Water is a catalyst and enabler of economic growth and socioeconomic development. Yet an analysis of the available water yield and water requirements indicates that SA may run out of water by 2020.
The agricultural sector and large industries consume copious volumes of water, and rapid urbanisation and industrial and population growth generates increased volumes of wastewater that can be treated and reused for agricultural and industrial processes. The sludge that is a byproduct of the treatment process can also be reused for agricultural activities or converted into energy.
Additional benefits of wastewater reuse include a reduction in negative environmental effects, fewer negative health impacts, improved stream flows and improved water quality. The reuse of effluent is therefore an effective alternative to natural water sources.
The Water Services Act prescribes the legislative duty of municipalities as water service authorities to supply water and sanitation services.
Many municipalities face significant service delivery challenges that inhibit them from fulfilling their mandate effectively. The difficulties are usually a result of underlying institutional challenges and financial constraints. Institutional challenges come from inadequate capacity and experience to fulfil mandates.
MEANINGFUL PRIVATE SECTOR PARTICIPATION MAY BE A MEANS TO ALLEVIATE THE CHALLENGES.
Given the challenges faced by municipalities, the role of private sector players has gained prominence.
Meaningful private sector participation in the water sector may be a means to alleviate the challenges municipalities face. While there is strong private sector participation in bulk water supply, there is a push to increase participation in wastewater reuse.
Private sector involvement in the wastewater sector is important in not only easing the burden of undertaking water infrastructure projects and services but it also facilitates an opportunity for skills transfer and innovation.
Private sector participants face two key challenges:
Economic pricing of water is not cost reflective. The pricing model for water provision is typically substantially lower than the cost, resulting in a limited ability to ensure adequate revenue generation for water utilities. This is compounded by an inability or lack of willingness to pay tariffs by end users. Water is typically perceived as a public good and is a constitutional human right.
Traditional procurement methods of lowest price bid versus the most technically astute tends to result in contracts being awarded to bidders that may not be technically equipped to carry out the services or provide an efficient solution.
Our practice is the financial and economic lead in a municipal wastewater reuse private sector participation project that aims to tackle the water shortages affecting a region in KwaZulu-Natal.
Both industry and commerce-related users consume potable water supplied by the city in their industrial processes and commercial activities. A majority of the generated effluent is discharged into the sea through a marine outfall. The discharge of effluent to sea presents a lost opportunity to reclaim and reuse the effluent.
The establishment of a "one-stop office" is a potential solution to tackling some of these challenges.
This could be located under the auspices of a dedicated department or public entity purely concentrating on one subsector (namely reuse of effluent) towards water sustainability and security. The one-stop office would be established to:
Reduce the time from inception, feasibility study and investigation to delivery of the potential improvement in wastewater treatment works and utilisation of effluent.
Promote private sector participation through a streamlined, viable procurement framework and process that is easily understood, applied and lends comfort to potential investors and stakeholders eager to participate in this subsector.
Promote innovative solutions in technological advancements through a number of competitive procurement processes over an extended period of time, thus driving down costs (capital and operational) with each iteration.
Promote SA’s socioeconomic imperatives, broad-based black economic empowerment, local content and participation and enterprise development in a subsector that is very difficult for local participants to access.
A programmatic approach that is centrally managed and located lends itself to scalability, a repository of knowledge for success and failures and an opportunity for continuous improvements in the sector.
The promotion of an enabling legislative and regulatory environment towards wastewater service delivery.
Developing a financing strategy to ensure projects are structured in a way that may enhance their bankability for the private investor is key.
The financing strategy needs to be developed from the early conceptual stages of a project or programme and through collaborative engagement with potential private sector stakeholders. This allows for the definition and structure of a project in a way that aligns with the funding requirements from the start.
Ultimately, strong collaboration between local government and private sector participants will be required to tackle the urgent need to find alternative sources of water and improve the existing institutional and funding challenges within the sector.
• Pautz and Mbarawa are with the Infrastructure and PPP Advisory practice at Genesis Analytics.