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South Africa seeks water investment with new procurement office

Stored water

Photo by Bloomberg

6th June 2023

By: Bloomberg


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South Africa is setting up an office to facilitate private investment in the water industry in a bid to arrest its collapse and emulate the success of the nation’s electricity procurement agency that’s attracted more than $10-billion of private money into renewable energy.

The Water Partnership Office is being set up by the state-run Development Bank of Southern Africa, and initial funding for its establishment may come from the Green Climate Fund (GCF), a more than $12-billion international financing facility.

“What the Independent Power Producers Office did for renewable energy,” the WPO wants to do for water, Catherine Koffman, group executive for project preparation at the Johannesburg-based lender, said in an interview.

The new office is another sign that South Africa’s government is trying to lure more private investment to arrest a decline in the quality of services of everything from energy and water to freight rail and ports. A national water plan released in 2019 said R900-billion ($47-billion) needs to be spent on water-supply and storage infrastructure by 2030.

The energy agency holds auctions for the provision of electricity by private companies for use in the national grid.

An offer has been made to an executive who will run the water office, Koffman said, without identifying the person. The GCF’s board will meet this month and will consider approving the funding, she said. The office’s creation has been a result of work between the DBSA, the National Treasury and the Department of Water and Sanitation, she said.

The GCF, which is based in South Korea, didn’t respond to an emailed request for comment sent on Monday.

The quality of South Africa’s water provision has suffered as cities have grown and infrastructure has failed to keep pace. A cholera outbreak last month in Tshwane, the municipal area that includes the national capital of Pretoria, highlighted the state of a wastewater treatment plant that supplies many of the city of about 3.6-million’s poorest citizens.

In addition to the growth of its urban areas, the country is grappling with climate change. The nation is already one of the world’s 30 driest: rainfall, while variable across its territory, averages less than 500 millimeters (20 inches) per annum.

Companies have moved factories away from areas that can’t supply adequate water. Astral Foods, the country’s top poultry producer, sued the government over its inability to provide adequate water supplies to one of its facilities.

“There is a big focus on municipalities,” Koffman said. “It’s an area that’s clearly starting to suffer.”

The WPO will initially focus on six priority areas including limiting wastage, water reuse, wastewater treatment, water-management contracts, seawater desalination and sanitation without the use of sewers, according to Koffman.

South Africa’s water industry has already attracted foreign interest. Spain will consider funding projects that benefit companies from the European nation as part of a $2.5-billion investment programme, and the Netherlands has helped fund assessments of water quality in the country.

“The market needs a pipeline” of projects, Koffman said. We are making sure the “program has the support it needs when it pulls the trigger,” she said.

Edited by Bloomberg




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