Supreme Court pulls the plug on Umgeni Water

Dolphin Coast residents have been spared astronomical water tariff increases following a recent judgement by the Supreme Court of Appeal (SCA) which ruled that Sembcorp Siza Water should not be charged higher tariffs simply because it is a private entity.

Siza Water, which operates in the iLembe district municipality, objected to a 37.9 percent tariff increase Umgeni Water imposed on it three years ago.

According to court papers, during the 2015/16 financial year Umgeni Water, after obtaining approval from the minister of Water and Sanitation, imposed the 37.9 percent tariff increase on Siza Water as opposed to an increase of 7.8 percent for its other customers, all of which were municipalities.

The court was dealing with an appeal brought by Umgeni Water after the high court had ruled in favour of Siza.

The Pietermaritzburg High Court had earlier found there was no lawful basis for differentiating Siza from Umgeni Water’s municipal customers and, accordingly, upheld the review and set aside the tariff increase.

The SCA upheld the ruling and found no provision in the empowering legislation that justified this type of discrimination between municipal and non-municipal water service providers as they were both performing a municipal function.

The court said penalising Siza for its ability to generate a profit through its efficiency would be irrational and accused Umgeni Water of targeting Siza because it was a private entity.

Siza Water was appointed by the Dolphin Coast transitional local municipality in 1999 to supply and manage the provision of water and sanitation services within the municipal boundary for a period of 30 years.

The area Siza supplies lies between the Tongaat River and the Umvoti River and incorporates the urban areas of Zimbali, Ballito, Umhlali, Shakaskraal, Chaka’s Rock, Salt Rock, Sheffield Beach and Tinley Manor, plus some inland and informal settlement areas.

Outside the concession area, iLembe District Municipality is the water service provider.

“Siza is thus performing the identical functions to those that iLembe would otherwise have to perform. If Siza stops supplying those water services, or the concession agreement is terminated, iLembe who is also the guarantor, must supply the end-users with water it has obtained from Umgeni Water.

“Its obligations are no different from those of the municipalities to which Umgeni Water supplies bulk water. It is against this background that the lawfulness of the differential tariff imposed on Siza must be considered,” said the SCA.

Umgeni was ordered to pay costs.

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