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A century later and despite massive challenges, Rand Water remains a good news story

Anthony Turton
By Anthony Turton
13 Feb 2025
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The Rand Water Board was created out of the ashes of the South African War to provide the foundation on which post-war reconstruction could be built.

There is much doom and gloom to write about at present. This is a challenge to a glass-half-full kind of guy, which is why it is exciting to discover the few gems that still exist. Rand Water is one of those gems. Let me tell you why.

As an institution, Rand Water provides bulk potable water to more than 18 million people across four provinces, namely Gauteng, some parts of North West, Mpumalanga and Free State. That is an impressive geographic footprint spanning an area of more than 37,000km².  

In terms of numbers, everything is gargantuan. It supplies an average of 4,443Mℓ/d of potable water with peak day demand of 5,200Mℓ/d. For the layperson, that is a staggering five thousand units of a million litres each day of the year without respite.

This is delivered through a complex network of purification plants, pipes, pumping stations and reservoirs that deliver bulk water to municipalities, mines and large industrial users tied together in a network of 3,600km of large-bore pipes.

In terms of upgrades, in 2023 alone, the largest storage reservoir of its type was commissioned in Ekurhuleni, with a capacity of 210 megalitres (million litres), while simultaneously commissioning the largest purification plant upgrade since the dawn of democracy, when a whopping 600 megalitres a day was added to keep pace with growing demand in Gauteng.

Financial stability


While all of this is impressive, the most notable achievement is its financial stability. You see, all this was done using its own balance sheet to raise capital. No bailout has ever been needed by the government, and for the past 20 years, Rand Water has received an unqualified audit. That’s a big deal in contemporary South Africa.

In fact, in the recent past, the RW21 bond was successfully redeemed to the value of R1.6-billion, and three new bonds linked to sustainability notes were issued to the value of R1.7-billion. The new issues attracted a staggering R4.5-billion in capital market bids, becoming the single largest sustainability-linked bond in Africa.

These are serious accolades, so let me tell you why this is important.

For starters, those who follow my writing know my views on the fiscal cliff. South Africa is fast approaching that time when the revenues that the state can recover without a tax revolt are incapable of meeting the obligations of the state in terms of civil servant salaries, social grants, infrastructure upgrades, education, policing and military expenditure. 

We already see the ugly signs of structural adjustment in the downsizing of the State Security Agency and the disastrous implications for the SANDF in the DRC arising from the inability to sustain logistics lines and replace dilapidated equipment.

But we also see it in the inability to fix broken sewerage and water reticulation infrastructure. It’s a known fact that the national water infrastructure is in dire straits. The Green Drop Report tells us that most of the sewerage works are dysfunctional, and the Blue Drop Report paints a gloomy picture of the nation’s potable water systems.

We need a staggering R1-trillion just to fix what is broken in the water sector, and the Treasury simply doesn’t have the money, which takes us to the heart of the future role of Rand Water.

Collaboration


What many people are unaware of is the collaboration between Rand Water and municipalities that are facing significant financial strain because of non-revenue water. An example here is Emfuleni Local Municipality (ELM) where Rand Water and ELM are piloting an innovative water services delivery model known as a Special Purpose Vehicle (SPV) designed to restore water and sanitation services in the area.

The SPV includes stakeholders like Rand Water, the affected municipality and other third parties willing to invest in upgrading, refurbishing, operating and maintaining water services infrastructure. Profits generated by the SPV will be distributed to investors as dividends, according to the SPV’s dividend policy.

This provides a viable model for distressed municipalities to commence their rehabilitation by transferring their water services assets on to the balance sheet of the SPV. These assets will be assessed, valued and migrated, as appropriate to their rehabilitation needs, in compliance with all public finance legislation.

The Rand Water stake will be determined by its capital injection, using its current capacity to raise finances independently of the Treasury. The SPV will manage its own assets, liabilities, rights and resources, effectively ringfencing water services under its umbrella.

For day-to-day operations, shareholders will appoint non-executive directors, who will then select the chief executive officer or managing director of the SPV. The SPV will be equipped with a chief operations officer, chief financial officer and a full management team and staff.

Oversight


To ensure proper oversight, governance structures such as audit, risk and investment subcommittees, composed of professional experts, will be established.

Consumers will pay their water bills directly to the SPV, ensuring that funds are exclusively used for water and sanitation services. This closes a gaping hole in existing municipal financial management. Additionally, water and sanitation grants, typically directed to municipal accounts, will be redirected by the municipality into the SPV to maintain liquidity.

All of this is a very big deal because Gauteng is home to the biggest industrial complex in Africa. The real economy is the only place capable of generating the jobs needed to employ the increasingly angry masses, hopefully avoiding a revolution that might well sweep all the current political leadership from the privileged positions they enjoy.

More importantly, the real economy is also the only place capable of generating the quantum of taxes needed to avoid the fiscal cliff.

It is significant that in all the turmoil and uncertainty that prevails, the oldest of all government institutions is still holding up to the rigours of rapid change.

The Rand Water Board was created out of the ashes of the South African War to provide the foundation on which post-war reconstruction could be built. That institution predates the constitution that formed the foundation of the Union of South Africa in 1910.

We should be proud of Rand Water, as it remains a testament to its founders over a century ago. Let us celebrate this good news story because it really is a very big deal. DM

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