Growing municipal debt, a worrying factor for Rand Water

Share the Article:

Rand Water has raised concerns over the escalating debts caused by municipalities’ failure to honour their bulk water purchase agreements and debt settlement arrangements.

The water utility said this situation highly destabilizes it’s financial position and poses a direct threat to its medium and long-term sustainability.

According to the utility spokesperson Makenosi Maroo, Rand Water operates without any form of allocation from the national fiscus thus relies solely on funds collected from its customers, primarily municipalities to fulfil its obligations.

“To date, Municipalities owe Rand Water a cumulative overdue amount of R3 billion, with R2 billion relating to Gauteng municipalities, R1 billion from Mpumalanga municipalities, and at least R63 million from Free State municipalities.

“The payment patterns of municipalities have deteriorated to concerning levels that threaten the liquidity, financial performance, and sustainability of Rand Water.

“Despite our relentless efforts to accommodate this ongoing pattern of non-payment through bilateral engagements and participation in Intergovernmental Relations forums, we have regrettably reached a stalemate,” she remarked.

Maroo stated that several agreements and engagements were held with the aforementioned non-paying municipalities, and it’s evident that these municipalities have taken advantage of these avenues and use them to cause endless and fruitless negotiations.

Reluctance to settle the debt

She continued; “It is clear that they have no intention to pay or enter into amicable arrangements that will afford them an opportunity to pay their account with ease. Some of these municipal customers take an inordinately long period of time to sign the agreements.

It is important to note that should Rand Water be placed under further on-going financial risk; the entity will be plunged into a debt crisis which will impact all municipalities currently serviced by Rand Water and curtail the ability to finance the construction and augmentation of bulk water infrastructure and to undertake adequate maintenance of its extensive network.

ALSO READ | Consumers urged to return various peanut butter brands to stores

“This would have dire consequences on the entire network, particularly Gauteng Province and other parts of the country that are serviced by Rand Water.”

Maroo added that Rand Water remains committed to serving its customers and ensuring long-term security of supply of potable bulk water.

“We implore the owing municipal customers to treat this matter with the utmost urgency,” she concluded.