Rand Water Faces Heavy Financial Losses from Unpaid Municipal Bills -

Africa’s largest provider of bulk water has been compelled to write off millions owed by municipalities that have failed to pay their bills.

Rand Water Services Pty Limited announced an impairment of R382.3 million for the fiscal year ending in June, as the net debt owed by the South African municipalities it serves surged by 12% to R4.4 billion, according to the company’s results released on Friday.

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Emfuleni, which hosts the country’s largest steel production facilities, had the highest outstanding debt, making up about a quarter of the total owed.

The inability of local municipalities to fulfill their payment obligations “poses a threat to the sustainability of water boards,” said Water Minister Pemmy Majodina, who is working with the finance and cooperative governance ministers to find solutions.

Recently, the National Treasury indicated plans to withhold funds from five councils in December due to outstanding water bills, aimed at forcing local governments to pay for essential services. Rand Water serves two of these councils – Merafong and Victor Khanye.

The South African government is grappling with a worsening water crisis primarily caused by years of insufficient investment and poor maintenance from local councils.

In October, Rand Water cautioned that the Gauteng province—home to Johannesburg and the capital Pretoria—might experience supply shortages unless cities quickly cut their water usage.

The decline of energy, transport, and water infrastructure under municipal management is seen as a major risk to the financial system, as noted by the central bank.

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Rand Water supplies water to around 18 million people across 17 municipalities and various industrial clients in four provinces.

Municipalities nationwide also owed R95.4 billion to the state-owned energy supplier Eskom by November, reflecting a 28% increase since the end of March, while Eskom has avoided power outages for nine months.

Energy Minister Kgosientsho Ramokgopa recently labeled the soaring debt as an “existential problem.”

Rand Water seeks to reduce its reliance on Eskom for power after experiencing a 19% rise in energy costs, as it strives to manage “runaway” expenditures. The company is exploring alternative energy sources, focusing on renewables such as solar and hydropower.

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