New state-owned company for water in South Africa coming in 2025

 ·17 Jul 2024

South Africa is heading towards the formation of a state-owned enterprise (SOE) for water which is expected to be established in the first half of 2025 – with some skeptical about its promised effectiveness.

In March 2024, Parliament passed the consequential National Water Resources Infrastructure SOC (state-owned company) Bill.

Broadly, the bill aims to create the South African National Water Resources Infrastructure Agency (NWRIA) as a significant public entity and state-owned company.

The main mandates of the NWRIA are said to: 

  • Implement water resource management infrastructure as identified by the department’s water resources planning processes;
  • Manage national water resources infrastructure;
  • Generate and collect revenue from the sale of water as its primary source of income, and
  • Raise commercial funding on the strength of its balance sheet and operational cash flows (actual and projected) for commercially viable projects.

According to the Department of Water and Sanitation (DWS), the sweeping reforms are intended to attract private investment, enforce accountability for non-performance, and remedy a crisis that has caused outages and poor water quality across areas nationwide.

Across South Africa, recent reports from the DWS reveal widespread challenges for the critical resource, showing that at a national average:

  • 46% of drinking water systems fail to meet microbiological standards;
  • 67.6% of wastewater treatments inadequately process sewage and other wastes;
  • 40.8% of water is lost due to leaks or remains unaccounted for.

This shows that some water supply authorities nationwide are struggling to meet their mandates.

“Amid water service delivery pressures in some parts of the country, this new agency is envisioned to help create a reliable water supply in the country,” said Parliament after the bill was passed.

However, “isn’t that already an objective of the department?” questioned Dr. Ferrial Adam, executive manager of water rights advocacy group WaterCAN.

Regardless, during the transition from the sixth administration to the seventh, there was uncertainty about whether these plans to create a water agency would materialise in the new administration.

However, the appointment of Pemmy Majodina as DWS minister indicates that these plans are still very much alive, with the minister “expecting [the bill] to be signed by the President shortly.”

In her first budget speech for the DWS in Parliament on 12 July, Majodina said “the establishment of the agency will be one of the major focus areas of the Department over the coming year.”

According to Majodina, there are currently around R135 billion of national water resource infrastructure projects, which are largely funded by raising money from the financial markets, banks, pension funds and development finance institutions. 

Most of this is raised by DWS’s entity, the Trans Caledon Tunnel Authority (TCTA), based on guarantees from the National Treasury, however the value of guarantees is said to be limited.

“It is for this reason that we are establishing the National Water Resource Infrastructure Agency, which will own all the national water resource infrastructure assets and obtain the revenue streams associated with those assets,” said Majodina.

“This will enable the Agency to borrow additional funds on the strength of its balance sheet,” she added. 

The National Water Infrastructure Agency will inherit all water resource assets and relevant staff from the Department.

Additionally, the TCTA and the Department’s Water Trading Entity, responsible for water sales revenue to Water Boards, will be consolidated into this agency.

The minister expects to complete the establishment of the agency by May 2025.

Water and Sanitation minister overseeing the establishment of the agency, Pemmy Majodina. Photo: Parliament

While government is largely upbeat about the establishment of the NWRIA, others are skeptical about the new grand plan for country’s water.

“It is always a concern adding an additional state-owned enterprise (SOE) given the state of our SOEs in the country,” said Adam.

The water justice activist questioned whether this is rather just a deflection from existing challenges which should already be addressed by the department.

“In South Africa when there is a problem – we either have a commission or now establish an SOE,” said Adam, adding that its effectiveness “really depends on who manages it and the transparent and open manner in which it operates.”

“SOEs can feed corruption if not done properly,” added the expert.

Adam said that the challenge, however, is not about the SOE within itself , but about the department being able to ensure that projects and various actions are rolled out efficiently and effectively.

“A focus on getting our infrastructure up to speed is of course what is needed [but it all] depends on how this will work to by-pass some of the challenges at a local government level,” said Adam.

Previously, Adam has said that the key interventions for water need to focus on:

  • Infrastructure repair and upgrades;
  • Identifying and fixing leaks;
  • Ensuring an adequate budget for infrastructure maintenance;
  • Renewal and extension;
  • Addressing vandalism;
  • Improve access to clean drinking water.

Adam highlights that the establishment of the agency requires quite an injection of funds and hence the call to the private sector.

However, “the funding model must be made clearer,” she said.

“The close partnership with the private sector and the call for funds from private sector of course raises the question on the direction of our water services and if we are heading towards privatisation – which globally has proven may not always be the best direction for accessibility and affordability,” added Adam.


Read: South Africa’s water crisis – experts warn about ‘futile fixes’

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