WaterPartially implementedMedium TermWater and Sanitation

Raw Water Pricing Strategy Reform

Theme: Water pricing

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Assessment

Growth Impact4/5

Feasibility3/5

Responsible: Department of Water and Sanitation

Feasibility Assessment

Medium: setting cost-reflective raw water tariffs for the Water Trading Entity, with a transparent cross-subsidy for poor households and smallholder farmers, sits within DWS's own pricing powers and requires no legislation. The obstacle is the payer profile rather than the tariff formula — the largest offtakers are municipalities whose non-payment already threatens water board viability, so cost-reflective pricing reallocates an under-recovery that has until now been financed by deferred maintenance. Absent a parallel municipal debt and collection settlement, a higher tariff raises billed revenue rather than collected revenue, and the WTE's maintenance funding gap is unchanged.

Description

South Africa's raw water pricing — the charges levied by DWS for water abstracted from state water schemes (dams, reservoirs, and inter-basin transfer infrastructure) and supplied to municipalities, industries, and agriculture — is managed through the Water Trading Entity (WTE). The existing pricing structure has been criticised for systematic under-recovery of operating and capital costs, leading to infrastructure maintenance underfunding. The Raw Water Pricing Strategy reform aims to introduce cost-reflective tariffs that recover full operating and maintenance costs while providing transparent cross-subsidies for poor households and smallholder farmers.

International Comparisons

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France1964

France funds water infrastructure from charges on the people who abstract and pollute water, collected and spent inside the river basin that generates them. The 1964 water law created, in each basin, a committee on which local authorities and users hold at least two-thirds of the seats, and an agency that levies charges on public and private users — six of each, once the basins were delimited. The load-bearing clause is the one that runs the arithmetic backwards: the total charge take is set by what the agency's multi-year investment programme costs. Payers vote the programme and are billed for it, which is why cost-reflective abstraction charges have survived six decades.

Approach

Charges are levied on the volume abstracted and on pollution discharged, on public and private users alike. The agency is a ring-fenced public establishment: receipts do not go to the general budget but into a multi-year programme of grants and loans for treatment works, network renewal and resource protection, executed as works of common interest to the basin. The statute ties the two together explicitly — the total charge take is determined by the spending the programme imposes on the agency — and the basin committee, where the payers sit, must agree the rates.

Timeline: Basin committees and basin agencies created by the water law of 16 December 1964, operational once the basins were delimited; the charge-and-programme model carried forward by the 1992 and 2006 water laws

Lessons for South Africa

The Water Trading Entity already has the ring-fenced shape — raw water charges levied by DWS on abstraction from state water schemes, held apart from the fiscus. What it lacks is the French bargain: a published investment programme whose cost sets the charge, agreed by a body on which the payers hold most of the seats. That matters because the largest offtakers are municipalities whose non-payment already threatens water board viability: cost-reflective pricing without a visible programme raises billed revenue, not collected revenue. A transparent cross-subsidy for poor households and smallholder farmers is easier to defend inside a published programme than as a line in a tariff.

Status History

tracked since Mar 2026

Recorded as Partially implemented when status tracking began — held since at least Mar 2026.
Mar 2026

Data as of 2026-08-24 · latest PMG meeting 2026-08-21