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Published: 04.06.2017

PPIAF to provide financial and technical support to advance non-revenue water in South Africa through SWPN

South Africa has a population of 51 million people with 60 percent of the population living in urban environments and 40 percent living in rural settlements. South Africa obtains its water supply from surface water (77%); groundwater (9%); and recycled water (14%).1 Currently, South Africa is using water broadly within its natural supply limits (using 98 percent of its predicted total resources) and rising temperatures will undoubtedly make the situation worse. During recent years, water issues in South Africa have moved to the forefront of national concern. The Global Risk Report (2015) of the World Economic Forum recognizes water scarcity as the number one global risk from both a resource and access point of view, highlighting the significance and severity of the prevalent water issues for South Africa and for the entire global community.

The Strategic Water Partners Network (SWPN) is a dynamic and cutting edge partnership between the public sector, primarily the Department of Water and Sanitation (DWS), the private sector and civil society. Together these three partners are working to close a projected 17% gap between water supply and demand by the year 2030 in South Africa. The partnership was established by the 2030 Water Resources Group (now hosted by IFC) in 2011 and strives to contribute to efficient, equitable and sustainable water supply and access to water for all South Africans through the identification and application of innovative and cost effective solutions and programs. The SWPN has become an established forum for collaboration between the public, private and civil society stakeholders on the country’s most pressing water issues.

South Africa is losing approximately 35% of its water supply to Non-Revenue Water (NRW). There is consensus within the sector that Water Conservation and Water Demand Management (WCWDM) is paramount to the sustainability of water supply and overall water security. Persistent problems related to inefficiencies in water management and use will, if unabated, continue to deplete the scarce resource resulting in further costly investment requirements. Given the historic difficulty of providing enough water to meet society’s needs, there is an acknowledgment that governments and the private sector should collaborate to develop effective policies and sustainable solutions.

As a response to incentives to work with the private sector, municipalities have expressed interest to potentially improve and maintain their NRW performance through Performance Based Contracts (PBCs). Meanwhile, many private service companies, particularly domestic and regional firms, would like to participate in and offer value-for-money services to water boards through PBC tenders. These private companies understand the market opportunity and possess the resources and skills necessary to provide quality offers. There are various types of PBCs, each with different risk allocations and different information requirements, that could be implemented depending on the circumstances of each municipality. Examples are the Physical Loss Reduction (DBOM) contract; the 24/7 Self-Optimizing Contract; the Cost-Plus (for use in Competitive Discovery) Contract; and the Incentivized Program Management Contract.

With support from the Public – Private Infrastructure Advisory Facility (PPIAF), assistance will be provided for improving the financial and technical capacity of selected municipalities. Along with South Africa, PPIAF and the World Bank Group are supporting other countries in Africa and around the world manage their NRW, through a partnership with the International Water Association. Specifically, the intervention is expected to help: a) the institutional set-up of NRW units; b) develop a NRW Reduction Plan covering both technical and commercial aspects; c) produce a market scoping assessment that will assist in gaining a better understanding of private sector interests in providing financing in water and wastewater treatment solutions; and d) organize workshops to disseminate the findings of the NRW Plans and designs for NRW Performance Based Contracts.

The funding from PPIAF is a welcome financial and technical contribution to support water conservation and demand management measures with the private sector working closely together with the public sector to close the water gap by 2030.

Click here for more information about PPIAF.