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Rand Water concerned about R6bn in outstanding municipal debts

Rand Water concerned about R6bn in outstanding municipal debts

Photo by Bloomberg

25th October 2023

By: Thabi Shomolekae

Creamer Media Senior Research Assistant and Reporter

     

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Bulk water supplier Rand Water noted on Wednesday that while it continues to pump at maximum capacity, storage capacity continues to drop, all this amid raising concerns about huge amounts of outstanding debts by municipalities.

Rand Water CEO Sipho Mosai gave an update on its water provision in areas of supply where he revealed that the entity had added additional storage and purification infrastructure.

He noted that with Rand Water’s current challenges, it won’t be able to pull off its infrastructure development if it is not paid on time. Municipal debts are currently sitting at just under R6-billion as of September.

Mosai said, as a result, Rand Water’s net trade receivable on the balance sheet will reduce from about R6-billion to R3-billion.

“So we are seeing an expected credit loss that is increasing to a 35% jump from 2022 to 2023, to more than R5-billion. We are concerned because we are expected, and we have an obligation, to supply bulk water, upgrade, refurbish, operate our infrastructure but we need to be paid,” he said.

While he acknowledged the challenges facing municipalities, he said Rand Water was self-reliant and self-sufficient, with no assistance from the fiscus.

“… so it is important that we get paid on time to continue to maintain the system,” he explained.

He highlighted that the City of Tshwane and City of Ekurhuleni were the municipalities with the biggest outstanding debts. Tshwane had an outstanding amount of about R690-million and Ekurhuleni’s debt sat at R440-million.

While both municipalities were making payments they were not being made on time, Mosai said.

“We have received payment for this month, we are hopeful that between the 25th and end of the month, the current accounts will at least have been settled,” he said.

He added that Mogale City had debts of about R43-miilion, the Madibeng municipality had over R7-million in debts and Royal Bafokeng’s debts were over R5-million.

Mosai explained that seven municipalities erere under the category of non-performing municipalities with debts of 90 days and beyond.

Lesedi local municipality has outstanding debts of more than R48-million and Ngwathe local municipality, in the Free State, has more than R58-milion in debt.

Victor Khanye local municipality owes more than R300-million and Rand West municipality owes about R400-million.

Merafong City local municipality, Govan Mbeki municipality and Emfuleni local municipality each owe more than R700-million.

Mosai noted that Rand Water’s biggest customer, Joburg Water, was making payments on time.

“We remain eternally grateful to the mayor, the MMCs, finance and water and sanitation infrastructure provision, MD and the Board, for paying us on time. We thank Midvaal, Metsimaholo, Rustenburg and Thembisele Hani for being the best-performing municipalities in our value chain,” he said.

GROWING WATER DEMAND

Meanwhile, he explained that through Rand Water’s augmentation plans for ensuring a sustainable water supply and meeting current and growing demands, Rand Water had embarked on building a completely new water purification plant station 5 at the existing Zuikerbosch Station.

Zuikerbosch Station 5A was launched in August with the main objective of providing an additional 1 200 ML/day of potable water to the current supply capacity of Rand Water.

Mosai added that construction of the scheme commenced in 2015, adding that the additional supply of 150 ML was now complete.

Edited by Sashnee Moodley
Senior Deputy Editor Polity and Multimedia

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