Provincial government has ordered iLembe municipality to halt plans to extend the Siza Water concession agreement.

KZN Finance MEC Francois Rodgers said in an April letter that the proposed Section 116 (3) extension initiated by the iLembe council last year may be unlawful, irregular and open to legal challenge. He said the section only allows limited amendments to existing contracts and cannot be used to create a new long-term arrangement.

Rodgers said a Section 78 assessment must instead be implemented immediately, the legal necessity of which was reportedly communicated to the municipality on multiple occasions. The process requires public participation, financial assessments and market testing to determine whether services should be delivered internally or by an external provider.

iLembe municipal manager Sazi Mbhele proposed the Section 78 assessment to council in September last year, but it was unanimously rejected in favour of an extension.

The future of Siza Water’s 30-year concession contract, due to end on February 1, 2029, has long been a hot topic on the North Coast. Water service delivery in the concession area, which covers about 40 000 households between Ballito and Etete, has consistently rated at a higher level than in the remainder of the district, which is served directly by iLembe.

Widespread issues, including infrastructure failures, high water losses and illegal connections, have regularly plagued iLembe communities.

Dolphin Coast Residents and Ratepayers Association (Docrra) chairperson Deon Viljoen welcomed Rodgers’ letter, saying proper procurement processes must be followed.

“Any deviation from this advisory could place the public-private partnership in jeopardy. We cannot risk legal challenges on such a critical service,” said Viljoen, adding that Docrra will monitor the process closely.

iLembe DA caucus leader Krsna Sing acknowledged that his party has supported the Section 116 (3) extension, but criticised the municipality for poor planning.

iLembe District Municipality spokesperson Sipho Mkhize confirmed the municipality had received advisory support from provincial and national treasury regarding the Siza Water concession. He said councillors had been briefed through workshops supported by National Treasury’s GTAC unit, while council is still considering whether to undertake a Section 78 assessment and has yet to make a final decision on the concession.

Siza Water’s managing director Shyam Misra said they were not aware of any directives from the Province and that iLembe had not contacted them regarding a Section 78 process. However, he said they would support what is lawful and correct.