The Mercury

Water tariffs must be equally applied

Umgeni Water cannot overcharge private firm

- Kailene.pillay@inl.co.za

A WATER service company, which provides supply within a municipali­ty, should not be charged higher tariffs purely because it’s a private entity.

This was the upshot of a recent judgment by the Supreme Court of Appeal (SCA), which found that private water services provider Sembcorp Siza Water, which operates in the iLembe district municipali­ty, in northern KwaZulu-Natal, should pay Umgeni Water the same tariffs that the entity charges other municipali­ties.

The court was dealing with an appeal brought by Umgeni Water after the high court had ruled in favour of Siza in a matter where it had objected to the 37.9% tariff increase that had been imposed on it three years ago. In the 2015/16 financial year, Umgeni Water, after obtaining approval from the minister of Water and Sanitation, imposed a tariff increase on the bulk water supply of 37.9% for Siza, a private entity, as opposed to an increase of 7.8% which it imposed on its other customers, all of which were municipali­ties.

Ruling on the matter, the Pietermari­tzburg High Court found there was no lawful basis for differenti­ating Siza from Umgeni Water’s municipal customers and, accordingl­y, upheld the review and set aside the tariff increase imposed on the company.

The SCA upheld the ruling and found no provision in the empowering legislatio­n justified this type of discrimina­tion between municipal and non-municipal water services providers, “more particular­ly when they are both performing a municipal function”.

“Penalising Siza for its ability to generate a profit through its efficiency would be irrational… it seems reasonably clear that Siza was targeted because it is a private entity,” the SCA judgment read.

Siza was appointed by the Dolphin Coast Transition­al Local Municipali­ty (DCLM), the predecesso­r to the iLembe municipali­ty.

In terms of its appointmen­t, Siza concluded an agreement with the municipali­ty to supply potable water and sanitation services to a portion of the DCLM’s region for a period of 30 years.

The area Siza supplies lies between the Tongaat River and the Umvoti River and incorporat­es the urban areas of Zimbali, Ballito, Umhlali, Shakaskraa­l, Chaka’s Rock, Salt Rock, Sheffield Beach and Tinley Manor. It also incorporat­es certain inland areas and informal settlement areas.

Outside the concession area, iLembe performs the function of a water services provider.

“Siza is thus performing the identical functions to those that iLembe would otherwise have to perform. If Siza stops supplying those water services, or the concession agreement is terminated, iLembe (which is also the guarantor) must supply the end-users with water it has obtained from Umgeni Water.

“Its (Siza) obligation­s are no different from those of the municipali­ties to which Umgeni Water supplies bulk water. It is against this background that the lawfulness of the differenti­al tariff imposed on Siza must be considered,” the SCA said.

The court also ruled that pending any further determinat­ion of tariffs for the supply of bulk water, Siza was ordered to pay for bulk water supplied to it by Umgeni Water at the same tariff as that at which Umgeni Water supplies bulk water to all other water services providers.

The court further ordered Umgeni Water and the minister of Water and Sanitation to pay the costs of the applicatio­n.

Spokespers­on for Umgeni Water Shami Harichunde­r said the water board received the judgment and its legal representa­tives were studying it. “The legal representa­tives will communicat­e with the leadership of Umgeni Water once this process has been completed. Based on the opinion expressed by the legal representa­tives, a decision will be taken on the next steps,” Harichunde­r said yesterday.

 ?? KAILENE PILLAY ??
KAILENE PILLAY

Newspapers in English

Newspapers from South Africa