Water privatisation in South Africa
Encyclopedia
Water privatisation in South Africa is a contentious issue, given the history of denial
of access to water and persisting poverty (see Water supply and sanitation in South Africa
). Water privatization
has taken many different forms in South Africa
. Since 1996 some municipalities decided to involve the private sector in water and sanitation service provision through short-term management contracts, long-term concession
s and contracts for specific services such as wastewater treatment. Most municipalities continue to provide water and sanitation services through public utilities or directly themselves. Suez of France, through its subsidiary Water and Sanitation Services South Africa (WSSA), and Sembcorp of Singapore, through its subsidiary Silulumanzi, are international firms with contracts in South Africa. According to the Managing Director of Silulumanzi "the South African water market is still in its infancy and municipalities are unsure of how to engage the private sector."
with a permanent population estimated at 34,000 located about 50 kilometers north of Durban. The privatization was welcomed and supported by the city council and senior government officials, including President Thabo Mbeki
who visited the area to sanction the process. The Development Bank of Southern Africa
and the Municipal Infrastructure Investment Unit supported the development and completion of the concession arrangement by providing technical and advisory services during the conception and contract development phase. This helped to make this option understandable and financially feasible. SWC is a local company formed by Saur International of France (which holds a 58% share), four other companies and company employees. After initial difficulties the contract was renegotiated in 2001, including a substantial reduction in investment requirements and the provision of free basic water. A more accurate billing and collection system has led to an increase in revenues of 68%, while tariffs were increased by about 30% and the number of customers increased by 6%.
in Mpumalanga
(ex-East Transvaal) signed a 30-year concession with the Greater Nelspruit Utility Company (GNUC), a subsidiary of Cascal, itself part of the British firm Biwater
. The concession serves 350,000 people in Nelspruit and neighboring townships. GNUC subsequently changed its name to Silulumanzi. In July 2010 it was sold to Sembcorp of Singapore. According to the private concessionnaire, in the first two years of the concession thousands of unregistered connections were found and many household and mains leaks repaired. The savings have enabled water delivery to other areas not previously supplied. Over 8,000 broken meters have been replaced and a further 15,000 new meters have been installed to provide new house connections and formalise existing unauthorised supplies. Total water supplied into distribution fell from 66,000 m3/day to 60,000, despite an increase of over 30% of customers supplied. This was achieved by reducing non-revenue water
. Traditional political protests had involved non-payment of water bills so that a change in culture was required. Facilitators have worked in the villages and townships educating, discussing and encouraging the regular payment of water and sewage bills. Besides meetings with elected representatives, they engage in street theatre and sports sponsorship. Also local offices have been established throughout the concession area to provide easy access for customers to pay their bills, raise queries, deal with complaints and report leaks. As a result, revenue collection has substantially improved. Furthermore, the portion of households with access to basic water supply increased from 52% in 1999 to 88% in 2009. In formalised urban areas, 24-hour supply has been extended to 82% of households, up from 37% in 1999.
established the municipal company Johannesburg Water and subsequently signed a management contract with Water and Sanitation Services South Africa (WSSA), a joint venture between Suez (ex-Lyonnaise des Eaux), its subsidiary Northumbrian Water Group and the South African company Group 5. The contract was not extended when it expired in 2006.
and provided water and wastewater services to over 2 million people in the provinces of Kwa-Zulu Natal (Dolphin Coast), Eastern Cape
(including in Stutterheim
), Western Cape
, Limpopo
and Gauteng
.
Denial of request
Denial of request is the refusal of one party to grant the request of another. Some acts that can be considered denial may include the refusal of a person or a group of people representing a company, organization, or government agency to provide what a client or one seeking to be a client has...
of access to water and persisting poverty (see Water supply and sanitation in South Africa
Water supply and sanitation in South Africa
Water supply and sanitation in South Africa is characterized by both achievements and challenges. After the end of Apartheid South Africa's newly elected government inherited huge services backlogs with respect to access to water supply and sanitation. About 15 million people were without safe...
). Water privatization
Water privatization
Water privatization is a short-hand for private sector participation in the provision of water services and sanitation, although sometimes it refers to privatization and sale of water resources themselves . As water services are seen as such a key public service, water privatization is often...
has taken many different forms in South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
. Since 1996 some municipalities decided to involve the private sector in water and sanitation service provision through short-term management contracts, long-term concession
Concession (contract)
A concession is a business operated under a contract or license associated with a degree of exclusivity in business within a certain geographical area. For example, sports arenas or public parks may have concession stands. Many department stores contain numerous concessions operated by other...
s and contracts for specific services such as wastewater treatment. Most municipalities continue to provide water and sanitation services through public utilities or directly themselves. Suez of France, through its subsidiary Water and Sanitation Services South Africa (WSSA), and Sembcorp of Singapore, through its subsidiary Silulumanzi, are international firms with contracts in South Africa. According to the Managing Director of Silulumanzi "the South African water market is still in its infancy and municipalities are unsure of how to engage the private sector."
Dolphin Coast (iLembe)
In January 1999, the Siza Water Company (SWC) became the first private company to manage a water and wastewater utility in South Africa. Under a groundbreaking 30-year concession contract, SWC assumed responsibility for providing water and sanitation services to what was then known as the Borough of Dolphin Coast, a locality in the iLembe District MunicipalityILembe District Municipality
iLembe is one of the 11 district municipalities of KwaZulu-Natal province in South Africa. The seat of iLembe is KwaDukuza . The majority of its 560 409 people speak Zulu...
with a permanent population estimated at 34,000 located about 50 kilometers north of Durban. The privatization was welcomed and supported by the city council and senior government officials, including President Thabo Mbeki
Thabo Mbeki
Thabo Mvuyelwa Mbeki is a South African politician who served two terms as the second post-apartheid President of South Africa from 14 June 1999 to 24 September 2008. He is also the brother of Moeletsi Mbeki...
who visited the area to sanction the process. The Development Bank of Southern Africa
Development Bank of Southern Africa
The Development Bank of Southern Africa is a Development Finance Institution wholly owned by the government of South Africa and focuses on large infrastructure projects within the public and private sector. It is one of several development finance institutions in Southern Africa...
and the Municipal Infrastructure Investment Unit supported the development and completion of the concession arrangement by providing technical and advisory services during the conception and contract development phase. This helped to make this option understandable and financially feasible. SWC is a local company formed by Saur International of France (which holds a 58% share), four other companies and company employees. After initial difficulties the contract was renegotiated in 2001, including a substantial reduction in investment requirements and the provision of free basic water. A more accurate billing and collection system has led to an increase in revenues of 68%, while tariffs were increased by about 30% and the number of customers increased by 6%.
Nelspruit (Mbombela)
In 1999 the municipality of NelspruitNelspruit
Nelspruit is a city of more than 500,000 people situated in northeastern South Africa. It is the capital of the Mpumalanga province . Located on the Crocodile River, Nelspruit lies about west of the Mozambique border and east of Johannesburg. The towns of Nelspruit are Kanyamazane and Pienaar...
in Mpumalanga
Mpumalanga
Mpumalanga , is a province of South Africa. The name means east or literally "the place where the sun rises" in Swazi, Xhosa, Ndebele and Zulu. Mpumalanga lies in eastern South Africa, north of KwaZulu-Natal and bordering Swaziland and Mozambique. It constitutes 6.5% of South Africa's land area...
(ex-East Transvaal) signed a 30-year concession with the Greater Nelspruit Utility Company (GNUC), a subsidiary of Cascal, itself part of the British firm Biwater
Biwater
Biwater Plc is a former British water company. It designed and built Water Treatment Works and Waste Water Treatment Works, mainly in the UK but also around the world...
. The concession serves 350,000 people in Nelspruit and neighboring townships. GNUC subsequently changed its name to Silulumanzi. In July 2010 it was sold to Sembcorp of Singapore. According to the private concessionnaire, in the first two years of the concession thousands of unregistered connections were found and many household and mains leaks repaired. The savings have enabled water delivery to other areas not previously supplied. Over 8,000 broken meters have been replaced and a further 15,000 new meters have been installed to provide new house connections and formalise existing unauthorised supplies. Total water supplied into distribution fell from 66,000 m3/day to 60,000, despite an increase of over 30% of customers supplied. This was achieved by reducing non-revenue water
Non-revenue water
Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses or apparent losses . High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself...
. Traditional political protests had involved non-payment of water bills so that a change in culture was required. Facilitators have worked in the villages and townships educating, discussing and encouraging the regular payment of water and sewage bills. Besides meetings with elected representatives, they engage in street theatre and sports sponsorship. Also local offices have been established throughout the concession area to provide easy access for customers to pay their bills, raise queries, deal with complaints and report leaks. As a result, revenue collection has substantially improved. Furthermore, the portion of households with access to basic water supply increased from 52% in 1999 to 88% in 2009. In formalised urban areas, 24-hour supply has been extended to 82% of households, up from 37% in 1999.
Johannesburg
In January 2001, the city of JohannesburgJohannesburg
Johannesburg also known as Jozi, Jo'burg or Egoli, is the largest city in South Africa, by population. Johannesburg is the provincial capital of Gauteng, the wealthiest province in South Africa, having the largest economy of any metropolitan region in Sub-Saharan Africa...
established the municipal company Johannesburg Water and subsequently signed a management contract with Water and Sanitation Services South Africa (WSSA), a joint venture between Suez (ex-Lyonnaise des Eaux), its subsidiary Northumbrian Water Group and the South African company Group 5. The contract was not extended when it expired in 2006.
Other cases
In 2003, WSSA also had a 25- year concession in Queenstown, Eastern CapeQueenstown, Eastern Cape
Queenstown, named after Queen Victoria, is a town in the middle of the Eastern Cape Province of South Africa, roughly half way in between the towns of Cathcart and Sterkstroom. It is currently the commercial, administrative, and educational centre of the prosperous surrounding farming district...
and provided water and wastewater services to over 2 million people in the provinces of Kwa-Zulu Natal (Dolphin Coast), Eastern Cape
Eastern Cape
The Eastern Cape is a province of South Africa. Its capital is Bhisho, but its two largest cities are Port Elizabeth and East London. It was formed in 1994 out of the "independent" Xhosa homelands of Transkei and Ciskei, together with the eastern portion of the Cape Province...
(including in Stutterheim
Stutterheim
Stutterheim is a town with a population of 46,730 in South Africa, situated in the Border region of the Eastern Cape province.Stutterheim has a rich history that makes for fascinating reading...
), Western Cape
Western Cape
The Western Cape is a province in the south west of South Africa. The capital is Cape Town. Prior to 1994, the region that now forms the Western Cape was part of the much larger Cape Province...
, Limpopo
Limpopo
Limpopo is the northernmost province of South Africa. The capital is Polokwane, formerly named Pietersburg. The province was formed from the northern region of Transvaal Province in 1994, and initially named Northern Transvaal...
and Gauteng
Gauteng
Gauteng is one of the nine provinces of South Africa. It was formed from part of the old Transvaal Province after South Africa's first all-race elections on 27 April 1994...
.
Further reading
- McDonald, David A, and John Pape, Cost Recovery and the Crisis of Service Delivery in South Africa, Zed Press, London, 2002.
- McDonald, David A, and Greg Ruiters, The Age of Commodity: Water Privatization in Southern Africa, Earthscan Press, London, 2005.