Water Boards: Municipal debt continues to grow

The debt owed by municipalities to water boards continues to grow. In reply to a parliamentary question to the Minister of Water and Environmental Affairs it has emerged that, as of 30 June 2011, municipalities owed water boards R1.89bn, of which R1.13bn is debt in arrears.

The Democratic Alliance (DA) has been tracking this debt for more than two years now, and the trajectory is heading one way: upwards. Over the same period the DA has been calling for action to be taken by National Treasury to ensure municipalities pay their debt in arrears. However, there has been no overall improvement. These debts are compromising the financial sustainability of many of the water boards, and this could potentially affect the future provision of clean water to the public as well as the ability of water boards to expand water infrastructure to areas where there is currently no access to running water.

From mid-2009 to mid-2011 the debt has grown by over R700m. As of 31 July 2009, R1.1bn was owed to water boards, of which over R525m was in arrears. As of the end of 2009, R1.2bn was owed to water boards, of which over R608m was in arrears. As of March 2010, approximately R1.4bn was owed to water boards, of which R704m was debt in arrears. At the end of June last year, R1.56bn was owed to water boards, of which R853bn was debt in arrears. It is evident that the arrears, that is, debt owing for more than thirty days, and in some 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 affect all water boards. Overberg Water, for example, is owed no debt that is in arrears. Amatola and Pelladrift Water Boards have relatively small amounts owing to them.

However, several of South Africa's 12 water boards are burdened by massive amounts of debt in arrears owing to them. For instance, Bushbuckridge Water is owed R230m of debt in arrears, Sedibeng R384m and Lepelle Northern R320m.

The reply to this parliamentary question also reveals the individual amounts owing by municipalities to water boards. The ANC-run Bushbuckridge municipality owes the Bushbuckridge Water Board R199m of debt in arrears, which is the majority of money owed to that water board. The ANC-run Mopani District Municipality owes Lepelle Northern Water R204m and the ANC-run Matjhabeng municipality is the biggest offender when it comes to Sedibeng Water, owing that water board R289m of debt in arrears.

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, continues to pressurise municipalities to pay their outstanding debts. There should be punitive measures taken against municipalities that are tardy in paying. There has been some success in getting Bushbuckridge municipality to pay an additional amount each month to Bushbuckridge Water to help reduce its long-term debt. The Department of Water has expressed frustration that the unconditional grant that municipalities receive as part of the equitable share for the provision of water to poor communities, is often being used for purposes other than settling debt with water boards.

The Department of Water has also reported that water boards with financial problems often settle their own debts before considering payment to the Department for their purchases of bulk water, as they know the Department is unlikely to legally challenge the water boards. It is evident therefore that non-payment of debts by municipalities has a knock-on effect that must surely be compromising the sustainability of the water governance network.

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

Statement issued by Gareth Morgan MP, DA Shadow Minister of Water and Environmental Affairs, September 19 2011

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