THE EVOLUTION OF MAGALIES WATER

called Vaal Central Water) took over the operations in the Northern Cape and Free State, Magalies Water took over Sedibeng Water’s assets, operations, staff, and liabilities in the North West province.

“This was a huge undertaking. First, water utilities are graded according to their size: from grade A (a huge bulk water supplier scheme) to grade D (small water entity). Sedibeng Water had a grade B2 rating (a Hay points score of 1 372) while Magalies Water at that time had a grade C1 (1 192 Hay points). This grading determines different salary levels, so upon the merge, we had employees performing the same job functions earning different salaries. Second, we absorbed close to 400 employees from Sedibeng Water, with an almost non-existent water production asset base. To put this into perspective, Magalies Water at the time had 320 employees and a R4.5 billion asset base,” explains Mkhize.

This meant that Magalies Water’s revenue-producing assets must now sustain over 700 employees. Considering that the water tariffs are low and were already pre-approved by Parliament for implementation effective from 1 July 2022, Magalies Water had little room to move. This is compounded by the fact that Magalies Water’s debt book moved from R300 million to over R2.4 billion after absorbing operations from Sedibeng Water.

“As a result, we have started working on the bulk water and sanitation masterplan for the newly acquired area. We will also be approaching National Treasury for funding of the non-economic component of the infrastructure development, and development funding institutions for the loan funding of the economic component of this infrastructure development,” says Mkhize.

In addition to challenges resulting from the merge, Magalies Water is also

Magalies Water

With an ever-expanding footprint of households, serviced municipalities, industries, and retail operations relying on Magalies Water, the company now owns and operates a total of four water treatment plants alongside its original, and largest, Vaalkop facility, producing 270 Mℓ/day. These include Cullinan, Klipdrift, and Wallmannsthal, with a combined potable water treatment capacity of 340 Mℓ/day. In addition to owned water infrastructure, Magalies Water also operates and maintains an array of water and wastewater infrastructure on behalf of customers with whom it has service level agreements.

contending with problems experienced by other water utilities like limited water resources or constrained infrastructure capabilities and population growth. Rapid urbanisation is affecting the service delivery of water and sanitation. Most of the water infrastructure is operating beyond its design capacity. Instead of decreasing, the number of informal settlements is increasing. “These newer informal settlements are seldom part of a municipality’s spatial planning, and it can take months, if not years, for the promulgation of a township establishment. This leaves informal settlements without basic services, often resulting in illegal water connections, which are dangerous due to operating bulk water pressures and result in a huge amount of water losses,” explains Mkhize.

He adds that vandalism and theft of infrastructure like solar panels and water level sensors also plague sites. “We are then unable to monitor the level of reservoirs and either spend a lot of time and money travelling to manually take water levels, or the reservoirs can overflow, resulting in water wastage.”

Water utilities like Magalies Water also experience a ripple effect when municipalities struggle with revenue collection. Many consumers, due to deteriorating economic circumstances, no longer pay for water.

Service delivery

“Despite these challenges, we are working hard to lift the standards of service delivery in the areas where Sedibeng Water operated. We have already seen some success with Dr Ruth Segomotsi Mompati District Municipality. I believe that part of the successes of Magalies Water has been due to the support received from the Minister of Water and Sanitation, Senzo Mchunu, who has appointed competent board members that understand the sector. Good governance has been a key reason why Magalies Water is succeeding, despite its many challenges. We are managing the little funds we do have in a responsible manner. Importantly, Magalies Water only employs and retains the best possible human resources with the requisite experience and qualifications,” states Mkhize.

There is a shareholder compact between the minister and each water board, with distinct performance indicators monitored by the shareholder on quarterly bases. Magalies Water has consistently been a top performer, achieving above 90% performance against the shareholder compact commitments, which has been topped up with the achievement of clean audits over three consecutive years.

The Department of Water and Sanitation (DWS) has an expanded mandate to determine that water boards get involved in the whole water value chain. Mkhize adds that there are currently two national entities that oversee water and sanitation service delivery: the DWS and the Department of Cooperative Governance and Traditional Affairs. “This tends to create some challenges in the way that water is managed. I believe that one ministry needs to manage water from the source to the tap. There are several role players that are responsible for the delivery of water and sanitation; however, they are not accountable to the same ministry. The Blue and Green Drop reports show that many municipalities that sit at the coalface of water and sanitation service delivery are struggling, while the entities supplying bulk water services are achieving or are close to achieving Blue and Green Drop statuses. I truly believe that if bulk water supply and reticulation have one mandate, we would go a long way to ensuring that all South African citizens have a sustainable supply of good-quality water services,” concludes Mkhize.