Thursday, 26 April 2018

Increasing Debt at Water Trading entity unacceptable

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Increasing Debt at Water Trading entity unacceptable

The water boards have a total of 23 litigations with cost implications of R71 million if not successfully defended

CAPE TOWN, South Africa, April 26, 2018/ -- The Portfolio Committee on Water and Sanitation is extremely concerned about the increasing debt book of the Water Trading Entity (WTE) despite various calls by the committee to use inter-governmental relations framework avenues to remedy the problem.

The WTE informed the committee that the debt book for the entity was now standing at a staggering R11.2 billion. This an increase of R1.2 billion year-on-year in the debt book from the 2016/17 financial year. While the committee is cognisant of the challenge of non-payment by municipalities, it is unacceptable that it has taken this long and there is no resolution in sight for this long-recurring challenge.

It is also worrying that despite the procurement of a debt collection service provider, no tangible evidence of its work is noticeable. “Now that the contract of the debt collector has ended, it is even more difficult to comprehend how the entity will be able to collect the debt. The committee reiterates its stance that the department must use inter-governmental avenues to deal with the matter,” said Mr Mlungisi Johnson, the Chairperson of the committee.

Similarly, the committee highlighted its displeasure at the high litigation costs in the books of the department and its entities. The department reported that it is facing 135 litigations and the cost implication of R100.7 million if not successfully defended. Added to this, the water boards have a total of 23 litigations with cost implications of R71 million if not successfully defended.

While the committee understands that there might be legal challenges the department has to defend, it views the current litigations as unreasonably high. As a result, the committee has requested a breakdown of the cases and reasons behind the cases, as well as reasonable expectation of success.

“It is even worrying because the cost mentioned does not include lawyers’ fees which will take the total cost even higher. This matter must be resolved with the urgency it deserves,” Mr Johnson said.

The committee was also not impressed with the resolution of the illegal overdraft that the WTE took out with the National Treasury. The committee had requested that both departments enter into a repayment plan that will not hamper the rollout of the mandate of the entity. While the committee acknowledge that the departments are still consulting, have called for urgent resolution of the matter.

The committee remains concerned about the capacity of management at the department to drive this essential entity. Some of the decisions made in the department boil down to lack of capacity. The committee is happy that the new Minister is implementing a review of the structure and measures will be taken to resource the department with adequately skilled employees.      

Distributed by APO Group on behalf of Republic of South Africa: The Parliament

Published in Energy and Environment