Rand Water Incurs Significant Financial Losses as Municipal Bills Remain Unpaid

Africa’s largest bulk-water provider has been forced to write off millions owed by municipalities that have not settled their bills.

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

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Emfuleni, home to the country’s largest steel production facilities, had the highest outstanding debt, accounting for about a quarter of the total amount due.

The failure of local municipalities to make payments “threatens the sustainability of water boards,” stated Water Minister Pemmy Majodina, who is coordinating with the ministers of finance and cooperative governance to identify solutions.

Last month, the National Treasury announced plans to withhold funds from five councils in December due to unpaid water bills, aimed at compelling local governments to pay for essential services. Rand Water provides services to two of these councils – Merafong and Victor Khanye.

The South African government is dealing with a deepening water crisis largely driven by years of inadequate investment and poor maintenance from local councils.

In October, Rand Water warned that the Gauteng province—home to Johannesburg and the capital Pretoria—might face supply shortages unless cities promptly reduced their water consumption.

The deterioration of energy, transport, and water infrastructure under municipal oversight is viewed as a significant risk to the financial system, as indicated by the central bank.

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Rand Water supplies water to approximately 18 million people across 17 municipalities and numerous industrial clients in four provinces.

Municipalities around the country also owed R95.4 billion to the state-owned power supplier Eskom by November, reflecting a 28% increase since the end of March, while Eskom has managed to avoid power outages for nine months.

Energy Minister Kgosientsho Ramokgopa recently described the rising debt as an “existential problem.”

Rand Water aims to lessen its dependence on Eskom for electricity after experiencing a 19% increase in power costs, as it works to control “runaway” expenses. The company is investigating alternative energy sources, with a focus on renewables such as solar and hydropower.

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