South Africa - Pretoria - 05 April 2020 - Hammanskraal residents benefit from the distribution of water tanks by the Department of Water and Sanitation, Rand Water and City of Tshwane. Picture: Thobile Mathonsi/African News agency(ANA)
South Africa - Pretoria - 05 April 2020 - Hammanskraal residents benefit from the distribution of water tanks by the Department of Water and Sanitation, Rand Water and City of Tshwane. Picture: Thobile Mathonsi/African News agency(ANA)

Rand Water ready for R27.6bn upgrade

By Given Majola Time of article published Oct 9, 2020

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DURBAN – The country's largest water utility Rand Water has said it would be embarking on a R27.6 billion infrastructure programme in the next five years.

Rand Water said that the re-engineering would include upgrading, rehabilitation and replacement projects that would maintain existing capacity to supply sufficient and quality water augmentation projects to meet growth and demand in areas of supply.

Spokesperson Justice Mohale told Business Report that the renewal would see new pipelines laid to provide sufficient additional water capacity into the system.

Mohale said the utility had identified ageing infrastructure that needed to be replaced in order to respond and contribute to the economic growth and recovery of South Africa.

“The augmentation projects, which have already been approved for implementation will increase Rand Water’s capacity to meet growth and demand in areas of supply,” said Mohale.

Last month ratings agency Fitch affirmed Rand Water’s AA+ rating with a positive outlook.

Fitch said it expected Rand Water’s cash flow to be mainly related to capex delays on Covid-19. The ratings agency said it forecast around R200million of working capital outflows per year in the current and the next financial years due to delays in physical cash collections or agreed extension of credit terms.

It said Rand Water had a good record of proactively managing customer relationships and working capital and that its liquidity would remain healthy in the next 24 months.

Mohale said that the pandemic had affected the utility with most customers unable to pay for bulk potable water supply.

“During this period, Rand Water has also recognised the impact on global supply chains and increased its self-sufficiency, for example in the production of chemicals,” said Mohale, adding that the next phase of the Lesotho Highlands Water Project would be completed in 2026.

He said the completion of the project would augment available water resources in the country.

In 2018, the Water Research Commission highlighted the role of water resources since some sectors of the economy were dependent on it.

The commission said that water risks were said to be felt at different points of the production chain for different sectors, including raw material production, supply, and direct operations.

In South Africa, the agricultural sector was the biggest user of water, accounting for 60percent of demand, followed by the municipalities at 27percent. Power generation accounted for 4.3percent of water usage, while mining used 3.3percent and industries 3percent.

Trade and Industrial Policy Strategies economist Neva Makgetla said that investment in water supply was critical for the country’s economic development.

Makgetla said Rand Water had embarked on bulk infrastructure rebuild despite the problems that came with municipalities’ neglect of critical infrastructure. “That is more of a problem in rural areas that have lower household incomes than in Gauteng (because people cannot afford to pay for the infrastructure there). Most people who work on water argue that the real threat is the potential collapse of some municipal systems - look at Makanda for a horror story of what can go wrong. But again, those responsibilities are different and the challenge is less significant in Gauteng,” said Makgetla.

BUSINESS REPORT

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