There are growing investment opportunities in the water sector in South Africa, especially when taking into account that we will need 63 billion cubic metres of water a year by 2030. At the moment, we have only 38 billion cubic metres available, says local water expert Dr Anthony Turton, as parts of the country begin to recover from the worst drought in living memory.
It will cost about R700 billion to refurbish our current water infrastructure and, due to ratings downgrades, government institutions might find it difficult to raise capital on the bond market for big projects.
The decision makers in boardrooms are further realising that they can no longer regard water as a “given resource” that government will provide in abundance, so they are becoming more open to new approaches, says Turton.
One example is the offtake agreement between Durban south sewage works in Amanzimtoti, a paper mill and a local oil refinery. The mill and the refinery are buying treated sewage water – which costs less than potable water – for their industrial processes. Before this agreement was reached, the treated water was discharged into the ocean.
Turton also believes that the mining sector, especially coal mines, can become “producers rather than polluters” of water as part of their processes of dewatering their operations.
According to Turton, current legislation and regulations limit business opportunities because the resource has been nationalised by the Water Act of 1998 with no official commercial value. He advises investors to make sure a secure offtake agreement is in place, and to internalise the risk associated with having to renew water licences every five years.