Debt owed to water boards continues to grow

The debt owed by municipalities to water boards continues to grow. The Department of Water Affairs revealed during a portfolio committee yesterday that just under R1.4bn is owed to water boards, of which over R704m is debt in arrears.

This is higher than the figures revealed in replies to DA parliamentary questions for various dates over the last ten months. As of 31 July 2009, R1.1bn was owed to water boards, of which over R525m was in arrears. As of the end of last year, R1.2bn was owed to water boards, of which over R608m was in arrears. It is evident that the arrears, that is, debt owing for more than thirty days, and in most of these cases, debt that has been owing for more than 120 days, is growing consistently. The situation is getting worse not better.

It must be said that the problem of debt in arrears does not afflict all the water boards. Overberg Water, Namakwa Water and Mhlathuze Water have no money owing to them that is in arrears. The municipalities that buy from these boards must be commended.

There is a major problem, however, at Bloem Water, Botshelo Water, Busbuckridge Water, Lepelle Northern Water and Sedibeng Water. Of particular concern is that over the last three months the arrears owing to Botshelo Water have grown by R6m, the arrears owing to Bushbuckridge Water have grown by R30m and the arrears owing to Sedibeng Water have grown by R72m. The management of Sedibeng Water acknowledged during the committee, after questioning from the DA, that at least one of its municipal clients had simply stopped paying after contractual differences.

The Minister of Water and Environmental Affairs must ensure that the National Treasury, which has a mandate to mediate between water boards and municipalities in terms of section 44 of the Municipal Finance Management Act, pressurises municipalities to pay their outstanding debts. There should be punitive measures taken against municipalities that are tardy in paying.

The considerable amounts outstanding to some water boards increase the financial risk of these water boards, and compromise their ability to engage in capital expansion projects. Unless there is a significant intervention now, the amounts owing to water boards will continue to grow.

Statement issued by Gareth Morgan, MP, Democratic Alliance shadow minister of environmental affairs, May 5 2010

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