Johannesburg Water, an entity in the City of Johannesburg responsible for water and sanitation services in South Africa’s economic hub, has kick-started a process to take over full responsibility for its finances from the city as part of the National Treasury’s metro trading services reforms.
The water utility has sounded out the market, looking to procure revenue experts to assist it in developing and implementing a revenue management model. This is in the context of transitioning from centralised City of Johannesburg group treasury control to ring-fenced accountability.
“Currently billing, credit control and debt collection are centralised at the City of Johannesburg group treasury. All funds received are swept into the City of Johannesburg primary bank account, leaving Johannesburg Water without direct control over its revenue,” the utility says in its tender document.
“In line with National Treasury metro trading services reforms, Johannesburg Water must transition to a single point of management accountability over its revenue management value chain, cash flow and ring-fenced financial operations.
“This reform necessitates a comprehensive revenue management model to maximise revenue generation, collection, billing completeness, leakage reduction and distribution loss management.”
Because the sweeping mechanism cleared Johannesburg Water’s accounts daily, the entity depended on the city to release its operational funds, and the city did not always release these funds timeously. This caused delayed payments to contractors, slowed infrastructure projects and increased the severity of water outages.
This reform necessitates a comprehensive revenue management model to maximise revenue generation, collection, billing completeness, leakage reduction and distribution loss management.
— Joburg Water
The reforms are backed by R54bn in performance-linked grants, which forces metros to ring-fence revenue for infrastructure investment, aiming to unlock R100bn in investment.
The National Treasury launched the reforms in March in a major bid to address the declining performance of water, electricity and solid waste services in the country’s eight metros — which together account for over two-thirds of economic activity in South Africa and are where more than four in every 10 people live.
The reforms are backed by R54bn in performance-linked grants, which forces metros to ring-fence revenue for infrastructure investment, aiming to unlock R100bn in investment.
The Treasury and the auditor-general last year told parliament that it was critical to ring-fence Johannesburg Water’s revenue and establish clear service-level agreements with the City of Johannesburg as part of critical reforms.
The Treasury in particular attributed Johannesburg Water’s long-term decline to weak municipal governance, poor capital budgeting and a failure to treat the entity as a self-sustaining business, which had led to chronic under-investment in infrastructure.
The City of Johannesburg budget for 2025/26 estimates the city will collect R11.9bn in revenue for water but will spend only R1.3bn on water infrastructure — less than 10% — an anomaly that the Treasury is looking to fix via the reforms.
Pipe bursts increased from 20,729 in 2023/24 to 33,436 in 2024/25, with only 67% of bursts fixed within the 48-hour target against an 85% target
Johannesburg Water, the biggest of the metro water entities, services at least 4.5-million people and is responsible for distributing 1.6-billion to 1.7-billion litres of potable water daily.
However, the entity’s network infrastructure is deteriorating at an accelerating pace. Pipe bursts increased from 20,729 in 2023/24 to 33,436 in 2024/25, with only 67% of bursts fixed within the 48-hour target against an 85% target.
The lead revenue expert Johannesburg Water is looking for is also expected to develop a detailed project implementation plan and assess the current billing, credit control and debt collection systems.
The exercise will also see the consultants perform customer billing data cleansing and reconciliation with property information and provide advice on:
- tariff structures;
- credit control policies; and
- debt collection strategies.
To manage the transition, the consultants will be required to develop a plan to shift accountability from the City of Johannesburg treasury to Johannesburg Water and design a ring-fenced bank account structure and cash flow protocols.
Business Times
.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.