Lesedi Local Municipality owes Rand Water over R50m

While residents struggle to go about their daily lives amid the ongoing water crisis, where taps are either dry or water supply is sparse, it appears the Lesedi Local Municipality (LLM) is also struggling with water, or rather, how to pay for it.

According to Rand Water, LLM owes it R52 965 941.24.

“Rand Water is deeply concerned over the escalating debts caused by municipalities’ failure to honour their bulk water purchase agreements and debt settlement arrangements with Rand Water. This situation highly destabilises Rand Water’s financial position and poses a direct threat to its medium- and long-term sustainability,” reads a statement issued by Rand Water on March 1.

“Rand Water operates without any form of allocation from the national fiscus and thus relies solely on funds collected from its customers, primarily municipalities, to fulfil its obligations.

“To date, municipalities owe Rand Water a cumulative overdue amount of R3b, with R2b relating to Gauteng municipalities, R1b from Mpumalanga municipalities, and at least R63m from Free State municipalities.”

The water utility said LLM’s overdue debt is R42 581 916.93, and its current is R10 384 024.31.

Rand Water further said municipalities’ payment patterns have deteriorated to concerning levels that threaten the liquidity, financial performance, and sustainability of Rand Water.

“Despite our relentless efforts to accommodate this ongoing pattern of non-payment through bilateral engagements and participation in intergovernmental relations forums, we have regrettably reached a stalemate,” the utility stated.

“Several agreements and engagements were held with the non-paying municipalities, and it’s evident that these municipalities have taken advantage of these avenues and use them to cause endless and fruitless negotiations when it is clear they have no intention to pay or enter into amicable arrangements that will afford them an opportunity to pay their account with ease. Some of these municipal customers take an inordinately long time to sign the agreements.”

The magnitude of the outstanding debt from municipalities has reached a critical level, requiring urgent attention.
Rand Water has invoked the provisions of Section 41(1) of the Intergovernmental Framework Act (IRFA), declared an intergovernmental financial dispute, and seek the intervention of National Treasury and Co-Operative Governance and Traditional Affairs.

In terms of the Promotion of Administrative Justice Act 3 of 2000, Rand Water also sensitises residents and communities of the defaulting municipalities of its intention to exercise its right and invoke the provisions of Section 4 of the Water Services Act and initiate the curtailment of water flow due to the non-payment of water services.

Rand Water advised communities in the Ngwathe Local Municipality (Free State) and Merafong City Local Municipality (Gauteng) that on February 26, it had reduced the water flow by 20%.

Should these municipalities fail to pay the overdue amount or enter into amicable payment arrangements, Rand Water will implement another 20% on March 25.

Rand Water is employing the same credit control measure for the other owing municipalities failing to honour their debt settlement agreement.

LLM has not yet been affected by the 20% loss of water flow, but this could change if it makes no arrangements or payments.

The HERAUT requested comment from the LLM on March 4 about the debt owed to Rand Water. However, it had received no response at the time of publication.