Private sector investors looking to finance public water and sanitation projects often struggle to find bankable projects, thus requiring the intervention of the Water Partnership Office (WPO) in identifying viable projects.
The WPO is a programme established by the Development Bank of Southern Africa (DBSA) and the SA Local Government Association (Salga) to facilitate private investment in water infrastructure projects.
Johann Lubbe, the head of the WPO, which is located in the department of water & sanitation, said various private firms had shown interest in plugging the funding gap in public water infrastructure but were hesitant to get involved in projects and were unlikely to finance projects deemed unbankable or high risk.
The government hopes to attract private sector funders to address the infrastructure shortfall in the water sector as municipal and wastewater services continue to deteriorate nationwide.
Lubbe said his office would support municipalities to develop a pipeline of projects that can be taken to market. “Our [WPO] challenge lies in bankable projects being available and that’s where the WPO will now progressively start supporting municipalities to build a pipeline of projects that will go to the market.”
The WPO had begun to mobilise private sector financing for water projects in eThekwini, Mangaung, Buffalo City, Nelson Mandela Bay and Tshwane for the replacement of leaking municipal water distribution pipes, which were resulting in high levels of non-revenue water, he said.
Other focus areas include private sector investment in municipal water-reuse and desalination projects.
“Preparatory work is often where we are lacking. We often just look at it from a technical perspective where it’s easier for engineers to design a size of a pipe or the volume of a waste water treatment works but that doesn’t attract money.”
In designing projects, “you have to look into the financial modelling of the project [and] how you are going to finance it and what revenue streams are available”, Lubbe said.
“But it takes time. It’s not something that happens overnight. On the larger projects it takes 12-18 months to properly structure the project. You also don’t want to rush through something and put it out to the market and then the private sector shoots it full of holes ... One would rather make sure that you address all the gaps and have well-structured projects that you can take to the market.”
The decline in SA’s water infrastructure has been evident through prolonged water shortages in municipalities in Gauteng as well as Polokwane and certain areas of eThekwini in KwaZulu-Natal.
It has been worsened by weak billing and revenue collection; insufficient prioritisation of budgets for maintenance by municipal councils; and a lack of qualified staff.
According to the latest Blue Drop report from the department of water & sanitation, water from 46% of the country’s systems was deemed unsafe to drink, while 47% of the water in all municipalities was lost to leakages, illegal connections or ineffective revenue collection.
The report also disclosed that 64% of the sewage and wastewater treatment plants in the country were at high or critical risk of discharging partially or untreated water into rivers and the environment.
The department has previously indicated that R900bn will be required over the next decade to halt further deterioration of water infrastructure.
With Linda Ensor
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