Ramaphosa announces new state-owned company to be up and running next year

President Cyril Ramaphosa says a new state-owned enterprise (SOE) for water is expected be operational in 2026.

Speaking at the National Water and Sanitation Indaba, the president said that the hope is to finalise the establishment of the National Water Resource Infrastructure Agency (NWRIA) in the coming year.

This will be “one of the most significant reforms coming to the sector to date,” he said.

“This new agency will bring strategic alignment, consistency and accountability to the various institutional arrangements for water stewardship that have to date proven to be less than ideal.”

In March 2024, Parliament passed the National Water Resources Infrastructure SOC (state-owned company) Bill, which was then assented to in August of the same year.

The bill establishes the NWRIA as a key public entity and a state-owned company.

Both the President and the Minister of Water and Sanitation, Pemmy Majodina, said the current system, marked by fragmented responsibilities across various entities, has failed to attract the investment needed to tackle the crisis.

Majodina initially said that the establishment of the SOE was expected to be complete by May 2025. However, Ramaphosa indicated that 2026 is more realistic.

Although access to piped water has increased, water supply in South Africa is frequently disrupted due to inadequate infrastructure investment, corruption, illegal connections, water scarcity, climate change, and systemic inefficiencies.

Recent reports by the Department of Water and Sanitation (DWS) — including the Green, Blue, and No Drop Reports – show that at a countrywide average:

• 51% of water has poor to bad microbiological quality,
• Non-revenue water losses sits at 47.4%,
• 40.8% is lost due to leaks or unaccounted for, and
• 67.6% of wastewater treatment plants fail to properly process sewage.

Reports vary, but the cost of revenue loss due to unaccounted-for water is estimated to be more than R16 billion annually.

This was evident when BusinessTech recently travelled across cities and towns in the North West, Free State, and the Northern Cape.

Residents and businesses consistently cited issues related to water and sanitation as the most dire issues.

Ramaphosa stated that the new legislation forms part of broader water sector reforms.

The Act aims to consolidate responsibilities under a single body to enhance critical water infrastructure projects’ planning, implementation, and funding.

Its key objectives include ensuring a sustainable and equitable water supply, improving water quality, boosting infrastructure investment, reducing management fragmentation, and attracting private-sector funding.

The NWRIA will implement water projects identified by the Department of Water and Sanitation (DWS) and collect water usage charges to fund operations and infrastructure.

Ramaphosa stressed that ageing infrastructure, vandalism, illegal connections, organised crime, financial mismanagement, and high water losses have severely undermined service delivery and deterred private investment in water infrastructure.

To strengthen its financial base, the NWRIA will take over the Trans-Caledon Tunnel Authority’s (TCTA) commercial operations, gaining assets to better leverage funding.

The TCTA, a state-owned entity, has struggled with insufficient assets to secure large-scale project funding—an issue the Act seeks to address.

Additionally, Ramaphosa underscored the importance of regulatory reform, including the Water Services Amendment Bill, which introduces a licensing system for water service providers and revokes licenses if standards for drinking water quality are not met.

Mixed reactions to the NWRIA

There has been a large debate about the establishment of a new water SOE.

Legal experts at Webber Wentzel, Calvin Nchabeleng and Makgati Makgatho said, “the Bill creates an opportunity for the national government to address issues relating to water security outside of South Africa’s constrained fiscal environment.” 

Visiting Professor at the Wits School of Governance Mike Muller previously wrote that this new arrangement could ensure that the needed funds are properly applied.

“This will avert the kind of problems that resulted when billions of rands meant for operation, maintenance and loan repayments were irregularly diverted by a previous Minister of Water and Sanitation for a spurious ‘War on Leaks’ project that never fixed a single leak,” said Muller.

Meanwhile, others worry about adding another state-owned enterprise, given the notorious performance of some of the existing ones.

Dr Ferrial Adam, executive manager of the water rights advocacy group WaterCAN, previously expressed her concern with BusinessTech.

“The one confusing thing for me is I believe one of the other objectives is to ensure sustainable and equitable supply – but isn’t that already an objective of the department?”

She underscored the importance of transparency and accountability, cautioning that “SOEs can and have become breeding grounds for corruption if mismanaged.”

Establishing the agency will require a significant financial commitment, prompting an appeal for private sector involvement.

In response, Adam highlighted the need for clarity on the proposed funding model and raised concerns about whether such a partnership signals a potential shift toward privatisation—a move that has proven globally not always to enhance accessibility or affordability.

Experts, however, argue that the success of the NWRIA will depend on several critical factors:

• Appointing a capable and independent board of directors;
• Engaging effectively with local communities;
• Tackling longstanding issues of corruption and mismanagement in the water sector.

Experts warn that Without these safeguards, the agency risks becoming another SOE plagued by corruption and inefficiency.