8 - 9 APRIL 2OO2

1. Background

A multi-party delegation of the Committee undertook a study visit to Mpumalanga for a first-hand account of water and sanitation delivery service.

2. Purpose of trip

To get a clearer picture on the conflicting reports on the public/private partnership.
b. To monitor progress on the provision of free basic water supply and any other matter related to water services.

3. Delegation

a. Ms B P Sonjica; ANC - Leader of delegation
b. Mr J F van Wyk; ANC,
c. Mr D Maimane; ANG,
d. Mr C B D Mcintosh; DP,
e. Mr Ms M Sibiya; IFP
f. Mr S Simmon; NNP
g. Kgoshi L Mothiba; UDM,
h. Mr A B Myeni; Committee Secretary. Mi A Kruger; DWAF
j. Mr R Mbambo; DWAF.

4. Places visited

a. MEG Local Government Administration
b. MborTlbela Local Municipality
c. Bi-Water
d. Bushbuckridge Water Board
e. Umjindi Local Municipality
f Thaba Chweu Local Municipality
g. Ehlanzeni District Municipality
h. Eastvaal District Municipality
I. Nkangala District Municipality
j. Nkomazi Sanitation Committee
k. Driekoppies Water Project
I. South African Municipal Workers'
Union (SAMWU).
5. Findings

5.1 Nelspruit Public-Private Partnership
The delegation was briefed by the MEG for Local Government,

Mbombela Local Municipality, Bi-water on this issue. SAMWU was also present at all these briefings.

a. Background

In April 1999 the Nelspruit TLC signed a thirty-year contract with the Greater Nelspruit Utility Company (GNUC), a private company owned by British water operator, Biwater, and a local black empowerment firm, Sivulule Investment. In terms of the contract, which represents by far the largest and most sophisticated municipal public-private partnership ever concluded in South Africa, over P1 ,4 billion in investment in the Nelspruit area will be made available. The concession was driven by population changes in 1994, when the boundaries of the municipality were expanded to include areas previously managed by the "self governing state" of Kangwane. The population increased ten times (24,000 to 240,000), the area of jurisdiction by eight times, but the total income of the jurisdiction area increased by only 37 percent.

The municipality concluded that a public-private partnership represented the only alternative with a reasonable investment needed.

After demarcation of municipalities and the 2000 local government
elections, Nelspruit became part of the Mbombela Local Municipalty.
GNUC is only responsible for the concession-area, while the council and
DWAF supply services outside the concession area.
b. Main Objectives

The council decided on a public-private partnership because they did not have the resources to address the huge backlog in service delivery The main objectives of the concession are to maintain existing projects and to address backlogs in infrastructures and service delivery.

c. Tariffs

Tariffs are determined beforehand, with normal annual tariff increases. The council still regulates tariffs and all tariff increases take place in terms of the concession. It is claimed that the tariffs in the concession area are the fourth lowest in the country, and that water in the White Piver area outside the concession area is more expensive than in the concession area.

d. Influence on free basic water

The concession had to be adjusted to make provision for cross subsidization. Tariff increases mostly affected larger water users, while

the tariffs of smaller water users were not increased. Free basic water initially led to a decline in payment culture, because of certain misunderstandings.

e. Employment

The company took over the staff of the council in the water sector. It is claimed that the concession did not lead to any job losses, but the number of directly employed increased from 1 58 to 220. Temporary jobs for 1250 workers were created. Local contractors are using 30 percent black empowerment economic empowerment component.

f. Challenges

i. The rate of payment is still very low, mostly because of poor communication systems.
ii. Illegal connections and water wastage through leakages.
iii. Some areas are still without water, and while there is non-payment of services in areas with water meters, not all areas have a 24-hour water supply.
iv. New demarcation covers a larger area than the concession area.
vi. Uncertainty about the powers and functions of category B and C municipalities.
vii. The trade unions were against the partnership but it was mostly based on general opposition against privitazation and not so much specific problems with the project.
viii. The project received a lot of negative publicity with complaints mostly from outside concession area.
ix. Vandalisation of water meters.
x. Strong opposition from certain political groupings within the community, claiming lack of consultation and high water tariffs.

g. Success/Progress

· More than P40 million has already been spent mostly for infrastructure development outside Nelspruit.
· Payment levels have improved because of better public communication, information systems and stricter credit control measures.
· To address backlogs, the service providers try to at lees. meet basic RDP standards in all communities.
· There is a general improvement in the quality of services and the objectives are to get a 24-hour water supply everywhere.
· Except for personnel training, the company has embarked on a community training and development programme. This includes bursaries for students, entrepreneurships, etc.

]_ · Community participation has improved by working through various community structures like ward councilors and SANCO. A process to establish a Water Forum wherein to discuss and resolve petty day-to-day issues is under way.
· Water wastage is minimized by measures to limit leakages and illegal connections.


a. Challenges

- Transfer of former homeland schemes - lack of capacity on the side of municipality,
- Billing system - DWAF took responsibility, which is not in line with Water Service Act, DWAF operating schemes for local municipalities, Non-payment of '~ 'ater bills by certain schools. Illegal connection of water.

b. Successes

- Prepaid system resulted in good payment of water,
- Program to supply communal water-points for pensioners has been established,
- Water forum dealing with water related problems has been established,


a. Challenges

Investigate new technology on water meter system, Water loss by distribution of 90/o, Lack of bulk water supply - Komati Dam won't reach its full capacity 2005, Rural settlement - feasibility study on whether people should stay there or be removed, Inadequate equitable share to fund water and electricity,

b. Successes

- New meter system has been installed in 1996, Strong leadership within the Council,
- Executive Council and Budget structures which involve the community,

Every entity is discussed within the wards,
- Payment rate is between 84% - 96%,
- Reliable meter and billing system.


a. Challenges

- Assisting the Lepelle area with the provision of water,
- Increase in the capacity of water works,
"Grey areas" within the existing policies and legislation of the Department of Water Affairs and Forestry, Relationship between the Water Board and Municipalities regarding the transfer of schemes.


a. Challenges

Harmonization of Water Service Act and Municipal Structures Act,
- Lack of mechanism for the of recovering arrears,
- Backlogs in terms of sanitation,
- Problem of cost recovery
- Lack of capacity due to strategic partnership,
- No role-clarification regarding the powers and functions of district and local municipalities.


a. Challenges

Establishment of future water service provider, Provision of water recovery strategy,
- Transfer of water scheme,
- Backlog in terms of water and sanitation, Lack of cooperative governance.

b. Successes

- Water management system in place,
- Master plan for delivery of water in place,
- All projects have been completed.


a. Challenges

Distance between settlements make it difficult to provide water,
- Bucket system still needs to be phased out, Difficulty in implementing free basic water in rural areas, Meters continually being vandalized, Boreholes damaged,
- Vacuum on service authority and service provider,
- Rate of payment too low.


a. Challenges

Lack of infrastructure and reticulation
Transfer of staff created problems
Villages go for 2/3 weeks without water, sometimes up to 4
Grey area in terms of water provision,
-Not clear whether the service authority should be the district
municipality or local council,
Problem of cross - subsidization in areas like Kwa-Ndebele
Water is not metered in certain areas,
Dealing with low existing service and income levels,
Problem of cost recovery,
-Lack of management and technical staff.


a. Urgent intervention by DWAF to villages which are known to go without water for up to 5 or 6 months, particularly Nkangala in the Mutse district.

b. Some of the problems can be addressed in the long term eg. Infrastructure development and reticulation. Dept must speed up the process of delivery for financing infrastructures.

c. Both the DWAF and DPLG should engage municipalities to improve cost recovery.

DPLG and DWAF should assist municipalities to introduce bylaws that will deal with problems of vandalism and illegal connections.

e. Improve institutional capacity in order to facilitate delivery.

f. Water planning forum should be strengthened.

g. Strengthening of structures created to address water issues should be implemented by the Provincial and District levels with planning forums both at district and provincial levels to ensure co-ordination.

h. Monitoring of situations where partnership exist to ensure that the presence of these PP's does not reflect negatively on the consumers. It needs to take place within the framework of the Water Services Act and other relevant Iegislation.

I. Certain Departments need to deal with water cuts and the implications thereof on the poor.

j. The supply of water to the pensioners should be repIicated in all the provinces.

k. Transfer of schemes - DWAF and DPLG must ensure that municipalities are capacitated before scheme: are transferred.