The extent of debt owed by municipalities to some of South Africa’s twelve water boards threatens to undermine their functioning. In a reply to a parliamentary question to the Minister of Water and Environmental Affairs, it has emerged that, as of September 2011, municipalities owed water boards over R2bn, of which R1.12bn was debt in arrears. Of this amount, the majority of money was owing to only three water boards.

The worst affected water board was Sedibeng Water which, as of September, was owed R421m of debt in arrears. Of this figure, most of the money owing was from a single municipality, Matjhabeng municipality, which owed over R320m of debt in arrears. Also in a poor position was Lepelle Northern Water Board, which was owed more than R303m of debt in arrears. Its largest debtor was Mopane District Municipality which, as of September, owed it R189m of debt in arrears. Bushbuckridge Water had over R240m of debt in arrears, of which R214m was owed by Bushbuckridge Municipality alone.

The Democratic Alliance (DA) has been tracking the debt owed to all water boards for more than two years, and the trajectory of the overall debt has been upwards, with a partial stabilisation in the last few months.

From mid-2009 to mid-2011 the overall debt grew 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 2010, R1.56bn was owed to water boards, of which R853bn was debt in arrears.
A year later, at the end of June 2011, R1.89bn was owed to municipalities, of which R1.127bn was debt in arrears. A few months later the debt in arrears was marginally lower at R1.121bn, mainly due to the improved positions of Rand Water, Umgeni Water and Magalies Water, which had reduced the amount of debt in arrears owing to them over the preceding three months.

However, looking at all twelve water boards combined masks some of the serious problems faced by individual water boards. The amount of debt in arrears owed to Sedibeng Water rose from R384m in June 2011 to R421m in September 2011. When one considers that in June 2010, Sedibeng Water had R225m of debt in arrears, one can clearly see the difficult situation that a water board like this finds itself in.

It must be said that the problem of debt in arrears does not affect all water boards. Overberg Water and Pelladrift Water are owed no debt that is in arrears, while Umgeni Water, which is one of the biggest water boards in the country, is owed very little money.

The DA has long been calling for action to be taken by National Treasury to ensure municipalities pay their debts in arrears. The results have been mixed. While there have been improvements in a few individual cases, the situations faced by Lepelle Northern Water, Sedibeng Water and Bushbuckridge Water worsen by the month.

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.

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 these water boards will continue to grow.