Political reforms contribute to increasing the investment attractiveness of water infrastructure

Revenue models in the water sector must simultaneously consider three key requirements: investor confidence, service accessibility for municipalities, and the public's right to reliable water supply. South Africa faces growing pressure on water resources, demanding both technical and social solutions.

Water supply challenges in South Africa

In Johannesburg areas such as Koronaville and Westbury, residents regularly face prolonged water outages, highlighting the need for more resilient systems. Instability in supply between rationing and restoration has been observed in Gqeberha and Nelson Mandela Bay, while Durban and Tshwane are working to keep pace with rapid urban growth through infrastructure modernization.

At the national level, water losses remain significant: more than two out of five liters of treated water never reach paying consumers due to leaks, theft, and inefficient metering. This issue negatively affects the financial capacity of municipalities and service reliability, but it also points to areas where targeted measures can yield the greatest benefit.

Reform and the investment environment

Water infrastructure is fundamental, as its functioning supports health, economic activity, and social stability. Solving these problems now opens an opportunity to strengthen resilience, restore public trust, and stimulate sustainable growth. The good news is that the necessary architecture is being formed through reforms that shift the risk profile in the right direction.

Firstly, the National Water Resources Infrastructure Agency is being established under the Agency Act. It will be responsible for developing, operating, and financing national water infrastructure, attracting commercial and investment finance independent of government guarantees, which gives the state a stronger basis for attracting private capital into strategic projects.

Secondly, the Water Services Amendment Act clarifies the roles of Water Service Authorities and Water Service Providers, allowing qualified private or regional municipal entities to operate within clear service models and contracts with municipalities.

Thirdly, recent steps by the Department of Water and Sanitation and the National Treasury to allocate municipal water revenues to a dedicated fund and to restore Blue Drop, Green Drop, and No Drop water quality audits indicate the formation of a more investment-friendly structure where responsibilities are clear and results are visible.

New project support mechanisms

Another element is the recently established Water Partnerships Office at the Development Bank of South Africa. It was created to assist municipalities in preparing, structuring, and procuring bankable projects in areas such as desalination, water reuse, and non-revenue water reduction, by developing standardized documentation and program management for scalable solutions.

Sector development priorities

One urgent priority is eliminating non-revenue water, which accounts for 40% of the national volume. Performance-based contracts between municipalities and water service providers that incentivize maintenance can turn leaks and losses into billable volume and more stable service.

The second critical aspect is wastewater reuse. Municipal and industrial reuse increases climate change resilience without the need for new water abstraction, and when integrated at a program level, it supports standardized risk distribution and better pricing. Both categories offer clear public interest benefits.

Public-Private Partnerships (PPPs) are a proven model for mobilizing private capital into water infrastructure both in South Africa and globally. Under such structures, private partners finance, build, and operate treatment and distribution facilities under long-term contracts, while the government retains ownership and regulatory oversight, allowing operational risks to be transferred and service delivery to be improved.

With support from clear legal frameworks, bankable project preparation, and cost-reflective tariffs, PPPs can bridge funding gaps at municipal and provincial levels, as demonstrated by the Silulumani and iLembe concessions, which expanded access, modernized systems, and increased efficiency, overcoming complex issues of affordability, free basic water, and equitable service levels.

By applying lessons from the South African renewable energy programme, standardizing PPP agreements, creating specialized program offices, and leveraging the experience of institutions like the National Treasury's PPP Unit and experienced investors in long-term infrastructure debt, transaction costs can be reduced and PPP projects scaled up so that more communities receive reliable and sustainable water services.

Ensuring revenue generation

A key requirement for attracting private capital is confidence that revenues collected from household and business water payments are directed to the water service provider and not commingled to cover other municipal obligations.

Recent reforms by the Department of Water and Sanitation and the National Treasury directly target this issue by allocating municipal water revenues to a dedicated fund, separating the functions of the Water Service Authority and the Water Service Provider with distinct accounting and service agreements, and restoring Blue Drop, Green Drop, and No Drop audits to track water quality, losses, and billing efficiency.

These measures together can create more transparent and predictable revenue streams that support cost recovery and allow for financially sound tariffs within long-term PPP contracts. Revenue models must also account for measures to mitigate municipal payment risks directly. Even with strengthened collection discipline, revenue shortfalls can still manifest as a payment risk, so additional credit support from development banks and the National Treasury remains a vital part of the equation.

There are successful local examples. The iLembe-Siza concession on the Dolphin coast and Silulumani in Mbombela expanded access and professionalized operations under long-term contracts, demonstrating how public-private collaboration can stabilize service delivery with clearly defined roles and measured outcomes. They also identified pitfalls to avoid: inherited underinvestment cannot be fixed overnight, and affordability pressures require explicit social measures, including policies for low-income earners, which must be funded and ensured.

Sustainable development and the future

None of this will work without measurable results. Sustainability in water supply is not just a label; it is about the delivery of services. In this sector, sustainability goes beyond regulatory compliance and actively contributes to progress toward Sustainable Development Goals (SDGs), particularly SDG 6 on clean water and sanitation and SDG 9 on industry, innovation, and infrastructure.

Key indicators include reliably served households, efficient water use, and infrastructure that supports long-term community sustainability. This represents accountability for reliable water services and the potential to create long-term shared value within Africa's sustainability priorities. Specialists at Old Mutual Alternative Investments can provide the long-term financing and structuring expertise needed to support water PPPs, viewing finance as a practical and sustainable debt structure.

Through ongoing political reforms that form a positive foundation for boosting investor confidence, South Africa can transform today's emergency into a reproducible stream of bankable projects, restoring dignity, protecting growth, and reducing the overall cost of water over time.

iol.co.zaJuly 4, 13:00

Survival Tips During Water Outages in Johannesburg Without Panic Buying

Experts warn that the continued failure to invest in preventative maintenance creates financial pressure on Johannesburg Water and increases the likelihood of service disruptions for residents.

Water Supply Issues in the City

Water outages have become a frequent reality for Johannesburg residents. Sometimes Johannesburg Water and Rand Water announce planned maintenance days in advance. However, outages often occur suddenly due to pipe bursts, pump failures, or reservoir problems, depriving suburbs of water for hours or even days. This problem is unlikely to disappear anytime soon.

In the latest audit by Johannesburg Water, the Auditor-General reached a similar alarming conclusion, finding that the utility company had not been conducting proactive maintenance of its water infrastructure. Instead of scheduled preventive repairs, the organization has increasingly relied on emergency fixes after pipes had already burst or infrastructure had failed.

Reasons for Network Deterioration

According to the Consolidated Local Government Audit Report for 2024-25, the deterioration of the network was caused by insufficient maintenance planning, poor execution, and weak oversight, leading to more frequent pipe bursts, reduced reliability, and increased repair costs. The Auditor-General warned that the constant refusal to invest in preventative maintenance puts pressure on Johannesburg Water's finances and raises the risk of service disruptions for citizens.

The report also noted delays in implementing infrastructure projects, weak project management, and unreliable performance reporting, which contributed to high water losses and undermined control.

Current Risks and Plans

The Auditor-General stated that in December 2024, the issue of significant irregularity regarding Johannesburg Water was raised, and infrastructure restoration is currently underway. Nevertheless, he warned that without effective corrective measures, the utility company will remain susceptible to constant infrastructure failures, rising repair costs, and increasing operational and financial risks.

Johannesburg Water's own documents present a serious situation: the utility faces a backlog in infrastructure upgrades amounting to 26.61 billion rand, while one of its five assets has a lifespan of less than 10 years. Major threats include aging infrastructure, funding constraints, and demand exceeding available water reserves.

The latest semi-annual performance report also acknowledges significant service delivery challenges, including unplanned outages that have sparked public protests in areas such as Coronationville, Westbury, and Claremont. Less than half of the burst pipes were repaired within the target timeframe of 48 hours during the reporting period.

Emergency Water Supply Tips

While residents cannot fix the aging infrastructure themselves, they can make an outage less disruptive. A mistake many people make is waiting for an announcement from Johannesburg Water before rushing to stores. Although the utility claims that Johannesburg is not in a 'Day Zero' situation and a water reserve has been established, it is always wise to have a water supply on hand.

It is recommended to purchase several five-liter bottles, use the water as usual, and then replenish and rotate them every few months. The initial cost is related to buying the bottles themselves, but afterward, they become a reusable emergency storage. If an outage is expected, fill the bathtub before the water supply stops. This water is ideal for flushing toilets but should not be consumed unless properly treated.

Buckets, dishwashing sinks, kitchen pots, and even empty ice cream containers can also serve as useful emergency storage.

Water Usage Priorities

The top priority is ensuring drinking water. Next are needs for cooking, medication, and basic hygiene. Instead of pouring precious stored water down the drain, pour several liters into a basin for washing hands. A basin of clean water will last the household longer than repeatedly running the tap or pouring directly from a bottle.

If you have sufficient supplies, wash dishes using one container for washing and another for rinsing. Laundry, however, can usually wait until the water supply is restored. Preserving potable water is far more important than washing clothes. The toilet is not the biggest problem, as most people use much more water for flushing than they realize. Bath water, collected rainwater, or other greywater can be used for flushing. Potable water should be reserved for people, not plumbing.

Alternative Storage Methods

If a planned outage is expected, freeze some bottles. They will help keep the freezer cold longer if there is a power failure, serve as cold packs in a cooler bag when moving groceries, and become drinking water as they thaw. The advice about installing a JoJo tank is useful for homeowners with space and funds, but unrealistic for many Johannesburg residents. Apartment dwellers, renters, and many township homes often lack the ability to install a large storage tank. Instead, consider storage suitable for your home. A collection of reusable five-liter bottles can fit under a bed or at the bottom of a cupboard. Twenty-liter containers fit in closets, behind doors, or in garages if accessible. Small volumes of water distributed across several containers are often easier to manage than one large barrel.

Safe Water Use

Do not drain the water heater. This is one of the most common pieces of advice on social media and one of the riskiest. Although a domestic water heater can hold over 100 liters of water, plumbing experts advise only accessing it in a real emergency. If municipal water supply ceases, first turn off the water heater's electricity at the distribution panel. Operating an empty water heater risks burning out the heating element, and the stored water may contain sediment and is not considered safe for drinking.

After municipal water supply is restored, allow the water heater to fill completely and wait until hot taps start working normally, allowing air to escape, before restoring power.

Using Garden Resources

Homeowners can also extend the life of stored water by reusing greywater. Water left over from bathing or washing clothes can be used for ornamental plants or lawns, reducing the need for fresh drinking water outdoors. However, vegetable gardens require more attention, as untreated greywater is generally unsuitable for edible crops.

What to Do During a Sudden Outage

In the event of a sudden water cutoff, check whether the outage affects only your property or a wider area. Close any open taps to prevent flooding when the supply is restored. Fill any remaining containers if water is still dripping. Immediately switch to using stored drinking water. Also, check social media and the Johannesburg Water website for updates.

Water supply issues in Johannesburg are unlikely to disappear overnight. However, several inexpensive precautions and knowing which mistakes to avoid can turn an unexpected outage from a crisis into just an inconvenience.