Joburg loses R6.6 billion to electricity and water issues

In the last financial year, between July 2022 and June 2023, the City of Johannesburg (CoJ) lost an astonishing R4.2 billion of electricity and a further R2.4 billion of water.

In total, that’s R6.6 billion in lost trading revenue, equal to more than 10% of its total revenue in the period (R65 billion). However, compared to its bulk purchases across electricity, water and sewerage, this is almost 30%.

This is revealed in the Auditor-General’s report on the CoJ’s financials, which runs to an astonishing 20 pages and 101 notes and irregularities. Both were identified as emphases of matter in the city’s audited financials.

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R6.6 billion is an enormous number. We know it never can and never will get to zero – technical losses on power lines and physical water leaks are a fact of life.

But half this figure, R3 billion, could easily flow into the city’s coffers if the basics were done.

This is a third of the amount the city gets from national and provincial government in the form of grants and subsidies, and 20% of its property rates income from residents and businesses.

Put another way, it’s also about half its debtors. This would go a long way toward ensuring a well-balanced budget in the metro.

Electricity issues

On electricity alone, CoJ lost nearly 2 900GWh in the year. This is close to 30% of the bulk units purchased from Eskom and Kelvin Power Station.

Thankfully it is an improvement on the 3 250GWh lost in 2022.

In rand terms, however, due to annual administrative price hikes, it lost the same amount: R4.2 billion.

Technical losses of 9% at City Power are probably higher than normal, but according to the city these will always be there due to “energy that is lost in the transportation of electricity from the point of supply to the point of distribution through dissipation as useless heat”.

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The major problem is on the other side of the equation – “non-technical losses”.

This includes outright theft, the bypass of meters, illegal ‘decalibration’ of meters, damaged meters and faulty voltage and current transformers, billing errors, and customers without meters.

Last year, it lost 21% of its electricity revenue, or R2.922 billion, due to these factors.

Water issues

With water, the losses are significantly higher, but the rand values are lower due to the relatively lower price of water compared to electricity.

In the year to June 2023, the city’s Johannesburg Water entity reported so-called ‘non-revenue water’ (NRW) of 46.11%, worse than the 44.79% from 2022.

This is made up of 12.7% of unbilled authorised consumption, which comprises “water supplied to informal environments, water supplied to deemed consumption areas over and above the flat rate of recovery applied, as well as water utilised in network system maintenance performed”.

Physical and commercial losses totalled 33% in the year, an increase from 32% in 2022.

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Nearly a quarter of all bulk water procured (24.05%) is lost to physical leaks in Joburg.

Commercial losses (9.35%) are related to illegal connections and billing issues.

The South African Water Research Commission classifies non-revenue water of about 40% but under 50% as “a high level of NRW” and “poor performance”. It does make the point that “certain levels of Non-Revenue Water are acceptable from an economic point of view as indicated in the table above”.

“This means the cost of interventions to reduce Non-Revenue Water should be less than the savings to be realised.”

• <15% – low level of NRW, very good performance
• 15%-30% – low level of NRW, good performance
• 30%-40% – average level of NRW, average performance
• 40%-50% – high level of NRW, poor performance
• >50% – very high level of NRW, very poor performance.

Anything between 30% and 40% in the South African metro and municipality context is a good result, what it terms “average”. Below 30% is “good performance”, with anything under 15% incredibly unlikely (and uneconomical) in our context.

Joburg Water has been “endeavouring” to achieve NRW levels of between 30% and 40% for years now, but the situation keeps deteriorating.

The Western Cape shows that a level of about 30% is realistic and achievable.

The province has a NRW of 29.6% – by far the best in the country.

In Gauteng, that number is an average of 45% (although this is not nearly as shocking as the averages of 56% in Limpopo and the Northern Cape). The Gauteng average is however 50% worse than the average performance in the Cape.

This article was republished from Moneyweb. Read the original here