Africa’s biggest bulk-water supplier has had to write off millions owed by municipalities that have failed to pay their bills.
Rand Water Services Pty Limited booked an impairment of R382.3 million rand in the year to end-June as net debt owed by the South African municipalities it serves climbed 12% to R4.4 billion rand, the Johannesburg-based company said in results published Friday.
Emfuleni — home to the nation’s biggest steelmaking operations — owed the most, about a quarter of the amount outstanding.
Non-payment by local municipalities “poses a threat to the sustainability of water boards,” Water Minister Pemmy Majodina said, adding that she’s working with the ministers of finance and cooperative governance to find solutions.
The National Treasury last month said it plans to withhold funds from five councils in December over unpaid water bills as part of efforts to compel local governments to pay for basic services. Rand Water supplies two of them — Merafong and Victor Khanye.
South Africa’s government is grappling with a worsening water crisis mainly caused by decades of underinvestment and poor maintenance by town and city councils.
Rand Water warned in October that Gauteng province — the nation’s commercial hub that includes Johannesburg and the capital, Pretoria — may run out of supply unless the cities didn’t immediately curb consumption.
The decline in energy, transport and water infrastructure that municipalities have overseen are a significant threat to the financial system, according to the central bank.
Rand Water supplies about 18 million people through 17 municipalities and hundreds of industrial customers in four provinces.
Municipalities nationwide also owed state-owned power utility Eskom — which has managed to avoid rolling blackouts for nine months — R95.4 billion by November, 28% more than what was outstanding at the end of March.
Energy Minister Kgosientsho Ramokgopa last week labelled the debt an “existential problem”.
Rand Water wants to reduce its reliance on Eskom for electricity after power costs surged 19% and it works to curb “runaway” expenses.
It is exploring alternative energy sources, focusing on renewables like solar and hydropower, it said.
BLOOMBERG