Briefing by National Treasury and AGSA on current financial position of Johannesburg Water and implications for water security; with Deputy Minister

Video The Portfolio Committee on Water and Sanitation met with National Treasury and the Auditor-General of South Africa (AGSA) to discuss the financial and operational challenges facing Johannesburg Water. The Committee's primary concern was the entity's sustainability as the water provider for South Africa's main economic hub. AGSA reported that Johannesburg Water was financially stable on paper, with positive net assets and a recorded cash balance of R4 billion. The Committee challenged this, noting that the R4 billion represented a loan account entry on the balance sheet rather than accessible cash, as funds were swept daily into the City of Johannesburg’s (CoJ) central account. National Treasury attributed the entity’s long-term decline to weak municipal governance, poor capital budgeting, and a failure to treat Johannesburg Water as a self-sustaining business, which had led to chronic under-investment in infrastructure. A significant focus of discussion was the sweeping arrangement. AGSA stated that its audit found that sweeping contributed to 30% of late payments to suppliers, while 70% resulted from internal inefficiencies within Johannesburg Water. Committee Members contested this, citing oversight visits that indicated sweeping was a major cause of delays, hindering the entity’s ability to pay contractors and maintain infrastructure. Members highlighted the disparity between internal financial issues and outstanding debts to major contractors, emphasising that sweeping had significant practical consequences for service delivery. Both AGSA and National Treasury underscored the importance of ring-fencing Johannesburg Water’s revenue and establishing clear service-level agreements with CoJ as part of critical reforms. National Treasury outlined measures to develop a service compact by the start of the next financial year, granting Johannesburg Water greater operational autonomy. Committee Members pressed for urgent intervention, stricter regulation of sweeping, and consequences for the City providing misleading information. They stressed that Johannesburg’s water security was a matter of national importance, requiring that revenue collected by Johannesburg Water be reinvested into the service and that infrastructure funding not remain locked in loan accounts. The Committee emphasised the need for robust internal controls, improved financial management, and accountability for poor decisions. Members noted that modern management tools, including technology innovations, should be employed to support the utility, given the size of Johannesburg’s population and its critical economic role. Deputy Minister David Mahlobo concluded by expressing the Department’s support for the Committee’s oversight and commitment to reforms that would ensure revenue was reinvested into services, while highlighting ongoing collaboration with Rand Water and initiatives to unlock major infrastructure investments. The Committee acknowledged the responses as satisfactory but reiterated the urgent need for systemic improvements to safeguard Johannesburg Water’s functionality and South Africa’s broader water security.