Municipal debt at R22bn: These areas could run out of water as boards go bankrupt

The Portfolio Committee on Water and Sanitation on Tuesday warned that municipalities owing millions of rands to the Department of Water and Sanitation would be without water in the next 6 to 12 months.

With debt that has accumulated from beyond 2019, the Chairperson of the committee Leon Basson said it was imminent that a solution be found to aid the “unsustainable challenge”.

“The magnitude of this problem is devastating to the cash flow of water boards and negatively affects the entire water value chain.

“The committee was informed that as of June 2024, the municipal debt to water boards is at R22.36 billion with an average increase of 151% between 2019 to 2024. The direct impact on water boards is that some boards, such as Vaal Central Water and Magalies Water, face bankruptcy in the next six to 12 months, as they do not have sufficient cash resources to pay for their operating activities and have stopped paying for their raw water,” said Basson.

Water Boards facing imminent bankruptcy

Vaal Central Water and Magalies Water inherited debt from Sedibeng Water which was dissolved in 2022 due to bankruptcy over municipal debt.

The two water boards took over the geographical service areas, workers, assets and liabilities of Sedibeng Water.

Under them, they have a total of 23 municipalities which will be without water in the coming months should they fail to pay off their current invoices in full.

Sean Phillips of the DWS in a presentation to the department’s Director-General said in the previous month, Vaal Water had insufficient cash flow to pay for operating services and have since halted paying for their raw water.

“By paying only essential expenses (salaries, electricity, chemicals etc) Vaal Central Water Board will be able to keep going until approximately May 2025, after which they will be bankrupt
and will not be able to deliver water.”

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Vaal Central Municipalities

Vaal Water Board has a total of 12 municipalities. Five of the municipalities with the most debt are Matjhabeng Local Municipality (LM), Kopanong Local Municipality, Mangaung Metropolitan Municipality, Nala Local Municipality and Nama-Khoi Local Municipality.

This big five owes a cumulative R9 308 852 to the department, while the total debt of the 12 municipalities is R9 502 573.

Phillips said non-payment by Matjhabeng and Kopanong would render Vaal Central Water Board bankrupt. “Even if all the other municipalities start paying their current invoices in full.”

“The Matjhabeng debt to the Water Board has grown by R2.041 billion from R4.897 billion on 30 June 2022 to R6.938 billion on 30 June 2024, which is a 41% growth over two years.”

Tsantsabane LM owes R122 039; while Dikgatlong LM owes R37 740; Khai-Ma LM R26 089; Mantsopa (Excelsior) R3 741; Gamagara-Khathu LM R3 486; Magalies Water / Maquassi Hills LM R0; and Joe Morolong LM R626.

Magalies Water Municipalities

Magalies Water Board’s expenditure has surpassed its bank balance. As a result, it cannot pay its operating costs and has stopped paying for raw water.

Magalies Water has a total of 11 municipalities. Maquassi Hills LM and Thabazimbi LM have the highest debt of R352 538 and R198 364, respectively.

“If these two municipalities do not start paying their current invoices to Magalies Water in full, then
Magalies Water will go bankrupt, even if all the other municipalities start paying their current invoices in
full.”

Other municipalities:

• Ditsobotla LM R83 568;
• Ngaka Modiri Molema LM R72 107;
• Mahikeng LM R101 647;
• Modimolle LM R61 235;
• City of Tshwane R57 206;
• Moretele LM R27 275;
• Bela-Bela LM R14 438;
• Moses Kotane LM R68 814;
• Rustenburg LM R7 311.

According to Phillips, Magalies Water is likely to pay its essential expenses until approximately “June 2025, after which they will be bankrupt and will not be able to deliver any water”.

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Water Boards with cash flow challenges

Amatola Water and Lepelle Northern Water are both experiencing cash flow challenges due to nonpayment for raw water by municipalities.

Amatola Water has 9 municipalities of which Amathole District Municipality owes R363 221 of the total debt of R419 258.

Municipalities under Amatola Water:

• OR Tambo DM R22 753;
• Dr Beyers Naude LM R733;
• Joe Gqabi District Municipality R1207;
• Makana Municipality R370;
• Koukama R71;
• Buffalo City Municipality R29 893;
• Ndlambe LM R996;
• Blue Crane Route LM R14.

Lepelle Northern Water has 13 municipalities of which Mopani DM and Sekhukhune DM owe the most with R345 744 and R158 178 respectively.

Municipalities under Lepelle Northern Water:

• Vhembe DM R109 846;
• Greater Letaba Mun R49 301;
• Fetakgomo LM R21 232;
• Polokwane Mun R32 807;
• Mogalakwena LM R16 092;
• Ba-Phalaborwa Municipality;
• Capricorn DM R9 375;
• Makhuduthamaga LM;
• Marble Hall;
• Greater Tubatse LM R298.

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Water Boards with declining payment levels

While Rand Water and uMngeni-uThukela Water are not facing imminent bankruptcy, the two boards are both experiencing declining payment levels from certain municipal customers.

Rand Water has 18 municipalities owing the department a total of R7 717 053.

Its five most problematic regions are:

• Merafong City Local Municipality with a debt of R1 023 020;
• Emfuleni Local Municipality owes R1 248 723;
• Govan Mbeki Municipality R842 306;
• Randwest City Local Municipality R584 640;
• Victor Khanye Local Municipality R423 817;

These local governments owe a cumulative debt of R4 122 507.

• Johannesburg Water R1 660 094;
• Ekurhuleni Metropolitan Municipality R1 005 165;
• Bushbuckridge Local Municipality R266 229;
• Ngwathe Local Municipality R72 435;
• Lesedi Local Municipality R96 269;
• Tshwane Metropolitan Municipality R345 174;
• Mogale City Local Municipality R46 584;
• Metsimaholo Local Municipality R18 857;
• Rustenburg Local Municipality R34 281;
• Midvaal Local Municipality R17 057;
• Royal Bafokeng Nation R5 429;
• Madibeng Local Municipality R12 381;
• Thembisile Local Municipality R14 593.

uMngeni-uThukela Water municipal debt

The three most problematic municipalities owed R1 779 219.

They are:

• King Cetshwayo District Municipality R875 204;
• Ugu District Municipality R390 778;
• Msunduzi Municipality R513 237;

The other municipalities owed a total of R1 157 409.

• Ethekwini Municipality R412 703;
• Uthukela District Municipality R166 501;
• Msunduzi Municipality R186 381;
• Siza Water R122 024;
• uMkhanyakude District Municipality R41 861;
• Ethekwini Municipality R70 036;
• Uthukela District Municipality R13 921;
• Msunduzi Municipality R9 862;
• Ugu District Municipality R5 290;
• Ugu District Municipality R6 393;
• Msunduzi Municipality R5 415;
• Siza Water R4 925;
• Msunduzi Municipality R4 810;
• Siza Water R3 613;
• Alfred Nzo District Municipality R5 658;
• Other R98 017.

While some municipalities may be up to date with their payments, non-payment by their counterparts could affect them should their shared water board go bankrupt.

“If a water board goes bankrupt and stops functioning, it will stop providing water to all its municipal customers, not just the ones which are not paying,” said Phillips.