THE government is moving ahead with the implementation of water supply cuts in municipalities that do not pay and owe the country’s water boards billions of rands.
The Department of Water and Sanitation and the SA Local Government Association (Salga) say the plan will see an improvement in the billing and revenue collection for bulk raw water and bulk water services.
The department and Salga have already met to develop strategies to improve billing and revenue collection in the water sector, and a decision has been taken to create Standardised Operating Procedures (SOPs) for debt recovery, covering both the water boards and the department’s Water Trading Entity (WTE).
According to Salga, the department’s final steps in the SOPs will accommodate instances where the Inter-Governmental Relations Framework Act provisions do not result in solutions.
Actions to be taken against defaulting municipalities include consistent enforcement of water limitations and/or restrictions for non-paying councils.
Legal action will be taken to attach municipal bank accounts where necessary, and there will be a collaboration with the National Treasury to withhold equitable share allocations for municipalities not paying their current invoices from water boards.
In addition, bulk prepaid meters are to be installed by water boards in municipalities with a poor payment record.
The department’s spokesperson Wisane Mavasa told the Sunday Independent that water boards and the WTE were facing liquidity and financial challenges due to non-payment of water debt by municipalities.
“Sedibeng Water was disestablished during 2022 because of being bankrupt, as a direct result of non-payment of municipal debt, as it struggled to collect revenue from its municipalities for the past five years,” she explained.
According to Mavasa, to assist with non-payment by municipalities, which is escalating year on year, the department has decided to standardise the collection process and develop SOPs that the water boards and the WTE should follow.
”Currently, the DWS (Department of Water and Sanitation) is busy with a consultation process with all relevant parties, including all the water service authorities.
‘’Once this process has been finalised, the SOPs will be submitted to the Water and Sanitation Minister Senzo Mchunu for his approval, after which, it will be submitted to Cabinet for its approval,” she added.
In September last year, Auditor-General Tsakani Maluleke reported to Parliament on the dire state indebtedness of the country’s water boards.
She found that in the 2020/21 financial year, water boards’ municipal debt stood at R14.2 billion, which was up from R12.5bn in 2019/20 36% of the total debt was older than 60 days.
Maluleke’s report states that Amatola Water, Bloem Water, Lepelle Northern Water, Magalies Water, Overberg Water and the now-disestablished Sedibeng Water all had debt-collection periods of more than 90 days, and none of the water boards audited paid their creditors within the general norm of 30 days.
She also found that the two that struggled the most were Lepelle Northern Water, which took 535 days (1.5 years) to collect on its debt, while Sedibeng Water took 1 541 days (4.2 years).
Maluleke recommended that the accounting authorities, audit committees, and management of water boards implement interventions to effectively deal with debt collection challenges, not only to improve their cash flow and sustainability but also to support the sustainability of their service providers.