Municipal water, electricity losses total R25bn a year

National Treasury plans to break the vicious cycle of underinvestment in infrastructure over six years with R54bn and a plan that is already shaking things up at metro level. Picture: Michel Bega/The Citizen South African municipalities lose R25 billion per annum in water and electricity that they buy but never sell, according to National Treasury. In some cities, up to 40% of all bulk water purchased generates no revenue and the average electricity losses stand at 25%.

This is the result of water leaks, transmission losses, electricity theft, and old meters that should have been replaced and are bypassed by major consumers, according to National Treasury. National Treasury disclosed this massive inefficiency during a virtual media engagement with members of the National Press Club on Monday (13 April), which focused on the institution’s role in intergovernmental relations, especially with municipalities. It has allocated R54 billion over six years for its new Metro Trading Services Reform Programme, which is aimed at breaking the vicious cycle of underinvestment in infrastructure.

The underinvestment leads to poor service delivery and deteriorating revenue collection, which once again leaves insufficient funds for the maintenance, repair and improvement of infrastructure. Sydney Maesela, lead city advisor at National Treasury, explains that the money will be disbursed in 24 separate allocations over the period as incentive-driven grants, accompanied by capacity support to turn around the electricity, water, sanitation, and waste management services. In the first year, three metros already felt the impact of underperformance.

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Nelson Mandela Bay received nothing because it failed to provide the information required by National Treasury. Ekurhuleni received a third of its potential allocation, while Mangaung received 66%. Metros can also increase their allocation by overachieving on targets relative to their peers.

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