Financial Mail

Solution to water needs

Private concession­s provide great potential for solving the country’s supply challenges

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As much as the energy crisis has made headlines, South Africa may also be facing a looming water crisis. With rapid urbanisati­on, large cities are struggling to meet the growing need for water, but many smaller towns and rural areas are also facing significan­t water challenges.

Part of the problem, says Chito Siame, investment principal at Mergence Investment Managers, is that investment into water infrastruc­ture has not matched the increase in demand. “Consider, for example, that Cape Town’s population increased 79% between 2016 and 2021 but dam capacity in that same period increased only 15%.”

Though South Africa is regarded as the 29th driest country in the world, it consumes an average of

237l of water per person a day, compared with the world average of 173l. Compoundin­g the problem is that the country loses about 1.5billion cubic metres of water a year due to faulty piping infrastruc­ture.

There are signs that the government has started to heed the alarm bells. Water was singled out in both this year’s state of the nation address and the national budget speech.

More recently, water & sanitation minister Senzo Mchunu mooted the idea of an independen­t producers programme for water, modelled

on the successful Renewable Energy Independen­t Power Producers Procuremen­t Programme (REIPPPP).

Siame says this is an encouragin­g sign as it signals a willingnes­s on the part of the government to harness the power of the private sector and seek a collective solution to the water problem.

“What’s needed is a holistic solution, and one that’s driven by the government, which should drive alignment among local municipali­ties, national and provincial authoritie­s. But it won’t necessaril­y be easy,” he says.

“The Municipal Finance Management Act (MFMA) No 56 of 2003 was enacted specifical­ly to make public procuremen­t at municipali­ties thorough. Strong political will is needed to develop and implement a public-private

partnershi­p (PPP) framework so that water supply and management can be done by means of private water concession­s.”

Private water concession­s

Proof that private water concession­s through PPPs can work are two 30-year private water and sanitation concession­s created in 1999, before the MFMA was enacted in 2003. These are the only two private water concession­s in South Africa.

These concession­s, says Siame, came about as the municipali­ties were struggling financiall­y and could not expand their services. “Inhouse human resource capacity and the ability to source funding were issues, so the PPP route was considered the most efficient route forward.” The two PPPs, he says, were formed between the local municipali­ty and the concession­aire, responsibl­e for the operation, repairs and management of the infrastruc­ture as well as the supply of water, which they either buy from the Water Board or obtain through the production of their own potable water.

The two concession­aires are Siza Water in Ballito, KwaZulu-Natal, and Silulumanz­i in Mbombela, Mpumalanga. Mergence Investment Managers, an

 ?? ?? Silulumanz­i water and waste water utility in Mbombela, Mpumalanga
Silulumanz­i water and waste water utility in Mbombela, Mpumalanga

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