Many reports have surfaced in the media of irregular spending and a surplus of funds within the City of Cape Town’s annual water budget, and the City has now decided to set the record straight.
At the end of 2017, additional funding was made available to fund the City’s various water augmentation projects as the drought had constrained the available water resources.
“This was a wholly new budget, to be funded through external loans as the need arose, which almost doubled the original budget for water and sanitation,” said Deputy Mayor and man in charge of the New Water Programme, Ian Nielson.
To date, 85% of the original budget has been spent.
“This original budget, along with the New Water Programme budget, reflects a rand value spend of R1,72 billion by the Water and Sanitation Department in the 2017/18 financial year, which is the highest annual spend ever achieved,” Neilson said.
“In the step one tariff, the average increase has been limited to R2,65/kl,” he added. “If water restrictions are lowered to appropriate levels by the National Department of Water and Sanitation, the City will lower the associated water tariffs.”
To clarify, there are two separate budgets that are being conflated to give residents a skewed idea of budget spend progress.
The original budget for Water and Sanitation services has already achieved 85% of it’s expenditure. This amount is attributed to normal operations such was pipe maintenance and water treatment.
This expenditure is separate from the budget that was made available for the New Water Programme for the funding of costly water augmentation projects such as aquifer extraction and desalination. It is misleading to presented these budgets as one entity as each is separate.
The money budgeted for the Water and Sanitation Department that has not yet been spent on the New Water Programme will be provided from external loan funding. Since the expenditure was lower than originally allowed for, the loans have not been taken up, providing a saving to the public as no interest repayments are due.
The impact on the rest of the 2017/18 budget has been minimal because of this.
As the City was not required to take up the loan funding, this also contributed to lower water tariffs in the 2018/19 financial year than would otherwise been inforced. Thus the financial impact of the saving has been positive for the public.
Additional savings were made possible through not spending on equipment for water collection points. This is indicative of the effectiveness of the water demand management strategy that the City introduced, and the water-saving efforts of residents.
The New Water Programme evolved out of the Water Resilience Programme. As the programme progressed, savings were identified through the constant review and re-phasing of the programme.
The City has proceeded with the implementation of the augmentation programme, which includes:
– Groundwater projects at Atlantis, the Cape Flats aquifer and the Table Mountain Group aquifer
– Temporary desalination plants at Strandfontein, Monwabisi and the V&A Waterfront
– Water re-use projects
The City makes no profit on the sale of water
If water restrictions are lowered to appropriate levels by the National Department of Water and Sanitation, the City will then lower the associated water tariffs. Restriction levels are linked to dam levels, and restriction tariffs are linked to the volume of water used by the City. This means that if the restriction level is reduced, individual use is expected to increase as the tariff decreases, ensuring the City receives the same total income.