UTHUKELA DISTRICT MUNICIPALITY RESTRUCTURING OF WATER SUPPLY SECTOR
6 JUNE 2005
IMPLICATIONS OF RESTRUCTURING
The restructuring of the water supply sector to Water Service Authorities consisting of bigger and more wide-spread areas, have numerous long term benefits, but as this process has only been implemented in the recent past, a number of hurdles is still encountered which blur the principles of the greater philosophy.
1.1 Cross Subsidization
As many WSA's jurisdiction now incorporate may precious Water Services Providers (WSP's), the benefits in terms of structuring a more representative tariff structure to include the vast rural areas (especially in KZN) the enormous poor communities (indigent), together with the massive added Operation & Maintenance (0&M) cost to manage the isolated infrastructure, is made possible. This achieves a equitable tariff, share by all in the relevant WSA, making water affordable to the greater community and not just islands of privileged consumers.
[PMG NOTE: LOCALITY MAP OF UTHUKELA DISTRICT MUNICIPALITY NOT INCLUDED
CAN BE MADE AVAILABLE ON REQUEST]
With many WSA's new responsible for a 'global planning' scheme throughout their area o jurisdiction on terms of their Water Services Development Plan (WSDP), informing are Integrated Development Plan (IDP), representative of the planned development of al sectors and future infrastructure, a better logical approach to development can be achieved. This eliminates ad-hock expansions which results in expensive O&M costs redundant infrastructure for enlargements and wasting public funds.
With a logical and global approach, the WSA's can plan a cost-effective solution to the Country's most problematic resource, the supply of potable water to all the people in the Republic.
[PMG NOTE: FIGURE 12.1 PLANNED BULK SUPPLY FOR UTHUKELA DISTRICT MUNICIPALITY NOT INCLUDED CAN BE MADE AVAILABLE ON REQUEST]
1.3 Benefit of scale
As indicated above, the long term benefits will be a result of managing the water sector comprehensively, with an overall perspective in planning over a larger, but viable area. The infrastructure 0&M staff as well as costs are co-ordinated and effectively managed by one overhead structure (rather than many before), still ensuring accountability to the people through Representative Council. This affects the overall water provision cost, resulting in more affordable tariffs to all the people of the area.
As mentioned before, we need to evolve past the restructuring phase to see the eventual benefit, but seeing that currently we are still faced with a lot of resistance from previously advantaged communities. Notwithstanding this, many rural WSA's are also faced with supplying 'Free Basic Water* (FBW) to the poorer community at large, unable to recover or cross subsidising cost through tariffs, as the reasonability of the tariff becomes unaffordable and has an affect on the local economy at large.
2. FREE BASIC WATER Through restructuring, FBW provision can now be implemented and controlled more effectively and more economically, as indicated before. In affluent areas where WSA's are blessed with major cities, inclusive of industry and a large economy, as well as Metro's, FBW provision, cross subsidies and cost recovery (even with an above average tariff) can be achieved successfully. Most the infrastructure is already in place with a cost-affective operation in terms of bulk supply.
The situation is reversed when a WSA is situated in a predominantly rural area with little to no industrial base, a poor local economy and a large indigent community. Water supply infrastructure is mostly isolated with rural schemes mostly resourced from groundwater, supplied through a RDP level standpipe system. Most rural schemes costs from 10 to 25 times more to operate and maintain as conventional bulk supply systems, yet these basic level of service provision schemes will contribute little revenue (if at all) towards the overall operational budget of the rural WSA. Therefore, National Government should urgently take note, to provide sufficient financial support to WSA's fitting the profile as mentioned before FBW would result in a total collapse of service delivery
[PMG NOTE: DIAGRAM ON FBW COST RECOVERABLE VS RURAL POOR NOT INCLUDED
CAN BE MADE AVAILABLE ON REQUEST]
3. PROGRESS OF RESTRUCTURING
It is well known that various levels of success have been achieved throughout the Country and KZN. Many different Delivery Mechanisms were opted for by different WSA's with little or no structures to share lessons learned' going through the Section 78 process.
3.1 The Uthukela District Municipality (as a partnering WSA) have been through the process of Establishing a Municipality Entity as its WSP (Uthukela Water Pty. Ltd and is currently back doing the provision function itself. Knowing both sides of the coin, we have a wealth of knowledge and experience to share.
3.2 Throughout the restructuring process until this day, the Uthukela District Municipality has not fully completed the Transformation from the previous WSP within our region.
3.3 In our District, we still have Local Municipality who maintain that they could produce water cheaper that the District WSA. The reality is that with our current structure we can produce water in their previous jurisdiction, even cheaper than them at the time, but we also supply the rural contingent, thus the higher tariff.
The Uthukela District Municipality has about 135 000 Households, 77% of which is enjoying a free service, situated rurally. This means that just more than 30 000 remain of which approximately 10 000 is registered Indigent, leaving approximately 20 000 households whom are burdened with the full load of the Operating Budget of around R96 000 000.00 of this budget, around R76 000 000 is fixed, if no water is physically billed.
As previously indicated, FBW in rural stand alone schemes, is a most expensive operation. Soon it is clear that FBW cost dies not only consists of water but salaries, billing, laboratory costs, electricity, vehicles, fuel, repairs, customer care, management, chemicals, repairs and maintenance. There is no financial return on this in a rural scenario.
If the reality that FBW/ Services will destroy the inland District Water Services Authorities, without the necessary financial backing from National Government /Treasury, is not realized, a crisis is awaiting to happen.
Even though the backlogs have not been addressed, and would not be until 2026, the more stand alone basic levels of infrastructure is in future, the bigger the cost of Operating and Maintenance will become per litre of water produced/ consumed. This will impact on tariff, making water unaffordable, leaving a higher fixed cost budget element, without any funds to continue operations.
We are all on a ship taking on water at an increasing rate. If we do not do something now, it will be too late to prevent if sinking.