Strict measures for defaulting municipalities that owe water boards R25 billion

Water and Sanitation Deputy Minister Sello Seitlholo said on Tuesday his department will continue to request the National Treasury to withhold Equitable Share allocations to defaulting municipalities that owe R25 billion to water boards.

Seitlholo said the withholding of the allocations was used as the last resort to force the councils to honour their obligations.

“The Department of Water and Sanitation, together with the National Treasury and the Cooperative Governance and Traditional Affairs (Cogta) Department, will continue to implement this measure to municipalities that persistently default on their current accounts,” he said.

Seitlholo made the statement when his department, Cogta and National Treasury briefed the Portfolio Committee on Water and Sanitation on the withholding of the Equitable Share from municipalities owing water boards.

He said the withholding of the Equitable Share was meant to ensure defaulting councils paid their current invoices prior to their allocations being released by the National Treasury.

“It is not aimed at reducing the historical debt. The debt write-off mechanism that has been agreed to between the National Treasury and Department of Water and Sanitation is aimed at reducing the historical debt,” said the deputy minister.

Seitlholo said the debt owed to water boards stood at R25 billion as at July.

 “The outstanding debt owed to water boards by municipalities does pose a financial threat to operational and sustainability of the water boards,” he said.

Seitlholo also said the withholding of the Equitable Share allocation was necessary and temporary intervention to safeguard the sustainability of the water bards.

“This mechanism will be in place until most of the non-compliant municipalities demonstrate consistent payment of their current invoices.”

Director-general Shaun Phillips said they get often get requests from the water boards to ask the National Treasury to withhold allocation from municipalities which consistently do not pay their current invoices. 

The department submitted 35 requests to the National Treasury for the withholding of the equitable share of defaulting municipalities in July.

National Treasury official Sifiso Mabaso said 18 municipalities submitted written representations to Minister of Finance Enoch Godongwana.

 “A total of R278 million was paid to the water boards within a period of seven weeks,” he said.

A Cogta presentation said R3.9 billion was withheld from 34 municipalities.

It said of the 34 municipalities, 18 municipalities owed the highest amounts to Vaal Central, Magalies Water, Lepelle Northern Water and Rand water and that these water boards face severe financial challenges.

“The total amount owed by these municipalities to the water boards is R15.8 billion.”

On Friday it was reported that the Office of the Auditor-General recovered R460 million in outstanding audit fees from municipalities in December 2024 after the National Treasury notified them of that their allocations would be withheld.

Mabaso said Godongwana has directed the National Treasury to withhold the allocations in December and March 2026.

Phillips said since the next transfer of Equitable Share is in December, the department will be preparing submissions to the National Treasury at the beginning of October 2025.

Parties have welcomed the withholding of the allocations to the defaulting municipalities and praised the collaborative efforts by the departments.

Mk Party MP Visvin Reddy praised the departments for enforcing payments by the municipalities.

“It was a bold step that signals seriousness about accountability,” Reddy said.

ANC MP Stanley Ramaila said: “We appreciate the achievement thus far in terms of making sure that the water boards are self-sufficient and sustainable.”

DA MP Stephen James Moore also thanked the department for the success of the project so far.

“We have saved two water boards,” Moore said.

mayibongwe.maqhina@inl.co.za