South Africa: Good Performance of Lepelle and Overberg Boards Undermined by Misaligned Water Value Chain

The Portfolio Committee on Water and Sanitation has welcomed the improved performance of two water boards, Lepelle Northern Water and Overberg Water, but cautioned that misalignment within the water value chain continues to result in communities experiencing dry taps.

The committee is currently undertaking a process of considering the annual reports of all water boards and received briefings from Lepelle Northern Water and Overberg Water. While the committee commended the improving governance and operational performance of both entities, it noted that the lived experiences of end users in the areas where these boards operate often paint a contrary picture to the positive performance outcomes reported.

“The good performance by the water boards is a direct representation of a fractured system, where improvements in the performance of the water boards do not translate into direct positive outcomes for communities. In a fully functional system, improvements in the performance of the water boards would lead to a tangible improvement in water access for the people,” said Mr Leon Basson, the Chairperson of the committee.

Municipalities, which are a critical role player in the water value chain, continue to exert downward pressure on the system through high levels of non-revenue water within municipal reticulation systems and the persistent non-payment for bulk water services supplied by the water boards. These challenges pose a significant risk to the financial sustainability of water boards.

The committee continues to urge a collaborative approach between the Department of Water and Sanitation and the Department of Cooperative Governance and Traditional Affairs to ensure comprehensive alignment across the water value chain and to safeguard access to water as a foundation for socio-economic development.

Regarding Lepelle Northern Water, the committee welcomed the improvement in governance and operational performance. The entity achieved an overall performance rate of 90% against its planned targets. Considering the governance and operational challenges experienced in previous financial years, the committee encouraged the board and senior management to continue prioritising liquidity and the overall financial health of the entity.

While revenue collection has improved by 11%, the committee remains concerned about the impact of municipal debt on the financial sustainability of the entity. Municipal debt owed to Lepelle Northern Water has increased to R1.36 billion, which remains a serious concern. The committee reiterated that municipal debt to water boards is a matter requiring urgent attention to ensure the sustainability of both the water boards and the broader water supply system.

Regarding Overberg Water, the committee emphasised the need for the entity to develop a clear growth strategy to expand its revenue base and ensure long-term sustainability. The committee welcomed several initiatives aimed at improving revenue generation, including plans to secure additional industrial customers and farmers, as well as the management of wastewater treatment works on behalf of municipalities and commercial clients.

The committee also noted positively the clean audit outcome achieved by Overberg Water. It remains the committee’s view that sound governance and strong financial management form a critical foundation for institutional effectiveness and service delivery.

Meanwhile, the committee resolved, following legal advice, to give the National Economic Development and Labour Council 14 days to make a submission on the Water Services Amendment Bill [B24 – 2025], following a request by NEDLAC for the committee to allow the Department of Water and Sanitation and Nedlac sufficient time to engage on the Bill. The committee is of the view that the three months requested by NEDLAC is not practical and would unreasonably delay the consideration of the Bill.