UMGENI WATER - Update on appointment of board members and withdrawal of intention to incorporate Mhlathuze water into Umgeni Water

Update on appointment of board members and withdrawal of intention to incorporate Mhlathuze water into Umgeni Water

Umgeni Water
Company code : BIUMWA

UPDATE ON APPOINTMENT OF BOARD MEMBERS TO THE BOARD OF UMGENI WATER AND
WITHDRAWAL OF INTENTION TO INCORPORATE MHLATHUZE WATER INTO UMGENI WATER

We refer to previous SENS (and public) announcements regarding the above matters that are of
profound governance significance to Umgeni Water.

1.   THE BOARD APPOINTMENTS

     When the previous Minister of Water and Sanitation, the Honourable Nomvula Mokonyane, MP,
     announced the appointment of an Interim Board for Umgeni Water in September 2017, she
     simultaneously provided an assurance that the process for the appointment of a permanent
     Board would be expedited. In conformance with this Ministerial undertaking and in line with the
     Water Services Act, the Board appointment process was initiated and concluded in January 2018.
     A Panel Report that emanated from the short-listing and interview processes was subsequently
     presented to the then-Minister of Water and Sanitation. It is worth noting that the Board
     appointment process and concomitant Panel Report presentation occurred against the backdrop
     of acceleration in political developments at national level that culminated in Cabinet/Executive
     changes in February 2018. As is widely known, Minister Mokonyane was replaced by the current
     Minister, the Honourable Gugile Nkwinti, MP, as Executive Authority responsible for the Water
     and Sanitation portfolio.

     The current Minister of Water and Sanitation has applied his mind in relation to the Panel Report
     and has considered it prudent to direct Umgeni Water to initiate the process de novo. In
     compliance with provisions of the Water Services Act, the nomination process will commence
     again with an advertisement calling for nominations and closing date for submission of names is
     27 July 2018. The advert will be published in various English and isiZulu-medium print media
     without delay. A Selection Panel will be constituted to consider all nominations and make its
     recommendations to the Minister of Water and Sanitation ideally before the end of September
     2018.

     We are confident that by the 1st of November 2018 a new Board will begin conducting its
     business, further reinforcing strict adherence to corporate governance in all its manifestations. In
     the meantime, as the process for the appointment of a permanent Board is rolled out, Umgeni
     Water continues to perform at optimum in governance and associated matters. The
     organisation’s conformance to the tenets of governance is monitored and overseen by various
     mechanisms, including committees of the current Board, an independently-chaired Ethics
     Committee, regular Umgeni Water-stakeholder engagements that assess compliance to
     contractual obligations and quarterly reporting to the Executive Authority.

     Completion of the 2017/18 financial year on 30th June 2018 will now pave the way for a
     comprehensive annual external-led audit of the organisation’s performance in various disciplines.
     The organisation has consistently obtained clean or unqualified audits over the past decade, and
     it is confident that it will again receive a clean audit.

2.   PROPOSED INCORPORATION OF MHLATHUZE WATER INTO UMGENI WATER

     The Honourable Minister of Water and Sanitation has withdrawn a decision to dis-establish
     Mhlathuze Water and transfer its assets, liabilities and staff to Umgeni Water and change the
     name of Umgeni Water to KwaZulu-Natal Water Board. Preliminary preparations made by
     Umgeni Water with regards to accommodating the proposed provincial water sector changes,
     specifically commissioning of an independent due diligence exercise that was to have been
     conducted to ascertain or confirm matters related to Mhlathuze Water, are no longer necessary
     and will, therefore, be discontinued. Umgeni Water wishes to state firmly and unambiguously that
      it continues to remain a sound investment platform - as is reflected in the organisation’s good
      standing and financial sustainability.

      The Ministerial decision will assist in ending speculation about the future of the two KwaZulu-
      Natal-based water boards, until such time the matter of rationalisation of the water sector and
      amalgamation or dis-establishment of entities is reopened by the Executive Authority after careful
      consideration of all relevant factors.

      It is important to be mindful that the proposed dis-establishment of Mhlathuze Water would have
      occurred in the context of rationalisation of the South African water sector, as recommend in the
      roadmap of the National Development Plan. Umgeni Water remains committed to the National
      Government’s institutional realignment vision and will continue to provide expert advice when
      called upon to do so.

      In the short-term to medium-term Umgeni Water will intensify efforts to expand its coverage in
      KwaZulu-Natal through provision of services and products to municipalities that are facing service
      delivery challenges, or when requested by the Provincial Government or Department or Water
      and Sanitation to intervene as implementing agent.

5 July 2018

Debt Sponsor
Nedbank Corporate and Investment Banking

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