917 448 873 1 061 455 427 1 061 455 427 -2009/2010 1 517 448 873 1 400 167 196 1 400 167 196 117 281 677 117 281 677 -Projected Projected Proposed Total Projected Projected Projected2010/2011 1 400 167 196 1 277 109 528 1 277 109 528 123 057 668 123 057 668 -2011/2012 1 353 041 510 1 151 159 726 72 135 383 1 223 295 109 129 746 401 129 746 401 -2012/2013 1 487 827 666 1 106 361 813 250 609 791 1 356 971 604 130 856 062 130 856 062 -2013/2014 1 394 212 159 1 226 988 375 35 171 635 1 262 160 010 132 052 149 132 052 149 -2014/2015 1 262 160 010 1 124 197 109 - 1 124 197 109 137 962 902 137 962 902 -2015/2016 1 124 197 109 1 035 397 461 - 1 035 397 461 88 799 648 88 799 648 -Table 16.9: Borrowing programme in Rands - ForeignDATE OFTOTALGROSSFOREIGN PORTIONBORROWING BORROWING LONG TERM SHORT-TERMActualActualActualTotal ShorttermShort-termportion of longterm debtShort-termborrowings2007/2008 - - - - -2008/2009 - - - - -2009/2010 -Projected Projected Proposed Total Projected Projected Projected2010/2011 - - - -2011/2012 75 931 982 - 72 135 383 72 135 383 3 796 599 3 796 5992012/2013 336 667 940 68 338 784 250 609 791 318 948 575 17 719 365 17 719 3652013/2014 356 189 129 301 229 209 35 171 635 336 400 844 19 788 285 19 788 2852014/2015 336 400 844 316 612 559 - 316 612 559 19 788 285 19 788 285 -2015/2016 316 612 559 296 824 274 - 296 824 274 19 788 285 19 788 285 -* The loans are denominated in South African Rands and thus there is no currency riskPage 130 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| DebtManagement andd Fundingg RequirementsChapterTable 16.10:Borrowingg programmee –DomesticDATE OFTOTALGROSSBORROWINGBORROWINGLONG TERMMDOMESTIC PORTIONSHORT-TERMMActualActualActualTotalShort termShort-termportionoff longg term debtShort-termborrowings2007/20082008/20092009/20102010/20112011/20122012/20132013/20142014/20152015/20162 0788 33730331 9788 90430002 0788 3373033Projected1 4000 16719661 277 10952881 151 15972661 0388 02303009255 7591666807 58454991 976 783 560917 448 8731 400 167 196Projected1 277 109 5281 151 159 7261 038 023 030925 759 166807 584 549738 573 186Proposed------------Total1 277 109 5281 151 159 7261 038 023 030925 759 166807 584 549738 573 186101 553 7431 061 455 427117 281 677Projected123 057 668125 949 802113 136 696112 263 864118 174 61769 011 363101 553 7431 061 455 427101 553 743Projected123 057 668125 949 802113 136 696112 263 864118 174 61769 011 363Projected---------Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 131

Chapter| Materialityy and signsnificanceframeworkChapter 17.Materialityandd siggnificanceframeworkThe framework is applied under two main categories,being quantitative andqualitative aspects.17. 1Quantitativee aspects:MaterialitylevelUmgeniWaterr Management assesses thee levelof a materialityy asbeingg ½ % off UmgeniWater’sgrosss revenue.It is recognisedthat different levelsof f materiality canbe set for different classess of transactions.UmgeniWater has, howwever, taken the approachof settinga moreconservativematerialitylevel thatwilll be usedfor alll classes off transactions.17.1.1.Factorss considered:•Natureof Umgeni WateWer’ss business:• Revenueforr UmgeniWaterr primarilyy comprises sales of water, feess for managementofwaterworksandd wastewaterworks.•Statutory requirementss applicable to Umgeni Water:• Umgeni Wateris listedass a PFMA Scheedule 3B publpic entity.• The Board of o UmgeniWateris requiredd too execute its mandate inn termss of thee PFMA.• Umgeni Wateraccordingly elects to t give g preference too a lowerlevel of matemerialityduee to itbeingg so closelyy governed by variousactss and the t publicaccountability responsibilityit hasto stakeholders.•The control and inherent riskss associated withh UmgeniWater:• In assessingg thecontrol riskof Umgeni Water,managementconcludedd thatlevelofmateriality beinbng ½ % of gross revenue is appropriate andprudent.This assessmentt is basedonn the fact thattt a sound control environment is beingmaintained. In thisregardcognisancewas given too amongstothermatters:• Proper andappropriate governance structures areestablished which includeaBoardd ofDirectors(AccountingAuthority)), CE and Executive Management.• A Riskk Management Commmitteee with specificc risk manamagement responsibilities;• Ann auditcommittee thattt closely monmnitors the controll environmentoff UmgeniWater;• The function ofinternal audit iss outsourcedd too professional independentinternal auditors; and• A three yearr Internal Audit Coverage Plan, basedd onn annual risk assessments17.1.2Umgeni Wateer General Approachh to Qualitativee AspectssMaterialityy is notconfined to t the sizeof theentityandd the elements of itsfinancialstatements.•Umgenii Water recognises thatt misstatementss that are large either individually or in theaggregatemay affectt a “reasonable”” user’’s judgement. Further,misstatementss mayalso be material onqualitativegrounds. TheTese qualitativee groundsincludeamongstt other::• New ventures thatUmgeni Water mayy enterinto.• Unusualtransactionsentered intoo that arenott off a repetitivenature andare disclosablepurelyy due to t the naturethereof due to knowledgee thereof affecting the decision makimng ofthe user of the financial statements.• Transactions enteredintoo that could result in reputationalriskk to Umgeni Water.• Any fraudulentor dishonestbehaviourr of an officeror staff off Umgeni Watter.• Any suspected corruption, irregularities or fraud.• Any nfringement of Umgenii Water’s agreedperformancelevels.Pagee 132Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Materiality and significance framework Chapter• Procedures/processes required by legislation or regulation (e.g. PFMA and the TreasuryRegulations).• Unauthorised, irregular or fruitless and wasteful expenditure.• Items of a non-financial nature, which would impact on the continued operation anddeliverables of Umgeni Water.The policy contained in this framework will be appropriately presented in the Annual Report of Umgeni Water asrequired.17.1.3 Detailed/Specific Umgeni Water Responses to Requirements1. Fiduciary duties of the Accounting Authority RequirementsThe accounting authority must in terms of the PFMA Sec 50 (c), on request, disclose to the executiveauthority responsible for that public entity or the legislature to which the public entity is accountable, allmaterial facts, including those reasonable discoverable, which in any way influence the decisions oractions of the executive authority or that legislature.Further/Specific Requirement(PFMA section 50(c)NoneUW Quantitative (Amount)Any fact discovered of which theamount exceeds the determinedmateriality figure as per section 17.1.UW Response: Qualitative1. Any item or event of which specificdisclosure is required by law2. Any fact discovered of which itsomission or misstatement, in theBoard’s opinion, could influence thedecisions or actions of the executiveauthority or legislature.2. Annual Report and Financial Statements RequirementGeneral/Principal Requirement (PFMA section 55 and Treasury regulations 28.2.1 and 28.3.1)Treasury regulation 28.2.1 states that any material losses through criminal conduct and any irregularexpenditure must be disclosed as a note to the annual financial statements of the public entity. Theinterpretation thereof provided by National Treasury is that no materiality level applies to unauthorised,irregular, wasteful and fruitless expenditures.Treasury regulation 28.3.1 states that for the purposes of material [Section 55(2) of the Act] andsignificant [Section 54(2) of the Act], the Accounting Authority must develop and agree a framework ofacceptable levels of materiality and significance with the relevant Executive Authority. The annual reportand financial statements referred to in the PFMA section 55 subsection (1) (d) must (a) fairly present thestate of affairs of the public entity, its business, its financial results, its performance againstpredetermined objectives and its financial position as at the end of the financial year concerned:Further/Specific Requirement(PFMA section 55 (2) (a))(b) include particulars of:(i) any material losses through criminalconduct and any irregular expenditureand fruitless and wasteful expenditurethat occurred during the financial year;(ii) any criminal or disciplinary stepstaken consequence of such losses orirregular expenditure or fruitless andUW Response:Quantitative(i) Losses throughcriminal conduct: Wherethe combined lossesexceed the materiality forthe year under review asestablished by thisframework.Losses through irregular,UW Response: QualitativeAll irregular and fruitless andwasteful expenditure that arosemust be disclosed together withits particulars. Where it has beencondoned (by the relevantauthority), it must still bedisclosed, but in this case therewill be an additional disclosureUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 133

Chapter| Materiality and significance frameworkFurther/Specific Requirement(PFMA section 55 (2) (a))wasteful expenditure;(iii) any losses recovered or written off;(iv) any financial assistance receivedfrom the state and commitmentsmade by the state on its behalf; and(v) any other matters that may beprescribed.UW Response:Quantitativefruitless, wastefulexpenditure: Fulldisclosure(ii) Full disclosure(iii) Full disclosure(iv) Full disclosureUW Response: Qualitativeshowing the condonement of thatexpenditure.3. UW Response to Information to be submitted by Accounting Authority RequirementGeneral/Principal Requirement (PFMA section 54)Before a public entity concludes any of the following transactions, the accounting authority for the publicentity must promptly and in writing inform the relevant treasury of the transaction and submit relevantparticulars of the transaction to its executive authority for approval of the transaction:Further/Specific Requirement(PFMA section 54 (2))(b) Participation in a significantpartnership, trust,unincorporated joint venture orsimilar arrangement.(c) Acquisition or disposal of asignificant shareholding in acompany.(d) Acquisition or disposal of asignificant asset.(e) Commencement or cessationof a significant business activity.UW Response: QuantitativeQualitative aspect is morerelevantQualitative aspect is morerelevantQualitative aspect is morerelevantQualitative aspect is morerelevantUW Response: QualitativeAny participation, outside of theapproved strategic plan andbudget.Any acquisition or disposal,outside of the approved strategicplan and budget.1. Any asset that would increaseor decrease the overalloperational functions of UW,outside of the approved strategicplan and budget.2. Disposal of the major part ofthe assets of UW.Any business activity that wouldincrease or decrease the overalloperational functions of UW,outside of the approved strategicplan and budget.Page 134 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Financial Ratios ChapterChapter 18. Financial RatiosTable 18.1: Umgeni Water Financial RatiosUMGENI WATER F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Financial Indicators and Ratios Actual Actual Actual Budget ForecastA Performance criteria/indicators1 Volume of water sold (kl'000) 403 754 415 956 425 848 425 978 414 579 413 905 414 273 419 037 425 322 431 7022 Total gross revenue (R'000) 1 280 747 1 485 496 1 622 380 1 614 484 1 683 216 1 853 130 1 700 682 1 819 270 1 947 290 2 082 6883 Total Bulk Revenue (R'000) 1 190 798 1 259 187 1 373 784 1 460 849 1 422 120 1 506 646 1 587 960 1 697 677 1 816 291 1 942 9384 Bulk Revenue Growth 13.62% 5.74% 9.10% 3.52% 5.94% 5.40% 6.91% 6.99% 6.97%5 Weighted average Water tariff (R/kl) (total bulk rev/total bulk vol) 2.949 3.027 3.226 3.429 3.430 3.638 3.831 4.049 4.268 4.4986 Net profit (loss) for the year 391 119 525 638 540 024 485 623 428 481 505 129 434 625 445 795 538 435 602 2077 Cost of raw water (c/kl) 18.370 18.690 19.695 23.882 24.277 36.876 42.371 46.717 51.375 56.5458 Profit from Operations/Revenue 0.435 0.432 0.382 0.345 0.285 0.308 0.291 0.280 0.308 0.3209 Total expenditure/Revenue 0.700 0.667 0.672 0.704 0.740 0.731 0.748 0.759 0.727 0.71410 Cost of sales/Revenue 0.307 0.367 0.383 0.384 0.416 0.452 0.407 0.417 0.426 0.43211 Total cost/volume (Rand/kl) (Consolidated) 2.220 2.382 2.560 2.667 3.003 3.272 3.072 3.294 3.329 3.44612 Total cost/volume (Rand/kl) (Bulk only) 2.021 1.900 2.034 2.330 2.390 2.456 2.801 3.005 3.020 3.12013 Net Finance costs (Rand/kl) 0.410 0.280 0.188 0.166 0.125 0.157 0.146 0.154 0.142 0.14814 Personnel cost ratio (Total Personnel costs/Total Costs excl finance costs) 0.271 0.223 0.223 0.280 0.203 0.222 0.255 0.254 0.265 0.27215 Personnel cost per kilolitre (Personnel costs/Annual volume) 0.491 0.542 0.602 0.743 0.710 0.842 0.908 0.908 1.028 1.08416 Personnel cost per kilolitre (Personnel costs/Annual volume) (Bulk only) 0.454 0.431 0.488 0.655 0.541 0.626 0.674 0.718 0.760 0.80417 Number of employees 799 825 845 910 914 920 920 920 920 92018 Kl'000 sold per employee 505.32 504.19 503.96 468.11 453.59 449.90 450.30 455.47 462.31 469.24B Operating Risks19 Working ratio (total expenses excluding depreciation, amortisation and finance costs divided by Total revenue) 0.449 0.477 0.512 0.537 0.598 0.637 0.644 0.648 0.620 0.61320 Operating Ratio (Total Costs excluding depreciation & amortisation/Total Revenue) 0.578 0.555 0.561 0.581 0.629 0.673 0.680 0.684 0.651 0.64421 Controllable working ratio (total expenses excl. raw water, depreciation amortisation & interest divided by total. rev.) 0.391 0.424 0.460 0.474 0.538 0.555 0.541 0.541 0.508 0.49622 Return on assets (income before interest & taxes divided by total assets excluding investments) 20.53% 22.63% 20.00% 14.25% 14.35% 14.97% 11.71% 10.86% 11.59% 11.39%23 Asset turnover (revenue divided by total assets excluding investments ) 0.472 0.523 0.523 0.414 0.503 0.487 0.402 0.387 0.377 0.35624 Gross margin % 69.29% 63.31% 61.73% 61.64% 58.39% 54.84% 59.26% 58.33% 57.43% 56.83%25 Current asset turnover (revenue divided by current assets excl investments) 7.260 7.421 5.370 7.703 7.205 7.251 7.181 7.267 7.380 7.45326 Fixed asset turnover (revenue divided by fixed assets) 0.555 0.601 0.605 0.438 0.547 0.527 0.429 0.412 0.399 0.37627 Debtors collection period (debtors divided by revenue times 365) (Excl. VAT) * 35.163 37.668 50.672 38.002 38.297 38.597 38.628 38.601 38.513 38.40328 Trade debtors collection period (Trade Debtors divided by revenue times 365) Excl VAT 35.163 37.668 50.672 38.002 38.297 38.597 38.628 38.601 38.513 38.40329 Accounts receivable turnover (revenue divided by accounts receivable) (Excl. VAT) 9.106 8.500 6.319 8.425 8.360 8.295 8.289 8.294 8.313 8.337Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 135

| Financial Ratios ChapterUMGENI WATER F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Financial Indicators and Ratios Actual Actual Actual Budget Forecast* Accounts receivable is made up as follows:Trade Debtors 140 656 174 766 256 764 191 626 201 335 223 393 205 179 219 336 234 235 249 805Provision for Doubtful debts - - - - - - - - - -140 656 174 766 256 764 191 626 201 335 223 393 205 179 219 336 234 235 249 805C Financial Risks30 Current ratio (current assets divided by current liabilities) 1.374 0.991 2.434 1.915 2.660 2.744 2.901 2.645 2.465 2.231 Debt ratio (total debt divided by total assets) 0.569 0.486 0.353 0.350 0.315 0.281 0.280 0.246 0.208 0.17232 Gross Debt-equity ratio (total liabilities divided by total accumulated reserves) 2.040 1.283 0.729 0.647 0.558 0.449 0.431 0.358 0.285 0.22333 Net Debt-equity ratio (Net liabilities divided by total accumulated reserves) 1.116 0.482 0.154 0.341 0.120 0.114 0.117 0.109 0.079 0.08434 Weighted Average Cost of Capital (WACC) (Per AFS) 13.22% 12.63% 9.50% 9.51% 9.33% 9.42% 9.52% 9.69% 9.86% 10.02%35 Weighted Average Cost of Capital (WACC) (Finance costs/Gross borrowings) 13.03% 13.52% 15.19% 8.58% 8.41% 7.68% 7.13% 8.06% 8.44% 9.16%36 Net Weighted Average Cost of Capital (WACC) (Net finance costs (excl retic asset interest income)/Net borrowings)37 Financial Leverage (D/(D+E)) (Net of redemption assets) 0.617 0.449 0.419 0.391 0.356 0.308 0.301 0.264 0.222 0.182C Debt ManagementNet DebtTotal Borrowings (as per Balance sheet) 2 078 337 1 978 904 1 517 449 1 637 886 1 400 167 1 353 041 1 487 828 1 394 212 1 262 160 1 124 197Total Investment (as per Balance sheet) 941 315 1 235 897 1 197 295 773 497 1 097 764 1 009 295 1 085 480 970 297 913 297 702 297Net Borrowings (Total Borrowings - Total Investment) 1 137 022 743 008 320 153 864 388 302 403 343 747 402 348 423 916 348 863 421 900D Business Credit Risk38 Interest Cover ratio (EBIT/int paid) 1.949 2.336 2.384 3.960 3.286 4.228 3.626 3.623 4.545 5.56239 EBITDA interest coverage (EBITDA/int paid) 2.633 2.993 3.469 5.370 5.657 6.526 5.770 5.749 7.009 7.88640 Cash from operations/average total debt 0.405 0.376 0.558 0.416 0.518 0.537 0.474 0.513 0.639 0.75241 Return on average total capital 0.546 0.416 0.298 0.220 0.191 0.189 0.144 0.131 0.135 0.13242 EBITDA/Sales 0.557 0.544 0.493 0.467 0.396 0.366 0.360 0.355 0.383 0.39043 Funds flow net debt pay back (cash from op before WC adj/total int bearing debt) 0.343 0.403 0.545 0.461 0.538 0.572 0.475 0.522 0.643 0.759E Surplus Ratios44 Accounting Surplus (NP)/Fixed Assets (PPE) 0.170 0.213 0.201 0.132 0.139 0.144 0.110 0.101 0.110 0.10945 Return on turnover (NP)/Revenue 0.305 0.354 0.333 0.301 0.255 0.273 0.256 0.245 0.277 0.28946 EBITDA 712 847 808 355 799 626 754 265 666 440 678 199 612 063 646 250 746 615 812 33647 Net Debt/EBIDAR 1.595 0.919 0.400 1.146 0.454 0.507 0.657 0.656 0.467 0.519Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 136

Table 18.2: Group Financial Ratios| Financial Ratios ChapterGroup Financial Indicators and Ratios F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastA Performance criteria/indicators1 Total gross revenue (R'000) 1 289 035 1 492 688 1 633 043 1 614 484 1 696 301 1 868 605 1 717 212 1 836 952 1 966 038 2 102 6552 Bulk Water Business segment2.1 Volume of water sold (kl'000) 403 754 415 956 425 848 425 978 414 579 413 905 414 273 419 037 425 322 431 7022.2 Total Bulk Revenue (R'000) 1 190 798 1 259 188 1 373 786 1 460 849 1 422 120 1 506 646 1 587 960 1 697 677 1 816 291 1 942 9382.3 Average increase in revenue 13.6% 5.7% 9.1% 3.5% 5.9% 5.4% 6.9% 7.0% 7.0%2.4 Weighted average Water tariff (R/kl) (total bulk rev/total bulk vol) 2.949 3.027 3.226 3.429 3.833 4.051 4.270 4.501 4.744 5.0002.5 Total cost per kl sold 1.996 1.828 1.966 2.298 2.363 2.426 2.792 2.996 3.013 3.1153 Net profit (loss) for the year 392 865 527 014 540 711 485 623 428 481 505 129 434 625 445 795 538 435 602 2074 Profit from Operations/Revenue 0.432 0.430 0.378 0.345 0.283 0.306 0.289 0.278 0.305 0.3175 Total expenditure/Revenue 0.703 0.669 0.676 0.704 0.742 0.733 0.750 0.760 0.729 0.7166 Cost of sales/Revenue 0.305 0.365 0.380 0.384 0.413 0.448 0.403 0.413 0.422 0.4287 Total cost/volume (Rand/kl) (Consolidated) 2.244 2.401 2.592 2.667 3.034 3.308 3.110 3.334 3.370 3.4908 Net Finance costs (Rand/kl) 0.410 0.280 0.187 0.166 0.125 0.157 0.146 0.154 0.142 0.1489 Personnel cost ratio (TotalPersonnel costs/Total Costs excl finance costs) 0.281 0.266 0.257 0.280 0.215 0.234 0.268 0.266 0.278 0.28410 Personnel cost per kilolitre (Personnel costs/Annual volume) 0.516 0.565 0.619 0.699 0.626 0.737 0.793 0.846 0.897 0.950B Operating Risks11 Working ratio (total expenses excluding depreciation, amortisation and finance costs divided by Total 0.453 0.479 0.517 0.537 0.601 0.640 0.646 0.651 0.623 0.61612 Operating Ratio (Total Costs excluding depreciation & amortisation/Total Revenue) 0.581 0.557 0.566 0.581 0.631 0.674 0.682 0.686 0.654 0.64713 Controllable working ratio (total expenses exclud.raw water, deprec, amort & inter. divided by total. rev.) 0.395 0.427 0.465 0.474 0.542 0.558 0.544 0.544 0.512 0.50014 Return on assets (income before interest & taxes divided by total assets excluding investments) 20.49% 22.54% 19.85% 14.25% 14.30% 14.95% 11.70% 10.85% 11.58% 11.38%15 Asset turnover (revenue divided by total assets excluding investments ) 0.474 0.524 0.525 0.414 0.505 0.489 0.405 0.390 0.379 0.35916 Gross margin % 69.49% 63.49% 61.98% 61.64% 58.71% 55.21% 59.65% 58.73% 57.84% 57.24%17 Current asset turnover (revenue divided by current assets excl investments) 7.172 7.316 5.361 7.703 7.170 7.231 7.147 7.203 7.281 7.31918 Fixed asset turnover (revenue divided by fixed assets) 0.559 0.604 0.608 0.438 0.550 0.530 0.433 0.416 0.403 0.37919 Trade debtors collection period (Trade Debtors divided by revenue times 365) Excl VAT 35.357 37.624 50.440 38.002 38.016 38.300 38.286 38.266 38.181 38.07620 Accounts receivable turnover (revenue divided by accounts receivable) (Excl. VAT) 9.056 8.510 6.348 8.425 8.422 8.360 8.363 8.367 8.386 8.409* Accounts receivable is made up as follows:Trade Debtors 142 348 175 407 257 269 191 626 201 410 223 526 205 342 219 544 234 451 250 050Provision for Doubtful debts - - - - - - - - - -142 348 175 407 257 269 191 626 201 410 223 526 205 342 219 544 234 451 250 050Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 137

| Financial Ratios ChapterGroup Financial Indicators and Ratios F08 F09 F10 F11 F11 F12 F13 F14 F15 F16Actual Actual Actual Budget ForecastC Financial Risks21 Current ratio (current assets divided by current liabilities) 1.375 0.990 2.418 1.915 2.635 2.717 2.872 2.612 2.436 2.222 Debt ratio (total debt divided by total assets) 0.568 0.485 0.352 0.350 0.314 0.280 0.279 0.245 0.207 0.17123 Gross Debt-equity ratio (total liabilities divided by total accumulated reserves) 2.033 1.279 0.727 0.647 0.556 0.448 0.430 0.357 0.284 0.22324 Net Debt-equity ratio (Net liabilities divided by total accumulated reserves) 1.112 0.480 0.153 0.341 0.120 0.114 0.116 0.109 0.079 0.08425 Weighted Average Cost of Capital (WACC) (Per AFS) 13.22% 12.63% 9.50% 9.78% 9.33% 9.42% 9.52% 9.69% 9.86% 10.02%26 Weighted Average Cost of Capital (WACC) (Finance costs/Gross borrowings) 13.03% 13.52% 15.18% 8.58% 8.41% 7.68% 7.13% 8.06% 8.44% 9.16%27 Financial Leverage (D/(D+E)) (Net of redemption assets) 0.616 0.449 0.418 0.391 0.355 0.308 0.300 0.263 0.221 0.182C Debt ManagementNet Debt28 Total Borrowings (as per Balance sheet) 2 078 336 1 978 903 1 517 448 1 637 886 1 400 167 1 353 041 1 487 828 1 394 212 1 262 160 1 124 19729 Total Investment (as per Balance sheet) 941 315 1 235 897 1 197 295 773 497 1 097 764 1 009 295 1 085 480 970 297 913 297 702 29730 Net Borrowings (Total Borrowings - Total Investment) 1 137 021 743 007 320 153 864 388 302 403 343 747 402 348 423 916 348 863 421 900D Business Credit Risk31 Interest Cover (EBIT/int paid) 1.855 2.400 2.387 3.960 3.239 4.315 3.778 3.958 5.631 6.47532 EBITDA interest coverage (EBITDA/int paid) 2.633 2.993 3.463 5.370 5.663 6.540 5.785 5.763 7.026 7.90333 Cash from operations/average total debt 0.406 0.377 0.558 0.416 0.519 0.537 0.474 0.514 0.640 0.75334 Return on average total capital 0.545 0.415 0.296 0.220 0.191 0.189 0.144 0.131 0.135 0.13235 EBITDA/Sales 0.554 0.542 0.488 0.467 0.393 0.364 0.357 0.353 0.381 0.38736 Funds flow net debt pay back (cash from op before WC adj/total int bearing debt) 0.382 0.404 0.545 0.461 0.539 0.573 0.476 0.523 0.644 0.759E Surplus Ratios37 Accounting Surplus (NP)/Fixed Assets (PPE) 0.170 0.213 0.201 0.132 0.139 0.144 0.110 0.101 0.111 0.10938 Return on turnover (NP)/Revenue 0.305 0.353 0.331 0.301 0.253 0.271 0.254 0.243 0.274 0.28739 EBITDA 714 070 809 629 797 662 754 265 667 110 678 886 612 791 646 981 747 369 813 06340 Net Debt/EBIDAR 1.592 0.918 0.401 1.146 0.453 0.506 0.656 0.654 0.466 0.518Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 138

| Self-Evaluation Staatement onFinanciall Viabilityoff Umgenii WaterChapterChapter 19.Self-Evaluationn StatementonFinancialViabilityy ofUmggeniWaterr19. 119.1.1OperatingPerformanceanalysisKey Indicators of Operatingg PerformanceUmgeniWater’s operating performancecanbe measuredd in termsof the t followingkeyy indicators:Figure 19.111: EBIT7000600050004000557642620EBIT5704804955105996666EBIT and thustNet profitadverselyaffected especiallyintheyearsF’111 to F’14dueto:• F’11 CredCdit note R30m duetoo amounts previouslyR'm30002000invoicedto DWAfor damoperating and maintenance100002008200920102011201220133 20144 201525 20166costss andassetimpairmentsR87m• F’12:Asset ImpairmentFigure 19.212: Net ProffitR96mm• F’13:Asset ImpairmentR95mmR'm700060005000400030002000391526540NetProfit505428435446538602• F’13:Conversioncost ofconverting froma definedbenefit plan to a definedcontributionplan R36m• F’14:Asset ImpairmentR81mm• F’14:Conversioncost of1000converting froma defined020082009201020112012201320144 20155 20166benefit plan to a definedcontributionplan R46mUmgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 139

Chapter| Self-Evaluation Statement on FinancialViabilityofUmgeniWaterFigure 19.313: Net Proffit25. 00%20. 00%15. 00%10. 00%22. 63%20. 53% % 20. 00%Return on Asssetss14. 35%14. 97%11. .71%10. .86%% 11. .59%11. .39%The returnn on assetsisexpected to t decreasee to belowtheUmgeni Water targetofbetween 15% 1 to 20%for thenext 6 years due mainly to thedecrease in EBIT.5. 00%0. 00%200820092010201120122013201420152016Figure 19.414: InterestCoverRatio6.0005.0004.000Interest Cover Ratio4. 2283. 6263.2863.6234.54555.562The interestcoverratio(EBIT/ interestpaid) isforecastt to improvefrom 2.38times too 3.29 timesin F’11.3.0002.0001.9492.3362.3841.000-20082009201020112012201320144 20155 20166Pagee 140Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Self-Evaluation Staatement onFinancialViabilityofUmgenii WaterChapter19.1.2Factorsimpacting on operating performanceThe operatingperformancee of Umgeni Water iss beingg negatively impacted by:1. Negative voluvumegrowth due to water lossdemand initiatives by Umgeni Water’s customersandd2. Higherthan inflationn linkedd increasess in operatingg costsper kilolitre1.Volume sales analalysisFigure 19.5: TotalBulk Water Sales4354430442544204415441040544004395390385340420084264163.0% %2 2.4% %200992010Total Sales VoluVume(Bulk)419415414414(0.16%))(2.65%)2011120120. .1%20131.1% %20144251. .5%%20154321.5% %20168.0080%6.0060%4.0040%2.0020%0.0000%-2.00%-4.00%Thegrowth in sale volumes iss negative2.65%in F’111 andd negativee 0.16%in F’122 due mainlyto theprojectednegative growthtrendfor eThekwini Municipality.2. Increasee in opeeratingcostsThekey costdriverss per unit of o kilolitresold ass indicatedd byy thetablebelowforr F’11 too F’12 are rawwater,energy, stafff andimpairmentsTable19. 1: KeyCost DriversComponentsDirect CostsChemicalsDepreciationEnergyMaintenanceRaw WaterStaff CostsOther direct operatingactivitiessTotal DirectCosts2009/2010Tariff f ChangeR.c/kl%0.0690.1470.1180.2320.1970.1930.0220.978(2%)7%29%6%5%9%169%%10%Budget 2010/2011TarifffChangeR.c/kl%0. 0720. 1950. 1780.2470.2390.2170. 0221. 17011%27%39%1%13%13%6%15%2010/20111TarifffChangeR.c/kll%0.0820. 1630. 1860.2350.2430.2150.0241. 14819%11%58%1%23%12%0%17%2011/20122TarifffR.c/klChange%0.0877%0.160(1%)0.20912%0.233(1%)0.36952%0.23610%0.019(19%)1.31414%Indirect CostsOverheadsDepreciationAmortisationImpairmentsTotal Indirect Costs0.5960.0350.2320.0230.88621%16%3%392%%18%0. 7490. 0440.218-1. 01118%30%(6%)-13%0.6470.0500.2280.2101. 1359%45%(2%)814%%28%0.6980.0710.0070.2321.0098%41%(97%)10%(11%)Total direct& indirect cost1.86414%2.18117%2.28322%2.3222%Finance Costs0.169(35%))0. 107(37%))0. 107(37%))0.13425%Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 141

Chapter| Self-Evaluation Statement on FinancialViabilityofUmgeniWaterComponentsCost - Bulk Water2009/2010Tarifff ChangeR.c/kl%2.0337%Budget 2010/2011TarifffChangeR.c/kl%2.390018%2010/20111TarifffChangeR.c/kll%2.3900 18%2011/20122TarifffChangeR.c/kl%2.4563%Contributionn fromm WastewaterContributionn fromm Section30 activities0.0170.05037%( 16%) )0.01110.0166(36%))(69%))0.01110.0166(36%))(69%))0.01000.0200(7%)27%Total cost1.9668%2.363320%2.363320%2.4263%Surpluss Margin//(deficit)1.2605%1.0666( 15%) )1.0666(15%))1.212214%Total Average UW Tariff3.237%3.42996%3.4336%3.646%19.2Costt ControlTable 19.2: CostControlSemi - controllableChemmicals/Energy//Raw WaterStaff CostsDepre/amort/Impairment Assets20100ActualR'm651190273188ForecasttR' m8092422942732011% Change24%27%8%45%% of Total80%BudgetR' 'm8683153492042012% Change7%30%19%(25%)% of Total82%Non-controllablee Costs445320%5%6319%6%Controllablee Costs146145(1%)14%133(8%)13%Total Costs– S29841100720%-10646%-Total costs excluding S30 projectt costsis projected to t increasee byy 20% in F’ ’11 andd 6% % in F’12.Theincreaseinsemi-controllable costss whichh form 80%off total costt in F’111 and 82% 8 % in F’12is projectedto increase by b 24%inF’111 and 7% in F’ ’12. Thesee increasess are driven primarily byy the increasee in energy, rawwater,staff costcs andimpairment of assets.Controllable costs whicwch formm 14% of totalcostsin F’11 F andd 13% in F’ ’12 is forecastt to decreasein F’11 andd F’12by 1% andd 8% % respectively. Thisis attributablee too operational efficiencies createdby theentity19.3Cashh FlowAnalysisFigure19.6: Cash flowfrom OperationssR'm9008007006005004003002001000842200874372009CashflowfromOperations8466652010201166665420122013715201480620158452016Net cashh generatedfromoperations is expectedtodecline overr next 3 years tolevels just overoR600mdueto the increasein workingcapital requirements relatingto the cost of o converting toadefinedcontribution pensionfund as wellas loweroperating profitsPagee 142Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Self-Evaluation Staatement onFinancialViabilityofUmgenii WaterChapter19. 4Debt ManagementFigure19.7: Debt too AssetRatio0.60000.50000. 5690. 486Debt:AssetRatioThe ratioo of debt toassetsisexpectedd to declinefavourably to t 0. .17 by 2016.0.40000.30000.20000. 3530. 3150. 2810. 2800.2460.2080. 1720.10000-200820092010201120122013201420152016Figure19.8:Debt too Equity Ratioo2.5002.0001.5002.0401.283Debt:EquityRatio1.0000.500-200820090.72920100. 55820110. .44920120.4310.35880.2850.22320133 2014201525 20166The gearing ratios asdepictedbythee nett debt toequityanddebt to equityratioswill bemaintained below0.7times.Figure19.9:Nett Debt to Equity Ratio1.2001.116Net Debt:EquityRatio1.0000.8000.6000.4820.4000.2000.1540. 1200.1140.1170.1090.0790.084-2008200920102011201220133 2014420152016Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 143

Chapter| Self-Evaluation Statement on FinancialViabilityofUmgeniWaterFigure19.10:Net Leverage Ratioo1.8001.6001.401001.201001.001000.800000.6000.400000.20000-NetLeverage Ratio1. .59550.91990.4000 0 .4544 0.50 0 07 0 0.657 0.6560.467 0.51920088 20099 20100 201121 20122 20133 20144 2015 2016The net leverageratio isexpectedd to rise to 0.657 timesinF’ ’14 due to the increasee inimpairmentss andthereaftercontinues itss downwardtrend.Pagee 144Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Self-Evaluation Statement on Financial Viability of Umgeni Water Chapter19.5 Business Segment informationTable 19.3: Business Segment Operating ProfitBusiness Segment Operating Profit2010 2011 2012R'000 R'000 R'000Bulk 583 (21%) 462 19% 548WW 15 (22%) 12 (10%) 11S30 21 (70%) 6 75% 11620 (23%) 480 19% 570Bulk SegmentIt is anticipated that in F’11 the impact of the negative volume growth coupled with the increase in impairmentsand operating cost will result in a decrease in the operating profit by 21%.However in F’12 the operating profit margin reverts to a positive % owing to the completion of the amortisation ofthe Reticulation financial.WW SegmentThe bulk wastewater segment is not projected to show growth owing to the high operating costs with relativelylow management fee increases.S30 SegmentAn analysis of the S30 segment in terms of the projects is shown in Table 26.3.Table 19.4: Analysis of the S30 segment.F'09ActualR’000F'10ActualR’000F'11ForecastR’000F'12BudgetR’000Revenue - Section 30 184 012 204 148 213 603 295 594Sect 30 - Revenue : Laboratory Services 4 022 3 199 3 500 3 700Sect 30 - Revenue : Research 1 845 563 1 110 780Sect 30 - Revenue : Scientific & Environ 11 646 14 553 18 542 -Sect 30 - Revenue : Sanitation 128 435 123 401 50 806 -Sect 30 - Revenue : Water Infrastructure 24 986 47 230 125 985 234 510Sect 30 - Revenue : O & M Contracts 13 078 15 202 13 660 56 604Cost of Sales -Section 30 141 132 169 537 186 373 225 259Sect 30 - Laboratory Services 1 876 1 363 1 800 1 903Sect 30 - Projects : Research 1 742 630 1 110 780Sect 30 - Projects : Scientific & Environ 10 821 13 366 17 317 -Sect 30 - Projects : Sanitation 102 325 108 883 47 757 -Sect 30 - Projects : Water Infrastructure 24 369 45 296 118 388 222 576Sect 30 - Projects : O & M Contracts - - - -Other Direct Costs 7 558 7 888 8 188 33 624Gross Profit 35 321 26 723 19 042 36 712Gross Profit % 19.2% 13.1% 8.9% 12.4%Net Admin and operating costs 10 350 5 275 12 602 25 465Operating profit 24 971 21 448 6 440 11 247Although revenue shows relatively good growth, the margins on the work being carried out as an implementingagent has reduced significantly. A bad debt provision of R6m on the Howick WW Operating and maintenancecontract has also contributed to a lower operating profit.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 145

Chapter| Self-Evaluation Statement on Financial Viability of Umgeni Water19.6 Sensitivity Analyses19.6.1 To a further reduction in volumes (Low Road planning scenario)Impact on debt levelShould volume growth recede to the low road planning scenario as discussed in section 7.4 “Water Demand,Planned Developments and Shortfalls” this will result in an unsustainable debt level as indicated in the graph inFigure 19.11.Figure 19.11: Gross BorrowingsGross Borrowings8 0007 0006 0005 0004 0003 0002 0001 000-Borrowing Limitreduction in vol-low road scenarioBudget F'12Budget F'11'08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30 '32 '34 '36 '3819.6.2 To a non-payment by debtors (debtors days = 60 days)Impact on debt levelShould the debtor’s days increase to 60 days, this will result in higher funding requirements and thus a higher debtlevel.Figure 19.12: Gross BorrowingsGross Borrowings8 0007 0006 0005 0004 0003 0002 0001 000-Borrowing LimitBudget F'12Non-pmt by debtors - 60 day'08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30 '32 '34 '36 '38Page 146 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016

| Bank Accounts Chapter19.7 Analysis of Financial RiskUmgeni Water assumes a low risk tolerance approach to risk. The three risks described in the sections that followhave been identified as specific treasury risks and are managed proactively to ensure their timely mitigation.19.7.1 Sustainable TariffAn unsustainable tariff will affect Umgeni Water’s ability to fund future capital expenditure programmesand undertake operational expansion. This risk impacts on the organisation’s ability to deliver on itsfinancial strategies, namely, ‘Contribute to an Affordable Tariff’.Mitigation approachUmgeni Water monitors and reports on cash flow funding requirements and maintains optimal debtlevels, has a transparent and formalised tariff policy, together with a robust tariff model. The organisationundertakes water demand planning, liaises with stakeholders to obtain commitment to the capitalexpenditure programme and subsequently undertakes project evaluation to assess sustainability of theprogramme.19.7.2 Liquidity RiskLiquidity risk will result in Umgeni Water being unable to raise sufficient funds in the required currencyand at the correct time to meet its financial obligations. This will impact on the organisation’s ability toachieve its financial strategies, namely, ‘Enhance Shareholder Value’.Mitigation approachTo mitigate liquidity risk, Umgeni Water has:• Short-term funding facilities to meet ongoing cash requirements for which facility options arein place with four banks (FNB, Standard, ABSA, Nedbank);• A Domestic Medium Note (DMTN) Programme has been established allowing for longer dateddebt such as bonds to be issued with relative ease;• Provided for a R 200 million cash buffer investment to cater for delayed payments by itscustomers;• A redemption strategy framework, which provides guidelines for managing the risksassociated with refinancing large debt maturities (such as the UG65 bond). The build-up in theredemption portfolio over a three-year period is: 10 % of the capital redemption value threeyears before maturity, 40 % two years before maturity, 75 % a year before maturity, and thebalance of 25 % is funded during the year of maturity; and• Borrowing limits approved by National Treasury, which are currently: R 2,800 million for F’10,and R 1,800million for F’11.19.7.3 Credit RiskCredit risk concentration will result in Umgeni Water being exposed to counter-party failure. This has thepotential to impact on the organisation’s ability to ‘Maintain an Optimal Debt Level, amongst its otherstrategies.Mitigation approachUmgeni Water will:• According to its Investment Policy, mitigate credit risk by conducting transactions only withcounter parties and issuers who satisfy soundly based and acceptable assessment processes, andonly after formal limits have been set. In addition, same-day settlement limits will be setwherever possible and/or strict settlement procedures set and adhered to, and• Continue monitoring of the credit quality of counterparties.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 147

Chapter| Bank AccountsChapter 20.Bank AccountsN/A.Page 148Umgeni Water Five‐Year Business Plan| 2011/2012 to 2015/2016

| Analysis of o RiskRksChapterChapter 21.Analysisof Risks21. 1RiskManagementUmgeniWater’s riskmanagementt is guidedd byy ann Integrated RiskManagement Framework, initially approved bythe Umgeni Wateer Boardd in 2006.This frameworkis being reviewed too alignit tocurrent bestt practise.There isa clear linkbetweenUmgeni Water’s strategyy and theintegratedd riskmanagementt framework.Theorganisation’sdefinitionn off risk is “recognisingg riskas all sourcesoff uncertaintythat could affect, positivelyornegatively,theorganisation’s abilitytoo achieve its strategicc and businesss objectives”.The integratedrisk mannagementt framework architecture comprisess a strategic andmanagement process. Thestrategic processcomprises:•The commitmentandmandateforr integratedriskmanamagementby thee UmgeniWater Board,including a riskpriorityy tablewhichh guidesboth risk accountabilityandd the organisation’ss riskappetite.•Communication and training•Allocation andd organisationn throughoutthee organisationn forr implementationn•Measurementandrevieww byy governancee structures•Continual improvementof theintegratedd risk manmagement framework.The managementt process comprises::•Contextt setting•Risk assessment consistingof: (1) Risk identification,(2) Riskk analysis,andd (3)Risk evaluation;•Risk treatmentt•Communication and consultation•Monitoringg and review• Independent assurance provided throughh control testingby Internal Audit.The IntegratedRisk Mannagementgovernance structure iss as follows:•The Boardd is ultimately accountable forintegrated risk r management,providingguidancee anddirection and is keptinformedof the statusandd effectiveness off therisk management systemm•The AuditCommitteemonitorsandd approves thestatusof strategicrisks quaqarterly,thee overalleffectiveness of the organisation’’s riskmanagementfunction,, itsimplementationn byy managementandreportss the status too thee Board.•The Corporatee Risk ManMnagementCommittee, which comprisestheExecutive, Top T Managerss and thedivisional RiskRk Champions monitor the status of strategic risksandratifies thempriorr to submissiontotheAuditCommitteefor approval. Operational risksrs aremonitoredd andapprovedd byy thecommitteeon a quarterly basis.•The Executive,Top ManMnagementandd the Board review the t organisation’’s strategicc risks andd identifyemerging risksrs onan annual basisandd report thesee to Corporatee Risk ManagementCommittee, AuditCommitteee and the BoaBrd.•Risk Owners whoare theGeneral Managersand Risk Championsof each divisdsionn integratee riskmanagementintotheirday-today managementt processes too continuallyidentify emergingrisks,review,mitigate & monitorthestatuss of thee risks assigned too them.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 149

Chapter| Analysiss off RiskssFiguFure 21.1: UmgeniWater’s strategic risksperr strategicperspectiveInfrastructurestability tomeetdemandtimeouslySustainable tariffCustomer andaGrowthCatastrophic failureePotable water andof strategicfinal effluent qualityinfrastructureFinancialCredit risk concentrationStakeholderrelationsLiquidityriskkDevelopmental andEnvironmentalHealth, safety andenvironmentWater resources availabilityincluding climatechangeServitudeencroachmentFrauFd riskOrganisationalLearningandGrowthLegal andIntegratedSkills availabilityregulatorybusinessand attractioncompliancecontinuityplanInformation andcommunicationstechnologygovernance21.2Assessment ofthe Major RisksTable 21.1:: Umgeni Watter’ss top 5 risks:# Risk and Riskk OwnerrOverall ControlStrength (OCS)Current Residual Risk Rating(CRRR)Risk Gap G (RG)1 FraudRiskOCS:(50%) SatisfactoryyRisk Owner: ChiefCRRR: R 175,000,0000 MajorrExecutiveRG: R70,0R000, 0000 ModerateRejectedby management &actionn to be taken within the2011/20122 business plann periodMitigation ApproachFollowingg a benchmarkexercise a framfmeworkfor fraudmanagement has been endorsed by b the AuditCommittee.The Fraudd Prevention policyy is to be submittedtoo theeBoardforr approval and thecurrentfraud prevention planistoo be reviewed thereafter. Thee fraud hotline is operationaland ismanagedby externall servicee providers & wherewerequestedd Internal Auditt undertakes add hoc investigations.2Waterresourcesavailability includinggclimate changeRisk Owner: GeneralManager Engineeringg& Scienntific ServicesOCS:(26%) WeakCRRR: R 51,.800,,0000 ModerateRG: R16,8R800, ,0000 MinorRejectedby management &actionn to be taken within the2011/20122 business plann periodUmgeni WatWer constantly monitors thee availability offsurface watewr resourcesto assess adeqaquacy tosustainn theorganisation’’s bulk water business. Waterconservationand demandmanagementinitiatives are pursuedtoincrease useefficiency, whilst alternative resourcee optionsincludingseawater desalinationn and wastewaterreclamation,are investigated. Research into climatechange iss undertaken too assesss impacts onn futureresourceavailability and inform adaptationstrategies.3Infrastructureestability tomeetdemand timeouslyRisk Owner: GeneralManager Engineeringg& Scienntific ServicesOCS:(48%) SatisfactoryyCRRRR : R 91,000,,0000 ModerateRG: R38,5R500, 0000 MinorRejectedby management &actionn to be taken within the2011/20122 business plann period.Umgeni WatWer maintains regular liaison with WaterServices Authoritiesregarding their futuree waterrequirements, and undertakes joint watersupplyinfrastructuree planning to ensure correct alignment andimplementationprogrammes.Similarliaison andinteraction iss maintained with DWAA regardingwaterPagee 150Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Analysis of Risks Chapter# Risk and Risk Owner Overall Control Strength (OCS)Current Residual Risk Rating(CRRR)Risk Gap (RG)Mitigation Approachresource infrastructure requirements and implementationprogrammes. Umgeni Water’s infrastructure requirementsare consolidated into its Infrastructure Master Plan, whichis updated on an annual basis.4 Catastrophic failure ofstrategicinfrastructureRisk Owner: Heads ofOperations5 Health, Safety andEnvironmentRisk Owner: ChiefExecutiveOCS: (80%) Very GoodCRRR: R 35,000,000 MinorRG: R17,5000,000 MinorRejected by management &action to be taken within the2011/2012 business plan period.OCS: (48%) SatisfactoryCRRR:R 84,500,000 ModerateRG: R76,375, 000 Rejected bymanagement & action to betaken within the 2011/2012business plan period.Umgeni Water views this risk in the context of forcemajeurein that there is a low probability of occurrence buta high severity & impact which is out of the organisation’sdirect control. Umgeni Water’s insurance programmeincludes assets, business interruption and public liabilityinsurance policies. A Business Continuity Managementframework includes crisis management plans tostrengthen the organisation’s ability to respond todisasters.Umgeni Water maintains the following systems tomitigate this risk: Pre-screening & post screening medicalexaminations, contractor health & safety induction,Occupational Health & Safety management systems inOperations (OHSAS 18000) and being developedcorporate-wide, Occupational injuries & disease safetystandards & programmes are implemented. Wastemanagement & biodiversity strategies are beingdeveloped. The organisation ensures compliance withwater & environmental legislation & regulations, whichincludes monitoring and reporting if there is noncompliance.Refer to section 9 of the financial business plan for the analysis of the financial risks; sustainable tariff, credit riskconcentration and liquidity risk.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 151

Chapter| Analysiss off Riskss21.3FraudPreventionnFollowing a benchmarking exercise, a suitable frameworkk for managing the business risk of fraudd was endorsed bytheExecutiveandAuditCommitteesfordevelopmentof an UmgeniWaterspecificframework.A FraudPreventionPolicyy has beenn developed andis to be approvedby the Umgeni WaterBoard,followingwhich, thecurrentFraudPreventionn Plan will be reviewedto confirmalignment too the Fraud PreventionPolicy.TheFraudPrevention Planwas establishedto prevent or o respondto incidentsof fraud in recognitionoff UmgeniWater’slegal obligationas prescribedd by Section 29.1..1 of the Treasuryy Regulationss arisingg fromthee PFMA.Thegovernance structure for fraudd preventionis ass follows:• TheBoardacknowledges itss responsibility too preventandd detect fraudat Umgeni WateWer.• TheFraudPrevention Committee, whichh comprises the chairman,an external specscialist,thee internalauditorsand managementfocuses on deliberate misrepresentation which could leadto prejudiceofothers andd falsificationby implementingthee FraudPreventionPlan. Thee Chairman of the FraudPreventionCommitteeattendsAuditCommitteemeetingsprovidingg regularfeedbackk onn theactivities off the Fraudd prevention Committee.UmgeniWater continues to operatee a fraudhotlinee service,managedd byy anexternall service provider andisavailable too all staffmembersand other stakeholders,includingsuppliers,, toenable all stakeholders to reportsuspicions of fraudd orotherwiseunethical behaviour.Pagee 152Umgeni WateWer Five-Year Business Plann | 201121/2012to 2015/2016

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected TargetsChapterUmgeni WaterScorecardStrategic Objectives, Outcomes, KeyPerformance Indicators and Targets2011/20122 to 2015/2016VERSION: 30 APRIL2011Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 153

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterChapter 22. Organisational Scorecard: Key Performance Indicators Linked toStrategy and Five-Year Projected Targets22.1 Organisational Scorecard with Baseline and Five-Year Projected Targets.Umgeni Water has eleven strategic objectives, ten outcomes and eighteen key performance indicators. The scorecard targets are projected for the fivebusiness plan years.Table 22.1: Organisational scorecard showing objectives, outcomes, key performance indicators and targets. (* indicates KPIs linked directly to the Executive Authority outputs)Strategic ObjectiveUmgeni WaterOutcomeKey PerformanceIndicatorCustomer and Growth Perspective1. Exceedcustomerexpectations2. Growth /Increasecustomer baseProduct qualityCustomerSatisfactionInfrastructureStability1. Per cent statutorycompliance forbulk potable waterand bulkwastewater.*2. Per centcompliance withservice levelagreements withparticularreference to supplyvolumes, pressure,service disruptionintervals, andmetering. *3. The extent towhich there isplanned andfundedinfrastructure tosupport economicResponsibleExecutiveGM E&SSGM OPSGM OPSStandard(Statutory/else bestpractice)100% potablewater compliancewith SANS 241 i .100% compliancewith dischargelicense or generalauthorisation i .100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.GM E&SS 100%implementationof infrastructureprojectmilestones.Baseline(Current year2010/2011)99.94% potablewater compliancewith SANS 24175% wastewatercompliance.100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.53% completionof infrastructureprojectmilestones.Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/201699.95% potablewater compliancewith SANS 24180% wastewatercompliance.100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.65% completionof infrastructureprojectmilestones ii .99.96% potablewater compliancewith SANS 24180% wastewatercompliance.100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.75% completionof infrastructureprojectmilestones99.97% potablewater compliancewith SANS 24180% wastewatercompliance.100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.85% completionof infrastructureprojectmilestones99.97% potablewater compliancewith SANS 24180% wastewatercompliance.100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.85% completionof infrastructureprojectmilestones99.97% potablewater compliancewith SANS 24180% wastewatercompliance.100% compliancewith bulk supplyagreement andresponse tocustomer querieswith particularreference tosupply volumes,pressure, servicedisruptionintervals, andmetering.85% completionof infrastructureprojectmilestones.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 154

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic ObjectiveUmgeni WaterOutcomeWaterResourcesAdequacyStakeholderUnderstandingand SupportKey PerformanceIndicatorgrowth andlivelihoods, andasset condition isenhanced andmaintained.*4. The extent towhich there iswater resourcesassurance / supplysecurity.*5. Per cent alignmentto provincial waterplan.*ResponsibleExecutiveStandard(Statutory/else bestpractice)GM E&SS 100%identification ofwater resourcesfor assurance ofbulk supply andcompletion ofprojectmilestones iii (UWdams).GM E&SS 100% (DWA)water resourcedevelopmentsidentified forassurance of bulksupply andprogressmonitored iii .GM E&SSGM OPSGM E&SSDiversify waterresources mix.100% alignmentof InfrastructureMaster Plan toBaseline(Current year2010/2011)25% completionof MhlabatshaneDam.8% completion ofSikoto Dam.15% completionof MvutshaneDam.Spring GroveDam enteringconstructionphase.Mkomazi project-Smithfiled damentering detailedfeasibility phase.Mvoti projectdam enteringfeasibility phase.Completion offeasibilityinvestigation ofseawaterdesalinationplants for theeThekwini region.Wastewater reuseinvestigation atthe DarvillWastewaterWorks.85% alignment ofInfrastructureMaster Plan toProjected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/201690% completionof MhlabatshaneDam.15% completionof Sikoto Dam.30% completionof MvutshaneDam.Spring GroveDam inconstructionphase.Mkomazi project-Smithfiled dam indetailedfeasibility phase.Mvoti projectdam in feasibilityphase.Commencedetailedfeasibility ofseawaterdesalinationplants for theeThekwini region.Continuewastewater reuseinvestigation atthe DarvillWastewaterWorks.85% alignment ofInfrastructureMaster Plan to100% completionof MhlabatshaneDam.30% completionof Sikoto Dam.50% completionof MvutshaneDam.Spring GroveDam inconstructionphase.85% alignment ofInfrastructureMaster Plan to50% completionof Sikoto Dam.70% completionof MvutshaneDam.100% alignmentof InfrastructureMaster Plan to70% completionof Sikoto Dam.100% completionof MvutshaneDam.100% alignmentof InfrastructureMaster Plan to100% completionof Sikoto Dam.100% alignmentof InfrastructureMaster Plan toUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 155

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic Objective3. ManageStakeholderRelationsUmgeni WaterOutcomeStakeholderUnderstandingand SupportKey PerformanceIndicator6. The extent towhich there isengagement ofstatutory,contracted andnon-contractedstakeholders andresponse toqueries regardingthe organisation’sdevelopments andperformance.ResponsibleExecutiveCEGM FINCEGM CSCEGM E&SSStandard(Statutory/else bestpractice)municipality andprovincial waterplans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.Baseline(Current year2010/2011)municipalitywater plans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/2016municipalitywater plans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.provincial waterplans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.provincial waterplans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.provincial waterplans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.provincial waterplans.Engagement ofDWA, NationalTreasury,PortfolioCommittee, KZNProvincialGovernment,MECs, andMayors, andresponse toqueries.Engagement oforganised labour,employees andinvestors, andresponse toqueries.Engagement ofenvironmentallobby groups,academia, mediaand otherstakeholders, andresponse toqueries.Financial Perspective4. Contribute to anaffordable tariffFinancialviability7. The extent towhich there is atariff that isconstant in realterms whileallowing for therepayment of debtand infrastructurefundingrequirements.*GM FINSection 34 WaterServices Act.Average TariffR3.429/klBulk waterTotal Cost/kl:R2.39/klOperational cashflows:R665mBulk RevenueGrowth %: 3.52%Average Tariff:R3.638/klAverage Tariff:R3.831/klBulk water Bulk water TotalTotal Cost/kl: Cost/kl :R2.456/klR2.801/klOperational cash Operational cashflows:flows:R666mR654mBulk Revenue Bulk RevenueGrowth %: 5.94% Growth %: 5.4%Average Tariff:R4.049/klAverage Tariff:R4.268/klAverage Tariff:R4.498/klBulk water Total Bulk water Total Bulk water TotalCost/kl :Cost/kl :Cost/kl :R3.005/klR3.020/klR3.120/klOperational cash Operational cash Operational cashflows:flows:flows:R715mR806mR845mBulk Revenue Bulk Revenue Bulk RevenueGrowth %: 6.91% Growth %: 6.99% Growth %: 6.97%Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 156

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic ObjectiveUmgeni WaterOutcomeKey PerformanceIndicatorResponsibleExecutiveStandard(Statutory/else bestpractice)Baseline(Current year2010/2011)Working ratio:0.598Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/2016Working ratio:0.637Working ratio:0.644Working ratio:0.648Working ratio:0.620Working ratio:0.6135. Maintain anoptimal debtlevelFinancialviability8. The extent towhich there is anoptimal debtlevel.*GM FINRefer gross debtto equity ratio.Net debt- equity:0.122.50 Interest cover:3.29

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic ObjectiveUmgeni WaterOutcomeKey PerformanceIndicatorNGOs orcharities.*ResponsibleExecutiveStandard(Statutory/else bestpractice)Baseline(Current year2010/2011)GeneralMaintenance;Security; andCleaningServices.Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/2016Maintenance;Security; andCleaningServices.Maintenance;Security; andCleaningServices.Maintenance;Security; andCleaningServices.Maintenance;Security; andCleaningServices.Maintenance;Security; andCleaningServices.GM CSWater sectoraligns to BBBEEand PPPFA.78% preferentialprocurementspend.78 % preferentialprocurementspend.80% preferentialprocurementspend.80 % preferentialprocurementspend.80 % preferentialprocurementspend.80 % preferentialprocurementspend.100% targetedsuppliersdeveloped.100% targetedsuppliersdeveloped.100% targetedsuppliersdeveloped.100% targetedsuppliersdeveloped.100% targetedsuppliersdeveloped.100% targetedsuppliersdeveloped.13. The extent towhich there issupport providedto vulnerablemunicipalities.GM E&SSWater boards’support stressedmunicipalities.100%%completion ofcontractedmilestones.100%%completion ofcontractedmilestones.100%%completion ofcontractedmilestones.100%%completion ofcontractedmilestones.8. Contribute tothe greeneconomy vCommunity andEnvironmentalSustainability14. Number ofenvironmentalsustainabilityinitiatives. *GM OPSGM OPSGM E&SSGM CSGM FinanceReduce waterlosses.Contribute tosustainablegrowth.≤ 3% water losses. ≤ 3% water losses. ≤ 3% water losses. ≤ 3% water losses. ≤ 3% water losses. ≤ 3% water losses.Establish baselinetargets forenvironmentalsustainabilityindicators.Finalise baselinetargets forenvironmentalsustainabilityindicators.Identify andimplement plansfor energy, waterand materialsefficiency.GM OPSGM E&SSGM E&SSIncluderenewable energysources.Mitigate climatechange impacts.Completedfeasibility studyfor Darvill WWWwaste energyreuse.Modelled impactsof climate changeon Mgeni systemresources.Continue energyco-generationinvestigation atthe DarvillWastewaterWorks.Continuedmodelling ofimpacts ofclimate changeon waterresources.Implementedwaste energyreuse at DarvillWWW.Continuedmodelling ofimpacts ofclimate changeon waterresources.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 158

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic ObjectiveUmgeni WaterOutcomeKey PerformanceIndicatorResponsibleExecutiveMsinsiHoldingsStandard(Statutory/else bestpractice)100%implementationof annualbiodiversitymanagementplan for alienplants, game andgrasslands.Organisational Learning and Growth Perspective9. MaintainStrategicEffectiveness10. EnsureFunctionalExcellenceLeadership andEmployeeDevelopmentLeadership andEmployeeDevelopment15. The extent towhich theorganisationprovidesleadership andinfluences thewater sector.16. Per cent retentionand developmentof core anddistinctivecompetencies.CEGM CS100% input intowater sector’slong-termstrategies: incl.,institutionalplanning, waterfunding andpricing, waterresources andclimate change,in context of adevelopmentalstate.Retain core anddistinctivecompetencies.Baseline(Current year2010/2011)65%implementationof annualbiodiversitymanagementplan for alienplants, game andgrasslands.Input into watersector’s longtermstrategies incontext of adevelopmentalstate.52 learnersenrolled as waterand wastewaterprocesscontrollers andartisans.18 graduates/interns developedin engineering,science and otherrequiredprofessionalfields.3 bursarystudents enrolledin engineeringfields.Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/201680%implementationof annualbiodiversitymanagementplan for alienplants, game andgrasslands.Continued inputinto watersector’s longtermstrategies incontext of adevelopmentalstate.70 learnersenrolled as waterand wastewaterprocesscontrollers andartisans.18 graduates/interns developedin engineering,science and otherrequiredprofessionalfields.10 bursarystudents enrolledin engineeringand financialfields.Continued inputinto watersector’s longtermstrategies incontext of adevelopmentalstate.70 learnersenrolled as waterand wastewaterprocesscontrollers andartisans.43 graduates/interns developedin engineering,science and otherrequiredprofessionalfields.10 bursarystudents enrolledin engineeringand financialfields.Continued inputinto watersector’s longtermstrategies incontext of adevelopmentalstate.70 learnersenrolled as waterand wastewaterprocesscontrollers andartisans.43 graduates/interns developedin engineering,science and otherrequiredprofessionalfields.10 bursarystudents enrolledin engineeringand financialfields.Continued inputinto watersector’s longtermstrategies incontext of adevelopmentalstate.70 learnersenrolled as waterand wastewaterprocesscontrollers andartisans.50 graduates/interns developedin engineering,science and otherrequiredprofessionalfields.10 bursarystudents enrolledin engineeringand financialfields.Continued inputinto watersector’s longtermstrategies incontext of adevelopmentalstate.70 learnersenrolled as waterand wastewaterprocesscontrollers andartisans.50 graduates/interns developedin engineering,science and otherrequiredprofessionalfields.10 bursarystudents enrolledin engineeringand financialfields.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 159

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic ObjectiveUmgeni WaterOutcomeKey PerformanceIndicatorResponsibleExecutiveStandard(Statutory/else bestpractice)Baseline(Current year2010/2011)492 Health andSafetyComplianceTraining74 TechnicalTraining104 Soft andGeneric.Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/2016Training anddevelopment willbe informed byIndividualDevelopmentPlans.Training anddevelopment willbe informed byIndividualDevelopmentPlans.Training anddevelopment willbe informed byIndividualDevelopmentPlans.Training anddevelopment willbe informed byIndividualDevelopmentPlans.Training anddevelopment willbe informed byIndividualDevelopmentPlans.GM CS 100%implementationof employeewellnessprogrammesincludingHIV/AIDS.100%implementationof employeewellnessprogrammesincludingHIV/AIDS.100%implementationof employeewellnessprogrammesincludingHIV/AIDS.100%implementationof employeewellnessprogrammesincludingHIV/AIDS.100%implementationof employeewellnessprogrammesincludingHIV/AIDS.100%implementationof employeewellnessprogrammesincludingHIV/AIDS.100%implementationof employeewellnessprogrammesincludingHIV/AIDS.11. EnsureOperationalCompetenceOperationalResiliency17. Number ofsystems andprocesses thatenableimplementationof strategy.CEMitigate strategicrisks to within theorganisation’s risktolerance level of≥50%(satisfactorygood)overallcontrol strength.≥ 70% strategicrisks mitigated to≥50%(satisfactorygood)overallcontrol strength.≥ 80% strategicrisks mitigated to≥50%(satisfactorygood)overallcontrol strength.≥ 90% strategicrisks mitigated to≥50%(satisfactorygood)overallcontrol strength.≥ 90% strategicrisks mitigated to≥50%(satisfactorygood)overallcontrol strength.≥ 90% strategicrisks mitigated to≥50%(satisfactorygood)overallcontrol strength.≥ 90% strategicrisks mitigated to≥50%(satisfactorygood)overallcontrol strength.GM CS GM CS 100%Implementationof ICT Strategy.GM CS 100%procurement planaligned to OPEXand CAPEX plans.100%procurement planaligned to OPEXand CAPEX plans.100%Implementationof ICT Strategy.100%procurement planaligned to OPEXand CAPEX plans.100%Implementationof ICT Strategy.Review of ICTStrategy.100%procurement planaligned to OPEXand CAPEX plans100%Implementationof ICT Strategy.100%procurement planaligned to OPEXand CAPEX plans100%Implementationof ICT Strategy.100%procurement planaligned to OPEXand CAPEX plans100%Implementationof ICT Strategy.100%procurement planaligned to OPEXand CAPEX plansGM E&SSGM OPSGM CSGM FinanceCE100%organisationalsystems reviewedand aligned toISO 9001, ISO33%organisationalsystemsreviewed, alignedto ISO 17025, ISO60%organisationalsystemsreviewed, alignedto ISO 17025, ISO100%organisationalsystemsreviewed, alignedto ISO 17025, ISO100%organisationalsystemsreviewed, alignedto ISO 17025, ISO100%organisationalsystemsreviewed, alignedto ISO 17025, ISO100%organisationalsystemsreviewed, alignedto ISO 17025, ISOUmgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 160

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected Targets ChapterStrategic ObjectiveUmgeni WaterOutcomeOperationalOptimisationKey PerformanceIndicator18. Per cent increasein utilisation oforganisationalresources (morebalanced use).ResponsibleExecutiveGM FINGM OPSStandard(Statutory/else bestpractice)14001 and ISO18001.Staff productivity(water volumesales peremployee).Improveproductivity ofproperty, plantand equipment.Baseline(Current year2010/2011)9001, ISO 14001and OHSAS18001, andcontributing tooperationalresiliency.468 cubic metresper employee.Projected Targets2011/2012 2012/2013 2013/2014 2014/2015 2015/20169001, ISO 14001and OHSAS18001, andcontributing tooperationalresiliency.485 cubic metresper employee.Establish baselinefor overallequipmentefficiency.9001, ISO 14001and OHSAS18001, andcontributing tooperationalresiliency.450 cubic metresper employee.Implementefficiency plan.9001, ISO 14001and OHSAS18001, andcontributing tooperationalresiliency.455 cubic metresper employee.Implementefficiency plan.9001, ISO 14001and OHSAS18001, andcontributing tooperationalresiliency.462 cubic metresper employee.Implementefficiency plan.9001, ISO 14001and OHSAS18001, andcontributing tooperationalresiliency.470 cubic metresper employee.Implementefficiency plan.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 161

| Organisational Scorecard: Key Performance Indicators Linked to Strategy and Five-Year Projected TargetsChapterEndNotesi Listof treatment works for section 29 and section 30 water servicesSection 29 list of water treatment works Section30 list of water treatment works Section 29 list of wastewatertreatment worksDurban HeightsWigginsMidmarDV HarrisHazelmereAmanzimtotiMzintoMtwalumeIxopooMvoti and other iLembePeriod: 2011/2012 to 2013/2014MthathaCoranaMhlahlaneMqanduliCoffee BayQhingqoloLibodeNgquleniLutshekoDarvillIxopoSection 30 list of wastewatertreatment worksPeriod: 2011/2012 to 2013/2014HowickPeriod: 2011/2012 to 2013/2014Mthathaii Listof capital infrastructure projects in five-year business planLivelihoodsEconomic GrowthMaphumuloWW: MidmarupgradeMhlabatshaneWW: Hazelmere upgradeGreater Eston Umlaas new water projectOzwathiniLower Mkomazi bulk water supply scheme and WWManyavuLower Thukela bulk water supply scheme and WWMkomazi water supply project and WWWGreater Mpofana regional schemeWW: Spring GroveWW: Maphephethwa upgradeRichmondReservoir: Howick upgradeReservoir: Bruyns Hill upgradePipeline: ’61 extension - ED4 to Umlaas RdPipeline: ’61 extension - ED2 to ED4Pipeline: ’57 augmentation – Umlaas Rd to eThekwini point MPipeline and Pump Station: Midmar Raw Water duplicationPipeline: new raw water pipeline – Midmar dam to raw water P/SPump Station: Midmar dam raw waterPipeline: Honolulu to Mvoti balancing reservoir pipelinePipeline: Hazelmere to Bifurcation augmentationPipeline: Hazelmeree raw waterPump Station: South Coast AugmentationPipeline: South Coast Phase 2 – Park Rynie to KelsoPipeline: ScottburghSouth LinkPipeline: Mzinto link- Ellingham Reservoir to Mzinto WWPipeline: Claridge toWartburg to DaltonPipeline and Pump Station: Claridge to Wartburg augmentationPipeline and Pump Station: Wartburg to Dalton augmentationWWW: Darvill capacityincrease.iii Wa ater resources infrastructure developments (both Umgeni Water and DWA) in five-year business planList of projectsUgu DMiLembe DM2010/2011 Mhlabatshane DamSikoto DamMvutshane Dam2011/ /2012Mhlabatshane DamSikoto DamMvutshaneDam2012/2013 Mhlabatshane DamSikoto DamMvutshane Dam2013/2014 Sikoto DamMvutshane Dam2014/2015 Sikoto DamMvutshane Dam2015/2016Sikoto DameThekwini MM Spring Grove DamMkomazi DamSpring Grove DamMkomazi DamSpring Grove DamMkomazi DamMkomazi DamMkomazi DammMkomazi Damiv Th e social economy refers to a third sector in economiesbetween the private sector and business or, the public sector and government, e.g. cooperatives.v Thegreen economy creates jobs, ensures real sustainable economic growth, whilstmitigating climate change, resources depletion and environmental edegradation.Main sectors identified:(1) Renewable energy (solar, wind, geothermal, wave, biogas, fuel cell,etc).(2) Green buildings (green retrofits for energy and water efficiency, green products / materials, etc)(3) Clean transportation (alternative fuels, hybridand electric vehicles, public transport, etc)(4) Water management (water purification, water reclamation, greywater reuse, rainwater systems, stormwater management, low-water landscaping)(5) Waste management (recycling including e(electronic) waste, brownfieldland remediation, sustainable packaging).(6) Land management(habitat conservation and rehabilitation, etc.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 162

| DeclarationChapterChapter 23.DeclarationUmgeniWaterhereby declaresthat all informationn is disclosed,is correctly disclosed andd includedin thisbusinessplan document ass requiredin terms of the Watter Services Act A (Act 108 of 1997), Public Financee Management Act(Act1 of 1999), andassociatedregulationsandd prescribedguideliness issuedd bythe Department of Water AffairsandNational Treasury.Umgeni Water Five-YearBusinessPlan | 2011/20122 too 2015/2016Pagee 163

Umgeni WateerPOO Box B 9Pietermaritzburg,3200+27(33) 34131111info@@umgeni.co.zawww.umgeni.co.za