BUSINESS DAY LIVE: Scores of municipalities drag R2.8bn in debt into the new year

Sixty-one local municipalities and four metros have carried their collective debt of more than R2.8bn — owed to nine water boards — into the new year. This has prompted the National Treasury into threatening to withhold the defaulting councils’ equitable share allocations.

Water and Sanitation Minister Nomvula Mokonyane said in a written parliamentary response that Sedibeng Water was owed more than R1.9bn for services provided to municipalities in the North West, Free State and the Northern Cape. Only the Western Cape does not have defaulting municipalities. More than R768m was owed to Rand Water by municipalities including Midvaal Local Municipality in Gauteng, Bushbuckridge Local Municipality in Mpumalanga, Royal Bafokeng Local Municipality in North West and Emfuleni Local Municipality in Gauteng.

The settling of these accounts is likely to rank high up on newly appointed Co-operative Governance and Traditional Affairs Minister Des van Rooyen’s to-do list. Mr Van Rooyen must also look into municipalities’ huge and persistent electricity debt to Eskom. While Rand Water, as a government body, cannot threaten to completely withhold service to municipalities, last year the service provider said it would be forced to reduce supply if demand increased to unmanageable levels.

National Treasury spokeswoman Phumza Macanda has said water meters would be installed in municipalities struggling to pay water boards for services. This would help verify invoices and assist in assessing each council’s water consumption. Tahir Sema, spokesman for South African Local Government Association (Salga) CEO Xolile George, said the association would continue to seek common ground between indebted municipalities and their service providers.

He said Salga would discuss this with Mr Van Rooyen soon. "Salga will meet in the first quarter of this year with water boards and municipalities to further the progress ongoing talks have made on outstanding debt… We will also be briefing in the first quarter of this year the newly appointed minister to bring him up to speed with the progress the talks have made thus far," he said.

Water and Sanitation spokesman Sputnik Ratau said the department was aware that many of the municipalities which owed water boards lacked the capacity to generate revenue as well as critical financial management skills. This made it harder for councils to address weaknesses in financial management, he said.

"The department believes that the payment plans put in place last year must be given the time and space to yield the desired results. The minister has spoken to provincial government leaders to say each province must have a water and sanitation plan and budget. Beyond that, and the adoption of government’s Back To Basics framework, we are sure what is built on these principles will bear results." Read more here