New Minister proposes creating a state-owned water company
To address the country’s deteriorating water infrastructure, a new state-owned water company could start operating as soon as 2025.
After years of deteriorating water infrastructure, a state-owned water company could be operational by 2025, according to Business Tech.
Although, experts are skeptical about its effectiveness, in light of the poor track record of traditionally corrupt SOEs in South Africa like Eskom and Transnet.
Earlier this year, in March 2024, a bill to form the National Water Resources Infrastructure Agency (NWRIA) was passed in Parliament. The goals thereof are to see sweeping reforms in the sector, attract private investment, enforce accountability for non-performance, and remedy outages and poor water quality.
Moreover, the main mandates of the state-owned NWRIA will be to:
- Implement water resource management infrastructure.
- Manage national water resources.
- Generate and collect revenue from the sale of water as its primary source of income.
- Raise commercial funding for commercially viable projects.
WHAT OF A STATE-OWNED WATER COMPANY?
According to department reports, there are widespread challenges facing South Africa’s water infrastructure:
- 46% of drinking water fails microbiological standards.
- 67.6% of wastewater treatment of sewage is inadequate.
- 40.8% of water is being lost due to system leaks.
However, as government transitions into its seventh administration and new Minister and former ANC Chief Whip, Pemmy Majodina, takes over control, there is renewed uncertainty over the viability of a state-owned water company. Speaking in parliament for the first time, Majodina said there are currently R135-billion worth of national water resource infrastructure projects on going. These are largely funded by financial markets, banks, pension funds and development finance institutions, based on guarantees from the National Treasury.
SOURCE ADDITIONAL FUNDING
“It is for this reason that we are establishing the National Water Resource Infrastructure Agency (NWRIA). It will own all the national water resource infrastructure assets and obtain the revenue streams associated with those assets. This will enable the agency to borrow additional funds on the strength of its balance sheet,” said Majodina.
Therefore, if it goes ahead, the state-owned water company will inherit all water resource assets and relevant staff from each department. Additionally, the Department’s Water Trading Entity, responsible for water sales revenue to Water Boards, will be consolidated into the agency, too. The question remains: What could possibly go wrong with another SOE?