Plan to clear historic municipal debt to water boards

The department of water and sanitation is in advanced discussions with National Treasury over scrapping the historic water debt that some municipalities owe to cash-strapped water boards.

As of June 2024, municipalities owed R22.36 billion to water boards, a 151% increase from 2019.

Many of the boards have publicly expressed concern the debt threatened their financial stability and the water sector as a whole.

Water debt threatened sector

Department spokesperson Wisane Mavasa said they were close to finalising a debt write-off mechanism which would allow municipal debt to be written off once municipalities had established a good payment record for current invoices.

This would start with one-third of the old debt being paid for 12 months covering three years. The municipalities must maintain a good payment record in each of the 12 months.

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According to Mavasa, in this way all old debt would be written off after a municipality has continued to pay its current invoices for three years.

“This incentive will only be offered to certain municipalities, and National Treasury and the department will decide which will qualify,” Mavasa said.

Regarding the R2 billion debt the Klerksdorp-based Matlosana municipality owed to the Midvaal Water Company, she said this debt would be limited to the amount of old debt that the Midvaal Water Company owed to the water trading entity of the department.

Matlosana municipality debt

Last week, Matlosana ANC ward 1 councillor Pakiso Mqikela welcomed the possibility of clearing the municipality’s debt, saying it would enable it to deliver services to those facing water shortages.

He said they currently used water tankers, especially in the new township development areas.

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The possible scrapping of the debt was discussed during a visit by North West premier Lazurus Mokgosi and Matlosana executive mayor Fikile Mahlophe to the Midvaal Water Company state-ofthe-art water purification plant in Stilfontein last week.

Midvaal Water’s chief executive Matshediso Dikoko and his team briefed them about plant’s history, operations and delivery capacity.

The company said the rising debt not only threatened its financial viability but also hindered its capacity to extend water provision to other parts of the province and the country.

Hindering capacity to extend water provision

Mokgosi supported the ongoing discussions between the department and Midvaal Water Company over the department’s proposal that half of Matlosana’s R2 billion debt be scrapped.

“Midvaal Water Company has what it takes to contribute to our efforts to resolve the water challenges across our province.

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“Efforts are being made to put in place plans to access this spare capacity as a matter of extreme urgency,” Mokgosi said.