As water utility Rand Water outlined the challenges it faces, including the debt owed to it, the Portfolio Committee on Cooperative Governance and Traditional Affairs (Cogta) has called for sound intergovernmental relations to ensure that municipalities honour their agreements with Rand Water and other utilities.

During a presentation to the committee, Rand Water highlighted the increasing municipal debt for water services, from R1.5-billion in the 2014/15 financial year to over R8-billion in the third quarter of 2024/25.

The entity warned that it was hamstrung by municipalities failing to honour their bulk water purchase and debt settlement agreements and that municipalities’ non-payment of debt was leading to the deterioration of the utility’s financial health.

According to a statement by the Portfolio Committee on Cogta, the entity also outlined various challenges, including illegal connections, electricity supply challenges, vandalism and encroachment on its infrastructure by informal settlements.

Illegal connections, vandalism, tampering with water valves and damage to other infrastructure needed to be seriously discouraged, the committee said.

“Municipalities need to use bylaws to stop incursions of human dwellings on water infrastructure servitude, as these actions have not only disrupted the supply of water but have resulted in serious injuries and deaths.”

Noting the huge infrastructural decay that leads to nonrevenue water losses, the committee urged the water utilities to consider writing off debts associated with such cases, and encouraged partnerships between utilities and municipalities to upgrade infrastructure and improve revenue collection.

“While it is important to enforce revenue collection for water provided, the indiscriminate cut-off of water supply to errant municipalities is problematic as vulnerable communities suffer,” the committee said, noting that it was unacceptable to starve communities of water supply to force municipalities to sign debt repayment agreements.

The committee asked that Rand Water review its tariff structures to ensure that this did not add to the financial burden of communities while still enabling municipalities to function.

However, it pointed out that many municipalities failed to honour their debts to utilities owing to dysfunctionality, poor governance and financial mismanagement, which compromised service delivery.

The committee also condemned malicious compliance whereby municipalities signed agreements with no intention to honour their debts.

Further, the culture of payment for services must be encouraged in communities by using flat rates in poor communities, while free basic services remain protected through a sound municipal indigent policy.

Water utilities need to be supported to remain financially viable and avoid any possibility of being bankrupted that ends with bailouts.

The committee called on the ministers of Cogta, Water and Sanitation and the National Treasury to get actively involved in managing this debt by using inter-governmental framework provisions that would ensure compliance before communities suffered service delivery lapses.

This, the committee noted, was to ensure that this did not add to the financial burden of communities while ensuring that municipalities could still function.

Noting Rand Water’s special purpose vehicle (SPV) model that it was considering to help alleviate debt pressures, committee members asked for more details on how the SPV would be structured and funded and urged that this must not just be an extractive financing model that worsens the existing challenges in municipalities. The committee also called for transparency around the SPV.

The committee was circumspect about Rand Water considering possibly holding back portions of municipalities’ equitable share as an option to ensure debt owed was collected.

Instead, the committee stressed that the solution must be balanced with a structured approach that balanced affordability, infrastructure maintenance and responsible financial management.

The committee urged further engagement to refine solutions and interventions to address current and long-term challenges.