Rand Water’s hardline: Utility reduces flow to defaulting municipalities

Rand Water has reduced the water flow by 20% to defaulting municipalities and announced should they fail to pay the overdue amount, it will further implement another 20% on 25 March.

Rand Water said yesterday it was concerned over escalating debts caused by municipalities’ failure to honour their bulk water purchase agreements and debt settlement arrangements with Rand Water.

Municipalities owe Rand Water a cumulative overdue amount of R3 billion, with R2 billion relating to Gauteng municipalities, R1 billion from Mpumalanga municipalities, and R63 million from Free State municipalities.

Restrictions will affect residents and businesses

Independent political analyst Sandile Swana said the effect of restricting water will affect residents and businesses.

Swana said what was not hidden “is the same councillors who have been voted in by residents are the same councillors who have not been collecting money from residents”.

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He said if the debt is not paid, Rand Water was going to struggle with day-to-day operations. Swana said the issue with Rand Water was made worse by the culture of “ANC economics which is the economics of poverty”.

“It’s going to be short of working capital. It’s going to be short of money to pay for electricity and of money to buy spares to make repairs to its own infrastructure. Rand water won’t be able to pay wages. And then it will become a squatter camp,” Swana said.

Payment patterns deteriorated

According to Rand Water, the payment patterns of municipalities 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 nonpayment through bilateral engagements and participation in intergovernmental relations forums, we have regrettably reached a stalemate,” the utility said.

Rand Water revealed it has invoked the provisions of Section 41(1) of IRFA and declare an intergovernmental financial dispute and seek intervention of National Treasury and the department of cooperative governance and traditional affairs (Cogta).

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Policies to improve water infrastructure financing and management

Anthony Turton from Centre for Environmental Management at the University of Free State said there were policies that need to be challenged to improve water infrastructure financing and management.

“The policy that stands in the way is in the constitution of South Africa and it is called the cooperative governance clause. The chapter makes it clear that one arm of government cannot reach into the activities of another arm of government,” Turton said.

“And that’s a problem because Rand Water is a state-owned enterprise that’s owned by the department of water and sanitation. But it may not reach into the affairs of a municipality which falls under Cogta,” he added.

Emfuleni municipality

Emfuleni local municipality is one of the nonperforming municipalities contributing to the Rand Water overdue debt. Also being one of the dysfunctional and distressed municipalities which was listed by Cogta five years ago requiring urgent intervention.

Rand Water said it is in the process of employing the same credit control measure for other municipalities who were failing to honour their debt settlement agreements.

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