South Africa has begun the process of establishing a new utility to help it entice private investment in infrastructure needed to head off potentially crippling water shortages.
The Department of Water and Sanitation plans to submit a bill to the cabinet by the end of April that sets out proposals for the creation of the National Water Resources Agency, according to Sean Phillips, its director-general. It will be created by combining the department’s Water Trading Entity and the Trans-Caledon Tunnel Authority, or TCTA, and could be operational next year.
“We want to create an entity to raise non-fiscus finance” and it should have a substantial balance sheet, Phillips said in a March 28 interview. “It would use a variety of different approaches,” including raising money based on revenue streams from particular projects, loans and other forms of finance that will draw in private companies to provide water, he said.
It will also combine two organisations, cutting down on costs and bureaucracy, said Barbara Schreiner, executive director of the Water Integrity Network, an international advocacy group that campaigns for transparency and capacity development in the water sector. The functioning of the agency will most closely mirror the way South Africa finances its national road network through the South African National Roads Agency SOC Ltd. The country’s power also mostly comes from a national electricity utility, Eskom Holdings SOC Ltd.The replacement value of South Africa’s national water assets is currently between R200 billion and R300 billion, according to Phillips, when asked about the potential size of the entity’s balance sheet.
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