Article by: Michael Jackson - Partner, Cox Yeats
In 1998, the National Water Act (the Act) was passed. It provided a radical reform of our water law, seeking to achieve the aim of providing water to all people in South Africa.
The State was appointed the public trustee of the nation’s water resources and national government was tasked with ensuring that all water resources were used and controlled in a sustainable and equitable manner.
Whilst the intentions behind the Act were laudable, very little has actually been achieved in the area of water reform and providing water resources to all people. One of the major criticisms has been a lack of funding in water infrastructure. This has included the establishment of large dams and water transfer schemes. The State, on its own, has not been able to achieve the objectives which were set out in the legislation.
The Trans-Caledon Tunnel Authority (TCTA) is a state-owned entity which was established in 1986 to finance and build the South African part of the Lesotho Highlands Water Project. This was a special purpose vehicle for South Africa to use to fulfil its treaty obligations to Lesotho in respect of this project.
In 2000, the mandate of the TCTA was extended to include other projects which could be financed through the private sector. These included the Olifants River Water Resources Development, the Mokolo Crocodile Water Augmentation Scheme, the Berg River / Voëlvlei Augmentation, the uMzibuvubu River Water Scheme and the Kriel Offtake Projects.
Basically, these were all public private partnership schemes to develop major water infrastructure.
The government seems to now recognise that the financing and implementation of bulk raw water infrastructure projects requires the involvement of both the public and the private sector. Instead of these schemes being owned by the government, it recognises that the model followed by the TCTA is more effective.
On 27 August 2024, the President approved of the South African National Water Resources Infrastructure Agency Bill (the Bill), which provides for the incorporation of a new company which will be owned by the government and called The South African National Water Resources Infrastructure Agency SOC Limited (the Agency).
This company will acquire all of the assets of the TCTA and use the model of the TCTA to further invest, finance and implement bulk raw water infrastructure projects. It is felt that if the Agency owns the assets, then it will have a large asset base on which it can unlock funding for new projects.
Within 12 months after the date of incorporation of the Agency, the Minister is to determine what government water works are to be labelled as National Water Resources Infrastructure and transfer the National Water Resources Infrastructure to the Agency. The other government water works are to be transferred to a water management institution. This will mean that the Agency will have a very large asset base and commercial enterprise. The Agency will be entitled to collect the revenue, previously earned by the State, on the National Water Resources Infrastructure, including collecting the water use charges due to it in terms of Chapter 5 of the Act.
The Bill is to be welcomed as it recognises the need to invest heavily in the South African National Water Resources Infrastructure and that the financing and development of large scale water projects needs the input of the private sector.
The TCTA was a successful example of financing and implementing viable economic projects. Obviously, it is hoped that the Agency will be an effective body, not marred by corruption and mismanagement.
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