Durban - The Office of the Auditor-General (AG) has issued a dire warning over the water losses being experienced in the eThekwini Municipality, saying that it had risen to 56.2%.
This means that the City was losing more than half of the water purchased from Umgeni Water which amounted to millions of rand in revenue loss.
The report, which covers the 2021/22 financial year, revealed that while the city purchased 401 527 498 kilolitres of water, it only sold 175 787 719 kilolitres, with the rest of the water getting lost along the way.
This was revealed in a presentation on the municipality’s audit outcomes by head of portfolio from the AG’s Office, Vanuja Maharaj, to councillors in a full council meeting yesterday.
Maharaj revealed that the city had obtained an unqualified audit opinion with findings. The findings were due to repeat audit offences, including lack of accountability and consequence management, irregular expenditure and lack of compliance with legislation.
Maharaj warned there would be severe consequences if the City did not take swift action to deal with the water loss matter.
She said water losses had increased to 56.2% over a five-year period from 36.85% in the 2017/18 financial year.
She said the major contributor to the losses was ageing infrastructure and illegal connections.
The presentation also noted that unfavourable expenditure on repairs and maintenance and capital expenditure has negatively impacted infrastructure as indicated by increased water losses.
Maharaj cautioned that the continuation of the current trends could be dire for consumers and the municipality, with a likely increased tariff that would consequently lower debtor recovery rates.
She suggested that increasing demand from consumers and limited water resources could give rise to the possibility of water shedding in the future. “Additionally the possible impact on water-intensive commercial clients and relative impact on the economy could be devastating,” Maharaj said.
She called on the City to address the budget constraints and even consider getting funds from other units to address the inadequate infrastructure budget as this would help in reducing water losses.
Other transgressions noted by the AG included:
The acquisition of goods and services to the value of over R200 000 without inviting competitive bids as prescribed by supply chain management rules.
Officials owning companies that won contracts from the municipality without disclosing this.
Services providers related to officials awarded work without disclosure of their links.
Maharaj said it was discouraging to note that some of the transgressions had been identified over the previous financial years but there appeared to be no action taken to deal with them.
One of the concerns was the irregular expenditure which was recorded at R1.5 billion for 2021/22, an increase from R770 million in the previous financial year.
Reacting to the AG’s report, opposition parties noted the warning signals that came with it. ADeC councillor Visvin Reddy said the report painted a bleak picture of poor management of the municipality.
“Of particular concern to us is that 56.2% of water bought by the municipality is lost. The city buys about 402 million kl of water but sells only about 175 million kl.
“This means that residents of eThekwini are paying for these huge water losses. The biggest contributor for non-revenue water is ageing infrastructure. With the monies spent on water lost, this could be used to replace pipes.”
DA councillor Thabani Mthethwa said the findings exposed the city’s continued flouting of supply chain management processes.
“Since 2018, the metro has continued to rack up billions in unauthorised spending. In the fiscal year 2021/22, the ANC-led eThekwini Municipality racked up a bill of R1.5bn in irregular expenditure, a significant rise over the preceding three years.”
The DA contended that the report underlined lack of consequence management by the City, blaming mayor Mxolisi Kaunda’s leadership for this.
“Many of the findings against the City are repeat findings involving the same transgressors, the same immoral ANC, and the same Mxolisi Kaunda, who should have been dismissed long ago,” said Mthethwa.
Kaunda, in a statement, welcomed the AG’s report, expressing satisfaction that the overall financial situation of the municipality remained sound. “The municipality is sitting with 51 days cash on hand, with 100% spend on major grants, delivered over R3bn worth of free basic service, has a collection rate of 95%, and prudent borrowing resulting in a moderately geared balance sheet with a gearing ratio of 21%, which is well below the National Treasury benchmark of 45%. The actual operating expenditure was below budget despite substantial increases in bulk purchases,” he said.
City manager Musa Mbhele said in the statement that appropriate plans were being implemented to address consequence management, contract management and performance information.
THE MERCURY