dealing with water project risks: berg water project: south africa

The Berg Water Project (BWP) will form an additional component of the Western Cape Water System (WCWS) and will increase the yield of the System by about 18% up to 523 million m3 per annum. The estimated capital cost of the Project is about USD 300 million (Escalated 2002 value) which includes social and environmental mitigation measures. The current WCWS consists of seven major dams and an aqueduct system of pipelines and tunnels to deliver water to various treatment plants from whence purified water is distributed to the end-users. The Berg Water Project is primarily for urban water supply to a population of about 3 million people, but does also have a role in a system’s context for the agricultural sector. A public entity, the TCTA (Trans Caledon Tunnel Authority), under the control of the Minister of Water Affairs and Forestry has been directed to finance and implement the project. The financing is to be procured in the private sector without a government guarantee. The Project must start storing water in May 2007 in order to reduce the risk of recurring severe water restrictions in the Cape Metropolitan area. Such restrictions have major adverse economic and social implications. The Cityof Cape Town has, in parallel with the new water supply project, been active in the implementation of a water demand management programme to contain the increase of water supply augmentation. The main project risks and their mitigation strategies are summarized in the paper. These risks fall in the ten categories of finance, engineering, procurement, governance, contractual issues, construction matters, force majeure, environmental/social and communication risks. TCTA’s risk management philosophy can be defined as conservative or having a low level of risk tolerance. The risk mitigation strategies to share risk amongst various Parties and to limit risk to acceptable levels are varied and many of the measures will be applicable to other dam and water projects.

Keywords:

Risk management , Mitigation measures , Water project development