New prepaid water system to be trialled in South Africa

Government plans to trial a new prepaid metre system across the country in an effort to cut down on municipal water debt.

The recommendation has been made by an inter-ministerial task team (IMTT) which was established in 2017 to deal with municipalities’ non-payment for electricity and water.

The IMTT said that four municipalities have currently been selected for this pilot including:

  • Maluti-a-Phofung (Free State);
  • Thabazimbi (Limpopo);
  • Naledi (North West);
  • Govan Mbeki (Mpumalanga).

The IMTT said that the pilot projects will deal with proof of concept, standardisation of the technology, systems, processes structure, and policies in the prepaid rollout.

It added that an implementation plan has been developed and presented and that financing options are being explored to fund the pilot.

The IMTT said that these prepaid smart meters have the potential to alleviate the growing water debt problem through:

  • Cashflow improvement;
  • Smart systems (intelligence) to manage the network;
  • Reduction of water losses; and
  • Addressing the culture of non-payment.

The IMTT did not provide any information as to when the pilot project will start or provide an estimate of how much it may cost.


Debt

As part of the same presentation, the Department of Corporate Governance highlighted that municipal water debt has been increasing at an alarming rate with just under R15 billion owed as at the end of September 2019.

This is an increase of R1.8 billion compared to the same period in 2018.

Some of the challenges mentioned by municipalities with regard to the inability to service the debt are:

  • The culture of non-payment by consumers to municipalities effects and results (in) the inability of municipalities to service their creditors (Eskom and water boards);
  • Lack of critical skills e.g. financial and technical people;
  • The tariff deficiencies in municipalities which results in low revenue generated from electricity business;
  • Revenue losses as a result of the network (ageing infrastructure) and theft.

The below table shows a summary of debt owed by municipalities as of 30 September 2019.

Area Debt as of 30 September 2018 Debt as of 30 September 2019 Percentage difference (%) ‘Narrative’
Amatola R238 622 000 R249 946 000 -8% Some payments
Bloem Water R931 295 000 R839 744 000 -10% Some payments
Lepelle Northern Water R417 351 000 R581 949 000 +39% Slow payments
Magalies Water R123 958 000 R152 105 000 +23% Slow/non-payments
Mhlathuze Water R26 973 000 R50 085 000 +86% Slow/non-payments
Overberg Water R5 767 000 R3 067 000 -47% Payments made
Sedibeng Water R3 337 277 000 R4 152 192 000 +24% Slow/non-payments
Rand Water R3 041 471 000 R2 663 534 000 -12% Some payments
Umgeni Water R447 680 000 R765 912 000 +71% Slow/non-payments
Water Trading Entity R4 543 502 000 R5 495 367 000 +21% Slow/non-payments
Total R13 113 897 000 R14 923 558 000 +14%

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New prepaid water system to be trialled in South Africa