Rand Water Faces Financial Losses from Uncollected Municipal Payments

Africa’s largest bulk-water supplier has had to write off millions owed by municipalities that failed to pay their bills.

Rand Water Services Pty Limited reported an impairment of R382.3 million for the fiscal year ending in June, with the net debt owed by the South African municipalities it serves increasing by 12% to R4.4 billion, as indicated in the company’s annual results released on Friday.

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Listen/read: Rand Water shutdown: ‘Vehemently clear’ planning wasn’t executed effectively

Emfuleni, which is home to the nation’s largest steel production facilities, holds the most significant outstanding debt, representing roughly a quarter of the total debt owed.

The inability of local municipalities to fulfill their payment obligations “jeopardizes the sustainability of water boards,” remarked Water Minister Pemmy Majodina, who is working alongside the finance and cooperative governance ministers to pinpoint solutions.

Recently, the National Treasury disclosed intentions to withhold funds from five councils in December due to unpaid water bills, with the goal of urging local governments to settle payments for critical services. Rand Water supplies two of these councils—Merafong and Victor Khanye.

The South African government is grappling with a worsening water crisis, primarily caused by years of insufficient investment and poor maintenance by local councils.

In October, Rand Water cautioned that the Gauteng province—home to Johannesburg and the capital, Pretoria—could encounter supply shortages unless cities swiftly curtailed their water usage.

The decline of energy, transport, and water infrastructure under municipal management poses a significant risk to the financial system, as per the central bank’s assessments.

Read:
JHB faces a water leaks problem … Here’s what’s being done about it
Johannesburg considers stricter water restrictions as supply declines
Largest companies to aid in resolving South Africa’s water crisis

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Rand Water services around 18 million people across 17 municipalities and multiple industrial clients in four provinces.

Municipalities nationwide also owed R95.4 billion to the state-owned power supplier Eskom by November, marking a 28% increase since March, while Eskom has successfully avoided power outages for nine months.

Energy Minister Kgosientsho Ramokgopa recently characterized the escalating debt as an “existential problem.”

Rand Water aims to reduce its reliance on Eskom for electricity following a 19% rise in power costs, as it seeks to manage “runaway” expenses. The company is exploring alternative energy options, placing emphasis on renewable sources like solar and hydropower.

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