LIQUID GOLD – MORE THAN A CENTURY OF WATER SUPPLY INNOVATION

Founded in 1886, Johannesburg began as a mining shanty town. An increasing concern over water followed the euphoria from the discovery of gold. In 1903, Rand Water was formed by individuals and institutions who instead of

From Rand Water’s inception at the turn of the 19th century during a serious drought, it was clear to the organisation that water was more precious than gold. Over the decades, this belief in the sanctity of water has endured. I often tell the Rand Water team that their work is more than the average nine to five job, it is about service, about providing dignity and life,” says Sipho Mosai, chief executive, Rand Water.

Over the past 121 years, Rand Water has grown from an entity that supplies water to thirsty gold diggers to the biggest waterboard in the Southern Hemisphere and African continent. “Our success is based on sharing in the pioneering spirit that led to the growth of the City of Johannesburg. It is the same spirit that has driven Rand Water’s growth,” explains Mosai.

Today Rand Water provides bulk potable water to more than 15 million people in Gauteng, parts of Mpumalanga, Free State and Northwest provinces - an area that stretches over 18 000 km.

Highlights over the past year

The water utility recently celebrated its 120-year birthday on a high note – with the launch of the 210 Mℓ Vlakfontein Reservoir and the construction of the Zuikerbosch Station 5A water purification plant in Vereeniging.

The Vlakfontein Reservoir is the largest cylindrical post-tensioned concrete reservoir in the world. The Zuikerbosch Station 5A water purification plant will provide a mammoth 600 Mℓ/day of water.

“Building and maintaining infrastructure is key to bulk water provision. The Station 5A and the Vlakfontein Reservoir showcases our commitment and discipline on seeing projects through in difficult operating environments. These projects are a result of many years of forward planning,” adds Mosai.

Last year, the water utility was awarded the Blue Drop certification. “Looking at the Blue Drop Reports, Gauteng is the best performing province in the country, not a single water treatment plant is in critical condition, all of our treatment works have been classified as in either ‘good’ or ‘excellent’ condition. Rand Water is very much a part of Gauteng’s good performance. We supply some of the best quality water in the world, in terms of SANS 241, EPA criteria and WHO guidelines,” says Mosai.

Another highlight for the year was the settlement of the RW23 bond at the principal amount of R1.23 billion. Rand Water’s bond RW23 was listed under the R10 billion Domestic Medium-Term Note (DMTN) programme, which was listed with the Johannesburg Stock Exchange in 2013 and matured on 10 December 2023.

“This bond settlement was achieved through prudent financial management and adherence to the Public Finance Management Act (PFMA) as well as strict financial discipline through its board-approved Corporate Treasury Policy (RWTP) to mitigate the possible refinancing risks. Amid all the economic challenges, Rand Water has successfully invested the redemption reserve funds in investment instruments that yielded a competitive return averaging 9.15%. We intend to use this measure to build and create future sustainability as bond settlements serves as a catalyst towards retaining investors’ confidence,” states Mosai.

He adds that throughout its entire existence, Rand Water has never received a bailout from government, and is entirely self-sustainable.

Another example of Rand Water’s financial discipline and prudence is the AA+(zaf) credit rating from Fitch. This denotes expectations of a very low default risk, with a very strong capacity for payment of financial commitments that is not significantly vulnerable to foreseeable events.

Rand Water Services

The water board has increasingly become involved in municipal spaces. “From a business point of view, it is extremely important for Rand Water to support municipalities in the delivery of water. Municipalities are taking strain, and we are experiencing the brunt of this in the form of late payments or non-payments. It therefore makes sense for Rand Water to enter that space in a financially sustainable way,” adds Mosai.

One such example has been the Emfuleni Local Municipality that was placed under the Section 63 intervention of the National Water Services Act. This meant that the National Government effectively took over the water services authority function of the municipality and all its ancillary responsibilities. In light of the intervention, the Department of Water and Sanitation appointed Rand Water as an implementing agency to affect Section 63 intervention objectives. Rand Water has been the implementing agent of the Sedibeng Sewer Scheme Project and Vaal River System Interventions.

“This has prompted the resuscitation of Rand Water Services, a subsidiary of Rand Water that will work with the private sector and municipalities. This is a standalone, special purpose vehicle with a board of directors and a professional management team. It will be a public private partnership. We are reimagining the way in which we supply water to communities. We are suggesting the establishment of focused water and sanitation utilities like Rand Water Services to assume the operations and maintenance of municipal water services, which will relieve municipalities of that burden,” states Mosai.

It is envisaged that a special purpose vehicle, independent of municipalities, would ultimately be responsible from the abstraction point through to reticulation to ease the burden of maintenance and upgrade of infrastructure through a proposed special-purpose vehicle.

“A professionally run special purpose vehicle would then be able to bill, deal with efficiencies and manage the indigent registers. It can then ringfence the revenue from water as well as the various subsidies from government solely for water and sanitation activities without funds being absorbed into the whole municipal system,” he says.

Mosai adds that there is little point in having pockets of excellence in the form of water boards like Rand Water, when there are households that are not receiving any water. “We want to be part of the solution. There needs to be better collaboration. We are encouraged and excited about the proposed amendments to the Water Services Act, this will be another driver for growth at Rand Water. I have been in the water sector for three decades, and for most of that time, water has barely made headlines. People are starting to understand the value of water.”