By Nkhensan Chauke
A parliamentary committee on Water and Sanitation has welcomed the National Treasury’s decision to withhold equitable share funding from five municipalities with a huge debts to water boards.
This follows Treasury’s announcement on Tuesday that municipalities failing to sign repayment agreements with water boards would not receive their equitable share instalments or conditional grants due that day.
On December 4, five municipalities owing billions of rands to three water boards face this sanction unless they formalize repayment agreements.
The municipalities of Matjhabeng, Kopanong, Thabazimbi, Merafong City and Victor Khanye are affected by the decision, according to the Treasury.
The decision stems from an agreement between Treasury and Water and Sanitation Minister Pemmy Majodina, who informed MPs that the measure aims to deter other municipalities from defaulting.
On Tuesday, the committee received a brief from the National Treasury, the Department of Water and Sanitation and the South African Local Government Association on solutions that were needed to overcome the enormous debt municipalities owe to the water boards.
“The measures by the National Treasury represent the necessary tough love needed to overcome the current challenges. We are hopeful that these measures should invoke the realisation of the need to pay for services to ensure the viability of not only the water boards, but the entire water value chain,” Leon Basson, the chairperson of the committee said.
Basson said the committee believes that the intended actions are measured and intended to achieve the greater good for the sector.
“By only releasing portions of the equitable share on conditions that the first portion of the equitable share on conditions that the first portion of the equitable share will be released with its own conditions. This could be the corrective measure needed to prevent Vaal Central and Magalies Water from bankruptcy,” Basson said
He added that the committee has always maintained the R23.7 billion owed to the water boards is unsustainable and presents a security and socio-economic risk to the country.
“The committee has called for tough measures to be taken against municipalities to stop the tide of accumulating debt,” he said
The committee has acknowledged the concerns raised by SALGA in relation to the funding model of the local sphere of government and the major effect of debt owed to municipalities.
“The committee highlighted the need for the adoption of a culture of payment of services across the board. In line with this, the committee encourages both municipalities and water boards to adopt robust debt collection mechanisms that will ensure sustainable cash flow management,’’he said
Furthermore, the committee has acknowledged that the measures are short term and it will be enabling private sector partnerships within the sector and allow for renegotiations for payments agreements between water boards and municipalities which require urgent action.
‘’At the centre of the current crisis is the unwillingness to pay for services rendered. Left unchecked, this culture will lead to the systematic collapse of the water value chain. These measures should help change this culture and ensure the viability of water boards and the sector as a whole,” Basson said.
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