In a bid to address the water debt owed by municipalities, the Department of Water and Sanitation, including water boards, have strengthened and standardised debt collection processes and put in place incentives for municipalities to pay their water board bills.
Presenting the Water and Sanitation Budget Vote on Friday, Water and Sanitation Minister Pemmy Majodina said the municipal debts to the water boards increased to R21.3 billion by May 2024, posing a major risk to the financial sustainability of the whole water sector.
Majodina said this debt has forced the department to close down the Sedibeng Water Board in 2022 and transfer its functions, including assets and liabilities, to the Vaal Central and Magalies Water Boards.
“The debts owed by municipalities to Sedibeng Water had resulted in it no longer being able to service its own debts and to meet its operational expenditure requirements. However, the transfer of Sedibeng’s operations to the Vaal Central and Magalies Water Boards did not solve the underlying debt problem and the municipal debt continues to grow,” Majodina said.
While non-payment by municipalities poses a threat to the financial sustainability of all the water boards, Majodima said the department is particularly concerned about Magalies Water and Vaal Central Water, which are experiencing an increasing cash flow challenges due to non-payment.
“One of our immediate priorities will therefore be to work with our colleagues in Cabinet, particularly the Minister of Finance and the Minister of Cooperative Governance and Traditional Affairs, to find a sustainable solution to this problem,” Majodina said.
While acknowledging that not all municipalities are falling behind on their payments, Majodima warned that non-payment by a few municipalities which are served by a particular water board can result in severe financial difficulties for that water board.
During the 2023/24 financial year, the National Government allocated R61.7 billion of water and sanitation-related grants to municipalities to enable the municipalities to address water and sanitation infrastructure backlogs and provide free basic water to the indigent.
Apart from these grants, the water services sector must be self-financing through revenues from the sale of water.
Available infrastructure for other economic activities
To ensure the department’s assets contribute towards the objectives of the Government of National Unity, Majodina said the department would be availing its infrastructure for other economic activities, including promoting tourism and recreation, and reducing the risk of load shedding through the use of dams for generation of hydropower.
The Minister noted that during the last financial year, the department issued an expression of interest to obtain access rights to state dams for tourism and recreation activities, with the aim of promoting economic development, particularly of communities adjacent to dams.
She said the expressions of interest received will be processed during the current financial year.
“In consultation with the Ministry of Energy and Electricity, the department has also issued requests for applications for interested parties to apply for water use authorisations to generate hydropower using water courses and the water resource infrastructure owned by the department.
“This process received interest from over 200 applicants, for generation of 2 845 Megawatts of electricity from the water courses. To date, the department has issued 40 authorisations for floating solar panels, and the remaining applications will be processed in the current financial year,” Majodina said. – SAnews.gov.za
