Dr Sean Phillips, Director-General of the Department of Water and Sanitation (DWS)

A decades-long decline in South Africa’s ability to provide a reliable supply of clean drinking water and create a functional sanitation system is coming to an end.

This was the message from Dr Sean Phillips, Director-General of the Department of Water and Sanitation (DWS), and other speakers at a networking forum hosted by Nedbank and the NEPAD Business Foundation (NBF) in Johannesburg.

According to Phillips, a series of interventions could reverse a trend that has seen water quality decline, municipalities failing to maintain infrastructure, water boards becoming insolvent, and infrastructure projects being delayed.

Thiago Almeida, Divisional Executive at Nedbank CIB, said South Africa could quickly resolve its water and sanitation crisis. ‘We are agnostic as to whether it’s done by the public sector or the private sector, but we are very conscious of the fact that there needs to be private sector participation for speed of rollout,’ he said.

‘There is something of the order of R30 billion of investments needed annually, not just to get the sector to where it needs to be but also to maintain it at an adequate level,’ Almeida said.

According to Phillips, the creation of the National Water Resource Infrastructure Agency (NWRIA), which is before parliament, would help merge the following:

• The Trans-Caledon Tunnel Authority (TCTA), which raises finance on the markets for infrastructure projects.
• The Water Trading Entity (WTE), which collects revenue from water sales.
• The DWS infrastructure branch, which maintains and operates the national water system.

“The main reason for doing this is to create an entity which can raise finance on the markets more effectively than the TCTA,” said Phillips. Phillips stressed that privatising water is not on the agenda of government, but that government wants to see much higher levels of private sector financing of water and increased involvement of private sector skills in the management of water services.

Phillips said that amendments to the Water Services Act would tackle widespread municipal dysfunction, and the involvement of the private sector would be key to supporting municipalities. ‘The private sector, particularly the banks and the pension funds, are keen to invest there. And there are private sector companies which have the skills and are also keen to get involved.’

The water services sector would also benefit from the new Water Partnership Office, led by Johann Lübbe, which will support municipalities and water boards in developing bankable projects.

On 20 October, Lübbe told delegates at the networking forum that his office was busy developing a toolkit for the creation, preparation, and structuring of projects within various subsectors in the water services value chain. ‘All our programmes and initiatives are aimed at creating opportunities for the private sector to support government with the provision of water services,’ he said.

Shyam Misra, managing director of South African Water Works (SAWW), said his company had proved in Ballito and Mbombela that the private sector can provide a reliable water supply.

A subsidiary of SAWW, Siza Water, has a 30-year concession on the Dolphin Coast and shares its profits with the Ilembe District Municipality, since achieving the required real return per the concession contract. ‘The contract is designed to attract the private sector to partner with municipality, bring in the expertise, skill the staff and through operating efficiency to achieve the return to shareholders. In striving to achieve the contractual return, there is an incentive to both the parties to benefit from the efficiency via the profit-sharing mechanism.

‘We are manging the primary resource for growth and development, and the ripple effect of efficient and stable water services is phenomenal for the whole economy.’

Almeida said the raft of changes being driven by DWS will create momentum to help stimulate bankable opportunities. ‘From Nedbank’s perspective, we can come up with different ways of funding these projects, but the challenge is ensuring there are frameworks in place and there’s competency on the side of the partnerships that are doing to be receiving these funds,’ he said.

The CEO of NEPAD Business Foundation, Peter Varndell, who chaired the panel discussion at the forum, said it would be important to support Phillips in troubleshooting and driving his agenda. ‘Then we need to align on a message, so people are aware of the issue and the role that every single person in the country needs to play in solving the water issue by reducing demand and paying their bills.’

ENDS