RAND WATER DEEPLY CONCERNED BY ESCALATING DEBT FROM MUNICIPALITIES.
Rand Water is deeply concerned over the escalating debts caused by municipalities’ failure to honor 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 fulfil its obligations. To date, Municipalities owe Rand Water a cumulative overdue amount of R3 billion, with R2 billion relating to Gauteng municipalities, R1 billion from Mpumalanga municipalities, and at least R63 million from Free State municipalities.
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 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 IRFA and declare an intergovernmental financial dispute and seek intervention of National Treasury and Co-operative Governance and Traditional Affairs.
In terms of Promotion of Administrative Justice Act 3 of 2000, Rand Water also would like to sensitize the residents and communities of the aforementioned municipalities of its intention to exercise its right and invoke the provisions of Section 4 of the Water Services Act and initiate the curtailment of water flow due to non-payment of water services. Rand Water therefore advise the communities of Ngwathe Local Municipality and Merafong City Local Municipality that on the 26th February 2024 it has reduced the water flow by 20%, should these municipalities fail to pay the overdue amount or enter in to amicable payment arrangement, Rand Water will further implement another 20% on the 25th March 2024.
Rand Water is also in the process of employing the same credit control measure for the other owing municipalities who is failing to honor their Debt Settlement Agreement.
It 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 and augmentation 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.
