Could Newcastle face its own Day Zero?

uThukela Water, and with it Newcastle’s bulk water supply, is in grave danger.

Non-payment by two of three shareholder municipalities, extremely low water tariffs, ‘band-aid’ maintenance and lack of new infrastructure, means catastrophic failure of the water network is a terrifying reality.

Chairman of the Board, Dan Naidoo said surviving this long was a miracle.

During his Chairman’s Address, at uThukela Water’s Annual General Meeting for the period 2017 to 2018, Naidoo laid bare the dire situation the entity – and those reliant on its services – faces.

“The bulk main lines are the lifeblood of Newcastle and this is currently an unfunded mandate. The risk here is extremely high.”

Naidoo began the address with his assurances that bulk water services were still in good hands, complimenting the skilled work force and uThukela Water’s compliance with municipal and government regulations on water quality.

Soon however, it became clear the negatives outweighed the positives.

The biggest risk at this stage, Naidoo explained, was in terms of there being no significant capital expenditure into bulk water infrastructure.

This is due to a lack of an approved annual capital budget.

“We have a clear map of what must be done, but the costs are astronomical. We are all aware of the situation, but we are not building new infrastructure, and instead band-aiding it.”

Naidoo stated uThukela Water had been brought up to best business practices, with good audit plans and strategies in place and strong internal policies. Its maintenance team has done ‘exceptional work, despite challenges’.

One of the major factors contributing to the looming water crisis, Naidoo added, was the region bearing the lowest raw water cost (R3, 05) in KwaZulu-Natal.

He said this was in fact detrimental to sustainable water services.

“We understand consumers are being stretched thin, but we have to decide if we live with or without water,” he stated frankly.

Perhaps the most frightening factor rests with bulk water lines. Naidoo said despite earmarked grand funding from the Department of Water and Sanitation, no money was yet available for replacement of the failing Ntshingwayo bulk concrete water main line.

This places bulk water supply to Newcastle directly in harm’s way.

Funding is also being sought for the Hilldrop and Braakfontein lines, and is even more pressing considering the area moves into an El Niño phase in the next year or so.

“We have managed scarce resources well and try to act in the best interests of the people.”

In conclusion, Naidoo elaborated on the three water paradigms – economics, management and engineering, to ensure water was utilised fully.

“Even storm water needs to be utilised – every drop counts.”

During his address, Acting Managing Director, Luiz Cunha chose to provide highlights for the entity, instead of elaborating on each point he made.

Cunha noted the following:

• uThukela Water is doing the basics right: the entity prides itself on providing water of the highest quality to the Water Services Authorities (WSA) it serves, and the water is among the cleanest in South Africa.
• uThukela Water also boasts among the lowest percentage of water losses from its network, at around eight per cent.

On the other hand, Cunha said not having a master plan to work from was a major challenge, and called it foolhardy to charge tariffs less than half of elsewhere in the country.

He urged the WSAs to be strong enough to affect necessary change.

“The planning stage is exhausted – it’s time to implement now.”

The financial portion of the presentation was made by Acting Chief Financial Officer, Farida Moola, who gave the salient points of uThukela Water’s Annual Financial Statements.

Moola noted the following:

• Net asset value decreased from the previous financial year; minimal capital investment and no approved budget resulted in severe constraints.
• uThukela Water currently receives no support from Government grants, which means its asset needs are not fully met.
• Cash and equivalents can only sustain operations for approximately two and a half months, which is not helped by late or non-existent payments from WSAs.
• The above point also led to a huge increase in debtors, of 88 per cent. Moola said in a business where payment was relied upon, the shortfall had a significant impact on uThukela Water’s operations.
• Despite these problems, uThukela Water remains debt-free and has no external borrowings or bank overdrafts due.
• Provision for repairs and maintenance is far below the norm, of an eight per cent minimum.

ALSO READ: uThukela Water takes stock of the past year

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Email: Reveshni Douglas (Editor) at reveshni@caxton.co.za

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