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Higher water charges are on the cards. Water Affairs Minister Edna Molewa said on Monday the cost of water would probably rise at a rate higher than inflation.

That’s because there is a funding shortfall of 56 percent in the more than half a trillion rand needed to pay for water infrastructure, services, conservation and demand management over the next 10 years.

A long-term investment plan drawn up by the Department of Water Affairs puts the overall cost at R573 billion, over the next decade, for the “total water value chain”.

Chief operations officer Trevor Balzer said that according to their estimates, only 44 percent of this would be funded – resulting in a significant shortfall.

He broke down the R573bn price tag as follows:

* R394bn for water services (municipalities, pipelines);

* R162bn for water resources infrastructure; and

* R16bn for water conservation and demand management (including dealing with “unaccounted” water lost through leaks).

“If we look at current budget allocations, taking into account all grant-funded programmes put in place by the national treasury as well, we estimate over 10 years that 44 percent of that is budgeted for,” Balzer said. This left a shortfall of 56 percent.

“We’ve really got to ramp up to be able to meet that target,” he said.

Asked whether price rises would outstrip inflation, Molewa answered: “Probably.”

“It’s very clear that we’re going to (need) a lot of money… it goes without saying that the cost (of borrowing) is likely to be very high and thus charges, also.”

Molewa said discussions were under way with the Treasury about the possibility of cross-subsidisation, or even government subsidies, to offset tariff increases, as water was a commodity needed by everyone and critical to development.

If the cost of water was too high it could strangle development, she said.

However, it was still too early to say whether the Treasury or government would subsidise future increases, as this was still under discussion.

Molewa signalled major changes to policies and laws regulating water use and said it was necessary to carefully consider developing “a national redress and equity water strategy” in order to help the poor access quality water and sanitation.

Currently, agriculture enjoys the bulk (62 percent) in terms of how water is allocated in the country, with 27 percent allocated for domestic use (23 percent for urban and 4 percent for rural areas) and 2.5 percent for mining.

Industry was allocated 10 percent, which broke down to 3.5 percent for industries, 2 percent for power generation and 3 percent for afforestation. Each sector pays different rates for water.

The department was reviewing the National Water Act, the Water Services Act and the Water Research Act to “improve water management and equity”, and amendments would be dealt with through a general laws amendment bill.

A massive project to review and re-engineer business processes in the water sector was also under way, to deal with the competing needs of servicing the poor in expanding urban settlements, industry and commercial agriculture.

“There is also the fear that existing policies and institutions are not able to cope with the disregard for water rights, eroding commitments to redress and equity, outdated practices and attitudes in the management of water resources and the tendency to neglect the poor in policy and planning…

“We are changing that and are moving at a very fast pace,” Molewa said. - Political Bureau