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Trends in the insight into the growing South African municipal water service delivery problem
Expanded Title:The sustainability of South Africa municipal water services provision is being challenged by the desire of government to extend high quality services from a relatively small portion of the population to the whole. Evidence of failures in delivery are mounting and many reasons for this have been identified, including a lack of political will at local government levels, low budget priority, insufficient capital, lack of capacity and skill and flawed tariff and accounting structures. This study generates new perspectives by surveying selected but representative, South African municipalities in their capacities as water service authorities (WSAs) on a range of financial sustainability issues – including cost burden on users, cross sub-subsidisation and cost calculations to set tariffs. The study is part of a wider investigation into the setting of tariffs that cover costs and satisfy demand, funded and advised by the Water Research Commission (WRC) An important, but neglected (in Africa), type of efficiency/equity analysis of water service provision in South Africa is that of the efficiency in mix of water service output. It has the aim of getting the right product mix. An analysis of efficiency in the mix of water service output is one that aims to match demand to the service produced. It is inefficient to produce a mix of outputs that the recipients cannot afford. The study concludes that in general there is under-recovery of costs in the water services sector and this occurs for many reasons. Inter alia, it occurs because there are insufficient transfers to cover the costs of those who do not pay, from central government grant assistance to the poor, there is inadequate provision for replacement and maintenance costs (also called rehabilitation cost or deferred maintenance) and external costs are being omitted. The problem of inadequate provision for replacement and maintenance costs should not occur if generally acceptable accounting principles for depreciation and maintenance are applied. Straight line depreciation of water infrastructure assets should in principle over-estimate depreciation where there is adequate maintenance renewal, because renewal has the effect of keeping infrastructure value somewhere between 65% and 95% of replacement value. The problem that is arising is that there is inadequate maintenance (renewal and rehabilitation), resulting in the current value (condition) of infrastructure falling below this proportion. It has been estimated that the current depreciated replacement cost to current replacement cost (DRC/CRC) for water and sanitation infrastructure has declined to about 52%.
Date Published:25/04/2013
Document Type:Research Report
Document Subjects:Wastewater Management - Sewers, Sanitation - Waterborne sanitation
Document Keywords:Municipality
Document Format:Report
Document File Type:pdf
Research Report Type:Standard
WRC Report No:2087/1/P/13
ISBN No:978-1-4312-0406-9
Authors:Hosking SG; Jacoby DL
Project No:K5/2087
Organizations:Departments of Economics, Nelson Mandela Metropolitan University
Document Size:996 KB
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