Rand Water is deeply concerned over the escalating debts caused by municipalities’ failure to honour their bulk water purchase agreements and debt settlement arrangements with Rand Water. This situation highly destabilizes 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 thus relies solely on funds collected from its customers, 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 following non-performing municipalities are contributing to this long overdue debt:
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 its evidence 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 afford them an opportunity to pay their account with ease. Some of these municipal customers take an inordinately long period of time to sign the agreements.
The magnitude of the outstanding debt from municipalities has reached a critical level, thus requires urgent attention. Rand Water has invoked the provisions of Section 41(1) of Intergovernmental Framework Act (IRFA) and declare an intergovernmental financial dispute and seek intervention of National Treasury and Co-operative Governance and Traditional Affairs. Rand Water has also requested the Hon. Minister of Finance and National Treasury’s assistance in curbing this escalating debt by withholding the aforementioned defaulting municipalities December 2023 equitable shares payout, until amicable agreement with a down payment to maintain cash inflow that will enable Rand Water to meet its short- and medium-term obligations.
I t is important to note that should Rand Water be placed under further on-going 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 Gauteng Province and other parts of the country that are serviced by Rand Water.
Rand Water remains committed to serving its customers and ensuring long-term security of supply of potable bulk water. We implore the owing municipal customers to treat this matter with the utmost urgency.
