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Poor revenue collection setting back water provision

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Water and Sanitation Minister, Senzo Mchunu, has warned municipalities who do not collect water revenue effectively, and citizens and businesses who do not pay for water services, that they are likely to end up with no water at all.

Water and Sanitation Minister, Senzo Mchunu, has warned municipalities who do not collect water revenue effectively, and citizens and businesses who do not pay for water services, that they are likely to end up with no water at all.

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.

Water and Sanitation Minister, Senzo Mchunu, has warned municipalities who do not collect water revenue effectively, and citizens and businesses who do not pay for water services, that they are likely to end up with no water at all.

Water and Sanitation Minister, Senzo Mchunu, has warned municipalities who do not collect water revenue effectively, and citizens and businesses who do not pay for water services, that they are likely to end up with no water at all.

“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.

Measures to improve water tariffs

Mchunu announced several measures to be implemented by the department to improve the country’s water pricing.

He said during this financial year, the department will be issuing revised norms and standards in terms of the Water Services Act for the setting of retail water tariffs by municipalities.

“We will be issuing the revised raw water pricing strategy this financial year, and we will also be working on the introduction of a multi-year tariff regime for bulk and raw water charges. In doing this work, we are being advised by the Regulator Commission, which was established during the last financial year,” Mchunu said.

Water Services Act amendments under consideration

The Minister said the department is considering introducing some amendments to the Water Services Act, with the aim of further clarifying the roles, responsibilities and functions of Water Services Authorities and Water Services Providers.

This includes the setting of minimum standards for the functioning of Water Services Providers, which must be enforced by Water Services Authorities. The Minister would be provided with powers to regulate these matters.

 

“We will consult on these proposed amendments and take them through the cluster process to Cabinet during this financial year. There has also been a gap on the requirement for the Minister of Water and Sanitation to consult with the Minister of Mineral Resources and Energy on the co-ordination of licences. We are filling up this lapse,” said Mchunu.

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. – SAnews

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