Ngwathe’s debt burden at Rand Water worries
Rand Water deeply concerned by escalating debt from municipalities
Eskom is not the only service provider with whom Ngwathe’s debt account is cause of conrcern. To date the Municipality owes Rand Water more than R61 million.
Rand Water is the water supplier for Heilbron, one of the Ngwathe towns.
The escalating debts caused by municipalities’ failure to honour their bulk water purchase agreements and debt settlement arrangements, concerns Rand Water deeply, and the situation highly destabilizes Rand Water’s financial position, posing a direct threat to its medium and long-term sustainability. As Rand Water operates without any form of allocation from the national fiscus it relies solely on funds collected from its customers, primarily municipalities.
Municipalities now owe Rand Water a cumulative amount of R4,1 billion, with R2, 9 billion relating to Gauteng municipalities, R1,2 billion from Mpumalanga municipalities, and Ngwathe being the only Free State municipality being in debt with Rand Water.
Rand Water says the payment patterns of municipalities have deteriorated to concerning levels that threaten the liquidity, financial performance, and sustainability of Rand Water. This despite relentless efforts to accommodate this ongoing pattern of non-payment through bilateral engagements and participation in Intergovernmental Relations forums, which have regrettably reached a stalemate.
The magnitude of the outstanding debt from municipalities has now reached a critical level, which has forced Rand Water to declare an intergovernmental financial dispute and seek intervention of National Treasury and Co-operative Governance and Traditional Affairs.
It has also requested the Minister of Finance and National Treasury’s assistance in curbing this escalating debt by withholding the aforementioned defaulting municipalities December 2023 equitable shares payout, until amicable agreement with a down payment to maintain cash inflow that will enable Rand Water to meet its short- and medium-term obligations.
Should Rand Water be placed under further on-going financial risk the entity will be plunged into a debt crisis which will impact all municipalities currently serviced by Rand Water and curtail the ability of Rand Water to finance the construction of bulk water infrastructure and to undertake adequate maintenance of its extensive network, was said in a statement by Rand Water on 8 December.
