Amid escalating debt, water utility Rand Water has reduced water supply to the Lesedi local municipality, in Gauteng, by 20%.

This is owing to the municipality’s failure to honour several scheduled payments, despite months of engagement between the two parties.

Rand Water on Friday said in a statement that the municipality owes it R27.71-million.

“The decision to reduce the bulk potable water supply by 20% was necessary to prevent further escalation of the municipality’s debt that has been accumulating owing to its failure to fulfil the signed Bulk Water Supply Contract,” the water utility explained.

While Rand Water had on many occasions held debt settlement agreement (DSA) meetings, the municipality failed to make payments towards the outstanding debt.

On April 14, Rand Water formally issued a notification of its intention to reduce potable bulk water supply to the municipality which would be effective 30 days after its issuance.

The notice was intended to explain the reasons for the proposed water supply limitation; remind the municipality of its legislative and contractual obligations; provide the municipality with ample time to notify its customers and make alternative arrangements to supply water should the restriction exceed 24 hours; and afford the municipality an opportunity to make representations prior to the implementation of the water supply reduction.

“Following the issuance of the notice, the municipality requested Rand Water to reconsider the implementation of the proposed water supply reduction. The entity carefully considered the request, however, the municipality failed to make payment towards the outstanding DSA instalment.”

As a result, on June 17, Rand Water was compelled to implement the potable bulk water supply reduction as the two parties could not find an amicable solution.

“This situation is highly intolerable as it poses a threat to Rand Water’s medium and long-term financial sustainability. It is important to mention that Rand Water operates without any form of financial allocation from the national fiscus, meaning that the entity relies solely on revenue collected from its customers, primarily municipalities, to fulfil its legal obligations,” Rand Water explained.

The organisation noted that it will not allow a situation where its financial stability is placed at risk because of defaulting municipalities.

“Financial sustainability will ensure that Rand Water continues fulfilling its legal obligation.”