Report reveals water boards drowning in debt

By Mayibongwe Time of article published Dec 22, 2019

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While facing non-payments for sale of water to municipalities, the country’s water boards are saddled with legal claims amounting to millions of rand from service providers.

This has been revealed by the boards in their 2018-19 annual reports tabled in Parliament recently.

In November, it was reported that municipalities owed boards R14.9 billion as at September 30, up from R13.1bn recorded last September.

The reports show Rand Water leads with litigation estimated at nearly R1bn. The board has put the total figure of the claims against it at R989m.

“The group’s legal advisors believe the group has reasonable defence against the claims and that the probability of loss will be minimal,” reads the Rand Water annual report.

According to the report, the biggest claim is for R667m lodged by a service provider for loss of income over a 10-year period due to cancellation of contracts entered into by an employee who had no delegation of authority.

The Sedibeng Water report shows the entity faced litigation of R16.2m.

“Legal proceedings have been instituted against Sedibeng Water and the organisation’s legal advisers have advised they believe Sedibeng Water has reasonable defences and that the probability of loss is minimal,” reads the entity’s annual report.

Bloem Water faced seven claims from service providers and residents.

In its report, the entity said there was an on-going litigation regards cancellation of a contract due to non-performance of supplier Alo Vivacitas which instituted the claim and the Bloem Water has issued a R5m counterclaim.

There were also labour arbitration matters which could not be estimated and a case against Gariep District residents who sued it to restore water supply to full capacity.

The entity also has litigation against various Bloemfontein businessmen who stopped construction at Jimmy Roos Farmers Dewetsdorp for illegal water connection and recovery for cost of water used.

Bloem Water is also being sued by Inyathi Specialist Coating for not paying invoices for construction of a reservoir in Trompsburg, and is involved in litigation with Mangaung Metro for raw water billing calculated from 2010.

Amatola Water said it was defending 10 applications for outstanding debt at an estimated cost of R37.737m.

It was defending seven labour labour matters to the tune of R5.6m and R6.284m for defending personal liability matters.

Magalies Water said legal proceedings have been instituted against it by former employees and estimated the cost was R870 000.

Service provider Ya Rena Civils, which was contracted to build a reservoir and failed to complete the project on time, has also instituted legal proceedings, and Umso Construction has filed a review application against the implementation of a tender.

Mhlathuze Water faced three litigation cases which included an Endecon Ubuntu claim for R1.5m in unpaid invoices, a R3.2m claim by Water Purification Chemical and Plant as well as an employee who was dismissed for misconduct in July 2018.

Lepelle Northern Water said it has a dispute with a supplier relating to interest charged amounting to R15.4m, a R3m legal dispute for work not completed by a service provider, and a legal dispute over R2.7m from the Land Claims Commission for a farm bought for a land claim in 2003.

Umgeni Water said it has instituted legal proceedings to recover R1.3m interest and penalties charged by the SA Revenue Services.

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