Profile - Legalbrief2#

More than half of the city’s water does not reach consumers

WATER losses are costing the eThekwini Municipality a fortune and have resulted in a drastic decrease in the city’s revenue.

The three big trade services – water, electricity and sanitation – have cost the city close to R1 billion in losses.

A budget statement for the month ending December 31, 2020, painted a dire state of affairs for the municipality. Its key trade services recorded a downward trend in generating revenue.

The city blamed this on the impact of the Covid-19 pandemic and the fact that some businesses were not fully operational yet.

But DA councillor Nicole Graham said the water losses were abnormal, above the acceptable norm and could not be justified.

“The losses are due to ageing infrastructure and leaks. The losses in water, electricity and sanitation have cost the municipality close to a billion rand,” she said.

IFP councillor Mdu Nkosi said the council had long been warned about the losses.

“Electricity is used by people who do not pay, but use the most. There have long been talks that officials should find ways to regularise this and collect the money.”

In the report, in which the city detailed its losses, it said water revenue had decreased by R720.3 million compared with the year-to-date budget.

It attributed this mainly to a decrease in revenue generated from water service charges.

For sanitation, where the revenue is linked to water usage, the decrease by R362.7m when compared to the year to date budget was also attributed to slow economic recovery.

As for cleansing and solid waste, there was a decrease in revenue by R148.5m when compared to the yearto-date budget.

The report also said for water distribution losses, the municipality had reported a ratio of 51.7%.

This percentage was not in line with the expected norm of between 15 and 30%, the city said. However, this was being investigated as there were some high meter readings distorting this ratio.

For electricity distribution losses, the municipality had reported a ratio of 11.8%, which is also above the norm of between 7% and 10%. It said this was due to transmission/distribution losses and illegal connections.

Ednick Msweli, eThekwini’s head of Water and Sanitation, said one of the challenges with water was that it was supplied to areas where people did not pay or were not metered.

The report also revealed that the city’s finances had been battered by the Covid-19 pandemic and lockdown measures.

This had seen a decrease in the revenue collection rate, cash-flow constraints, and it had been forced to reprioritise expenditure to address the pandemic.

Other challenges included a decrease in Capital Budget Funding and the need for reprioritisation, an increase in community needs with limited funding available and a decrease in revenue generation for the city’s entities due to lockdown regulations.