REVEALED: Rand West City’s R400 million debt with Rand Water

Rand West City Local Municipality (RWCLM) has been identified as one of the municipalities in arrears with Rand Water and is said to owe the entity more than R400 million.

This is according to a damning statement released by Rand Water recently where it has named and shamed municipalities that are in areas.

“Rand Water is deeply concerned about 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. Rand Water operates without any form of allocation from the national fiscus and thus relies solely on funds collected from its customers and primarily municipalities.

“To date, municipalities owe Rand Water a cumulative amount of R4.1 billion with R2.9 billion relating to Gauteng municipalities; R1.2 billion from Mpumalanga municipalities, and at least R58 million from Free State municipalities,” the statement read.

The municipalities in question include two municipalities in the West Rand District namely RWCLM and Merafong as well as the Lesedi, Victor Khanye and Ngwathe Local Municipalities.

Rand Water also said that 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 non-payment through bilateral engagements and participation in Intergovernmental Relations forums, we have regrettably reached a stalemate. Several agreements and engagements were held with the aforementioned non-paying municipalities, and it’s evident that these municipalities including the metros have taken advantage of these avenues and use them to cause endless and fruitless negotiations when it is clear that they have no intention to pay or enter into amicable arrangements that will allow them to pay their account with ease.

“Some of these municipal customers take an inordinately long time to sign the agreements,” the statement added.

The Herald meanwhile approached RWCLM spokesperson Phillip Montshiwa regarding the matter who said they are actively servicing what is due to Rand Water.

“The municipality entered into arrangements with Rand Water and we are servicing the debt owed, as well as the current account. We are complying with the said arrangements and we are on par,” said Montshiwa who added that the municipality hasn’t defaulted on its arrangements with Rand Water.

He added that he will be in talks with the municipality’s finance department and will revert to the Herald with detailed feedback regarding the matter.

Meanwhile, according to information at the Herald’s disposal, Rand Water has decided to implement Section 41 (1) of the Intergovernmental Framework Act and has sought intervention from National Treasury and Co-operative Governance and Traditional Affairs regarding the issue.

The entity has also asked the finance minister Enoch Godongwana to step in and help mitigate the situation by withholding the defaulting municipalities’ December 2023 equitable shares payout.

This will be until such a time that the municipalities enter into an amicable agreement with the entity and pay a down payment, which will help in maintaining cash flow and allow Rand Water to meet its short and medium-term obligations.

“It is important to note that should Rand Water be placed under further ongoing financial risk; the entity will be plunged into a debt crisis which will impact all municipalities currently serviced by Rand Water and curtail the ability of Rand Water to finance the construction of bulk water infrastructure and to undertake adequate maintenance of its extensive network.

“This would have dire consequences on the entire network, particularly the Gauteng Province and other parts of the country that are serviced by Rand Water,” the statement concluded.