Private sector can demonstrate the art of the possible in water supply

World Bank hails the contribution of expertise and finance to a financially weak municipality through a PPP

With the new Public Procurement Bill ready for parliament it is hoped — and expected — that publicprivate partnerships (PPPs) will receive a boost. PPPs are being deployed to assist in solving some of SA’s more intractable electricity and rail logistical constraints. With the right frameworks and management they can help boost the country’s economic performance.

Less discussed in the public sphere is the role of PPPs in water provision. Access to water is a basic human right. It is vital to health, dignity and opportunity. But in Southern Africa it is by no means guaranteed. Large and growing populations mean demand is high and steadily increasing, while climate change is increasing the severity of droughts and floods. Deteriorating public infrastructure means water supply is often inadequate, even when rainfall is abundant.

SA’s National Water & Sanitation Master Plan noted that in 2017 more than 3-million South Africans lacked access to a basic water supply service and 14.1-million people lacked access to safe sanitation. More than 50% of SA’s wetlands have been lost, and of those that remain 33% are in poor ecological condition. As a result the plan projects a 17% water deficit by 2030 if no action is taken. Water scarcity is a growing crisis that cannot be ignored.

Over the past decades there has been increasing pressure on listed and multinational companies to understand their environmental and social effect properly, to commit to sustainable operational and business practices, and to develop innovative models and initiatives in this regard.

Listed companies are aligned with global reporting requirements and frameworks such as the UN sustainable development goals, Task Force on Climate-Related Financial Disclosures, Carbon Disposal Project (CDP) disclosures and global International Organisation for Standardisation standards. These frameworks require rigorous monitoring and analysis.

By using data to understand our effect and the effect of resource scarcity and climate change, we can better understand our vulnerabilities and risks and implement pragmatic, results-driven models within appropriate time frames, all within rigorous governance and reporting frameworks. This is a powerful foundation for positive social effect.

As a result, the private sector, and mining companies in particular, have been able to make an extraordinary contribution to socioeconomic development in rural areas, including development related to ensuring efficient water re-use and adequate water supply.

Our operations at Impala Platinum (Implats), for example, addressed supply constraints in vulnerable host communities through big infrastructure projects, and we continue to focus on alleviating water shortages. We work with municipalities and schools to improve water conservation and climate-change awareness. We assist with strategic regional planning and local service provision, and work with local stakeholders to address immediate needs and ensure bulk infrastructure is maintained and longterm planning is in place.

At the same time, we work to improve our internal water use. Our goal is to achieve 70% water recycling and re-use by 2030, and we have improved our performance to 53% from 41% over the past five years, earning an A rating from the CDP Water Disclosure Project.

We believe the private sector can and must lead the way in demonstrating the art of the possible in terms of sustainable water use. But the scale of the challenge is too great for it to be solved by business alone. We believe the answer to sustainable access to water lies in strategic PPPs.

The private sector and parastatals can offer resources — principally expertise and funding — that governments are otherwise unable to obtain, and governments can help apply these resources at scale. Such strategic partnerships address infrastructure problems — and do so to the benefit of all stakeholders.

Alongside other commercial water users Implats is part of two PPPs — the Olifants Management Model and the Rustenburg Water Services Trust — which illustrate the potential of these models to support the development of effective, long-term water infrastructure.

Rustenburg Municipality, in a water-stressed part of the country, faced the dual challenge of increased water demand from domestic and industrial sources and deteriorating wastewater treatment capacity. Public finances could not meet investment needs, which led to an engagement with local mining companies, including Implats. The municipality and mining companies established the Rustenburg Water Services Trust to finance and operate new water infrastructure.

The trust takes an innovative approach to blended finance. It secures ring-fenced revenues from municipal bulk water sales and an offtake agreement with local mines. This revenue security enabled commercial finance to be accessed at favourable terms. The public sector played a big role in structuring a transaction that addressed critical water resource needs.

This strategic partnership has realised several benefits: secured supplies for mining, increased freshwater availability, and improvements in downstream water quality through better wastewater treatment. The partnership inspired a World Bank case study, which concluded: “The Rustenburg case proves that relatively small and financially weak municipalities can raise significant funding through well-structured projects with strong revenue streams from private sources,” and that “there is high potential for replication in areas where industry has a stake in improving outcomes”.

Efforts to adequately address the water needs of the middle Olifants River catchment area in Limpopo have been inadequate since they were conceptualised in the late 1990s. This has resulted in chronic water scarcity and an associated increase in social unrest. Water infrastructure has been vandalised and mining operations disrupted.

To address these pressing social and commercial challenges the government and a consortium of commercial water users, including our Marula mine, agreed to collaborate by entering a joint venture arrangement to construct and manage bulk water infrastructure. This arrangement, termed the Olifants Management Model, was launched in 2022 and will accelerate the delivery of raw and potable water in the region, creating employment opportunities and ensuring security of water supply for the Marula operation and its host communities.

The water security crisis requires effective action today. Only through collaborative efforts and sustained commitment can we ensure access to this human right and secure a better future.

The challenges underlying water scarcity in Southern Africa — constrained public purses, struggling infrastructure, climate-related risk and ever-increasing need — are familiar. PPPs represent a powerful tool to tackle these challenges, and where their success has been demonstrated they should be championed, embraced and scaled.