14/2/2024

A new water utility is envisaged by the National Water Resource Infrastructure Agency (NWRIA) Bill, now introduced to Parliament using Green Climate Funds, will bring life to the plan to replace South Africa’s decaying water infrastructure, says Minister of Water, David Mahlobo.

Minister of Water and Sanitation, David Mahlobo, was briefing the relevant parliamentary portfolio committee on the proposals contained in the NWRIA Bill that provides for the incorporation and establishment of the South African National Water Resources Infrastructure Agency SOC  Ltd.

The problem with the proposals so far, said  an opposition MP in committee debate,“It is  a repeat of the same old story where governement heads are disinclined to let the private sector into the mechanics of a scheme either to participate in or to  monitor what is happening.   The proposals cover a scheme to replace the old infrastructure  modern and and fully updated water system in the region of R7bn to meet constitutional requirements for all citizens, to quote Miniter Mahlobo.

After the money

The proposals call for a new water entity to administer the $235 million (R4.3 billion) nest egg from the Green Climate Fund.   Opposition MPs are objecting to any movement of funds until the Bill is approved and signed into law.   

These funds, Minister Mahlobo said in his briefing, would act as seed money to create a state water infrastructure fund six times that size, sufficient as a domestic fund  to solve a large part of SA’s growing water shortage. “This would be achieved primarily by increasing the reuse of water”, he said. 

The plan, to précis the Minister’s presentation, is to combine the department’s existing water trading entity with the Trans-Caledon Tunnel Authority (TCTA) and with other national water resource infrastructure units.  By creating a balance sheet to express this, the Minister said, it was hoped that there would be sufficient assets to meet investor requirements in terms collateral.

Premature

The opposition has objected to the plan for a new water utility saying that Mahlabo’s ministry and his department had “jumped the gun” by announcing such a move and  deployment of public funds before parliamentary approval.   Nic Myburgh angrily stated that the DA upfront had no intention of giving their support to such a Bill at this stage since the proposals “sounded like another attempt to create a new wasteful state utility and the wasting of a good water resource unit at the expense of the taxpayer.” 

Myburgh said everybody knew that there was little in the fiscus to guarantee such ventures and asked, for the record, if approval of Treasury had been sought and any guarantees?   He said it was public knowledge that the Minister of Finance had officially turned down the Minister Mahlabo’s request, so why was a Bill was being considered by Parliament with no public or private sector offerings in sight, he asked? 

Quiet start

Minister Mahlobo answered giving two examples of mining companies that had co-operated in building water projects as part of their employee housing projects but the discussion was then ruled out of order since it was not centered on the Bill under debate.  Myburgh refused to sit down and argued that the concept of the Bill was not of value since the proposed state entity was underwritten on the dubious basis of assets held by another parastatal.

The Minister said his department awaited the decision of Development Bank of Southern Africa (DBSA) that the R4.4 bn Green Climate Fund held by them would be the initial capital input for NWRI SOC Ltd  balance sheet before going to the market.

He then explained that the new agency would be a public entity, owned and controlled by the State, and intended to administer, finance with advisory services in respect of the national water resources infrastructure needed throughout the country.  Cabinet, he assured them, would have no line of direct communications.

Arm’s length

It should be borne in mind, Myburgh was told after he objected again, that the meeting was held to let the Minister propose his Bill, not to debate it at this stage.   Deputy Minister Mahlobo concluded by saying that NWRIA Bill before MPs did not replace or trump in any way the National Water Act but should be read in conjunction with other legislation.

“By introducing the NWRI SOC Ltd we are creating an entity to raise non-fiscus finance and it must have a substantial balance sheet.”   He said that the Bill  would be allowed by the Constitution.

Other views

Comment from the engineering and sanitary industry is that the Bill might work if the new water utility stays in a regulating authority role with the private entities in partnership with governmental institutions and at that level only.

The Bill now goes  for debate in February 2024 and will be monitored.

Patrick McLaughlin

editor