By Lehlohonolo Lehana.
Water & sanitation minister Senzo Mchunu says his department and the National Treasury have agreed on various measures to deal with municipalities’ outstanding debt.
Presenting his department’s Budget Vote in Parliament on Tuesday, Mchunu said poor governance and ineffective management in municipalities is the main cause for the decline in municipal water and sanitation services.
Mchunu warned that weak billing and revenue collection at municipal level is resulting in escalating debt across the water value chain.
“In February this year, municipalities owed the Water Boards R16.7 billion, and municipalities and the Water Boards in turn, owed the department R17.4 billion. What is most worrying is that these debts are escalating rapidly, and this poses a grave risk to the financial sustainability of the water sector,” Mchunu said.
Mchunu said the department has already disestablished one of its entities, Sedibeng Water, due to municipalities’ non-payment.
“If the current trend of escalating debt continues, more Water Boards will have to be disestablished in future and this could result in a situation where no bulk water treatment and bulk water distribution services are being provided to some municipalities, which would mean that there would be no water supply in those municipalities,” Mchunu said.
In an attempt to address the escalating debt, Mchunu said the department has agreed with National Treasury and the Water Boards on several measures to be taken, and they are in the process of consulting the South African Local Government Association (SALGA) and all Water Services Authorities before they are implemented.
The measures include National Treasury withholding equitable share allocations from municipalities; the department and the Water Boards standardising and strengthening their credit control measures and debt recovery processes, and the consistent enforcement of water restrictions on non-paying municipalities, including legal processes to attach municipal bank accounts, where necessary.
The measures also include the installation of bulk prepaid meters by Water Boards in municipalities with a poor payment record.
Over R14bn to support infrastructure backlog
An amount of over R14 billion has been allocated to municipalities to address water infrastructure backlogs.
Mchunu said, the department will be allocating R10.1 billion to municipalities through the Regional Bulk Infrastructure Grant (RBIG) and R4.6 billion through the Water Services Infrastructure Grant (WSIG).
“The RBIG will be spent on 130 different projects across the country and the WSIG will be allocated to more than 400 projects across the country, “Mchunu said.
The department has over the past year been visiting municipalities with severe water and sanitation challenges and meeting with mayors, councillors, municipal managers, technical staff, and local stakeholders to analyze the problems and to identify what needs to be done.
“In most cases, we have been able to agree on improvement plans together with the municipalities, including projects to improve infrastructure, funded from our RBIG and WSIG. In many cases, we have mobilised our Water Boards to assist municipalities to implement the improvement plans.
“For example, in the Eastern Cape, the Amatola Water Board assisted Nelson Mandela Bay with the development of Phase 3 of the R534 million Nooitgedacht water transfer and treatment scheme, which was completed during the last financial year, using RBIG funding,” Mchunu said.
Over R130 billion budget
The department’s budget over the Medium Term Expenditure Framework (MTEF) is R132.667 billion, which includes allocations of R40.291 billion, R43.968 billion and R48.408 billion in the 2023/24, 2024/25 and 2025/26 financial years, respectively.
The department’s budget consists of two components, including Main Account and Water Trading Entity. A total of R72.322 billion has been allocated to the Main Account, including allocations of R22.257 billion, R24.180 billion and R25.885 billion in 2023/24, 2024/25 and 2025/26, respectively.
Included in the Main Account budget are Conditional Infrastructure Grants for municipal water services totalling R37.603 billion, including R37.602 billion for the Regional Bulk Infrastructure and Water Services Infrastructure Grants.
The Water Trading Entity has allocated R60.344 billion, including R18.033 billion, R19.788 billion and R22.524 billion in 2023/24, 2024/25 and 2025/26, respectively.