Durban - The Board of Umgeni Water has blamed its dented profits for the 2021/22 financial period which ended in June last year to some KZN municipalities not paying it on time for bulk water delivery.
The state owned entity has since listed non-payment or delays in payment for water delivered as one of the key financial risks it faces in the near future.
This was revealed by Thami Mkhwanazi, the water board’s chief financial officer (CFO) on Thursday in Durban when the results were delivered.
Mkhwanazi did not name the municipalities, but he revealed that their credit losses had shot up from R174 million to R454m.
According to the financial report, the biggest buyer of bulk water from the board was eThekwini Municipality.
The other bulk customers were Msunduzi (Pietermaritzburg) local municipality (which is known for its perennial financial woes), Umgungudlovu District Municipality, Ugu, Ilembe, Harry Gwala and King Cetshwayo District Municipality which came on board after Uthukela district pulled out.
“Payments are actually delayed, you can actually see that out of the R1.2 billion that we recorded as profit, had the municipalities paid us on time on all the outstanding debts, we will be sitting at R1.6bn or actually at R1.7bn profitability.
“Because (of) that credit loss, we actually had to take it from our bottom line and there were few asset write-offs,” Mkhwanazi said.
He added that due to some municipalities facing challenges, they were also starting to feel the brunt as some invoices were not paid on time.
“I think I have mentioned the fact that municipalities are struggling, some of them are facing cash flow issues and their sustainability is being tested and we are feeling that brunt as a water board that what we bill and supply, either gets delayed or is not paid for the longest period of time,” he added.
Meanwhile, Mkhwanazi said seven of the 75 tenders that were audited by the auditor-general were found to be irregular and their latest irregular expenditure was sitting at R161m and actions were being taken against those implicated.
Furthermore, he revealed that six forensic investigations had been concluded and sent to the board and nine disciplinary actions were recommended after some investigations.
According to the other part of the financial report which was delivered by the acting chief executive, Dr Sipho Manana, the Umgeni Water Board identified six key risks they faces as they carry their business.
Among them was the failure to deliver projects on time and within budget and the ability to meet current and future water demands.
Despite that, Manana said they had all the mechanisms to ensure that these risks did not overwhelm them to an extent that they totally crippled them.
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