NEDLAC AGREEMENT ON THE WATER SERVICES BILL

1. BACKGROUND

1.1 Government had formally tabled this issue at the Development Chamber meeting of 8 May 1997. The draft water services bill was published for comment in the Government Gazette of 23 May 1997. The bill aims to give legislative effect to the policy set out in an earlier white paper on water supply and sanitation policy (November 1994)

1.2. It must be noted that commenting on the water services bill (WSB) was hampered by the absence of the proposed bill dealing with national water resource management. The WSB deals with the supply of water and sanitation. It does not deal with issues of water resource management and allocation.

1.3. These issues have a considerable impact on the need for and the cost of water services both to the provider and to the consumer.

1.4. The two bills should be read together to enable a comprehensive overview of the economic, social and developmental implications of the water law reform. That was made difficult in that at the time of preparation of attached comments, the national water bill was not ready for comment.

2. THE PROCESS IN NEDLAC

2.1. Development Chamber - 22 May 1997

2.1.1 At the chamber meeting of 22 May 1997, the chamber agreed to establish a task team comprising the representatives of all constituencies and the Department of Water Affairs and Forestry (DWAF). The task team was expected to receive positions from constituencies and attempt to reach consensus on the issues identified for the negotiations. The task team was to table the draft for chamber consideration.

2.1.2. Meetings of the task team took place on 10 and 30 June and on 14 July 1997 in order to consider the written positions of constituencies on the water services bill received from labour, community and business.

2.2. Development Chamber 17 July 1997

2.2.1. The task team had tabled the draft agreement at the chamber meeting of 17 July 1997.

2.2.2. All constituencies indicated their in-principle support of the water services law and the need to redress current inequalities. However, constituencies had asked to be given time in order to peruse the document which had been tabled on the Draft Agreement by the Development Chamber concerning the water services.

2.2.3. The chamber meeting agreed to forward to the secretariat written responses to the document which had been tabled by no later than 22 July 1997. In addition, constituencies agreed that a report to the Department of Water Affairs and Forestry should include annexures of the constituency positions on the water services bill.

2.2.4. The chamber had agreed to mandate the task group to engage with the parliamentary process in order to attempt to reach consensus on the outstanding issues.

2.3. Development Chamber - 21 August 1997

The draft agreement concerning the water services bill was tabled at the chamber meeting of 21 August 1997 and was ratified by all the chamber constituencies.

2.4. Management committee - 31 July 1997

The draft agreement was tabled at the management committee meeting of 31 July 1997 for noting.

3. AIMS OF THE AGREEMENT CONCERNING THE WATER SERVICES BILL

The aim of the agreement concerning the water services bill was to give broad recognition of the urgent social, political and economic imperatives underlying the proposed reform of the water services law and the need to redress current inequalities. In particular, the agreement adresses the following issues:

• right of access to basic water supply and sanitation.
• division of functions between levels of government.
• private sector involvement in water service provision.
• regulation of water use by industrial users.
• supplying of water services by industrial users.
• norms and standards for tariffs.
• setting minimum standards for service levels.

4. CONCLUSIONS OF THE AGREEMENT CONCERNING THE WATER SERVICES BILL.

This report, therefore, completes consideration of this issue within Nedlac, and the report and attached agreement concerning the water services bill is hereby submitted to the Minister of Labour and Minister of Water Affairs and Forestry in terms of section 8 of the Nedlac Act, No. 35 of 1994.

Appendix 4

The water services bill published
23 May 1997

1. INTRODUCTION

1.1. The water services bill was published on 23 May 1997 and tabled at Nedlac for negotiations. The bill aims to give legislative effect to the policy set out in an earlier White Paper on Water Supply and Sanitation Policy.

1.2. Written submissions were received detailing the responses of the chamber constituencies to the bill. Consensus was achieved on several important issues, detailed in part 2 below. A number of other areas of concern were raised by the constituencies in their formal submissions to Department of Water Affairs and Forestry on the bill. The DWAF has undertaken to give due consideration to these concerns and to the suggestions from constituencies for the reformulation of the bill.

2. AREAS OF AGREEMENT

2.1. Support for reform

There is broad recognition by constituencies of the urgent social, political and economic imperatives underlying the proposed reform of the water services law and the need to redress current inequalities. The constituencies endorse the principles underlying the reform initiative.

2.2. Right of access to basic water supply and sanitation

Constituencies support the recognition of a right of access of all South Africans to basic water supply and sanitation provided for in section 2(a) and section 3(1) of the bill.

2.3. Division of functions between levels of government

Constituencies support the constitutionally-mandated division of functions between national, provincial and local government. Constituencies noted their concern about the capacity of local government, particularly in rural areas, to provide the required services. For this reason, constituencies supported the measures provided for in the bill for the upgrading and improvement of local government capacity, financing and infrastructure.

2.4. Private sector involvement in water service provision

2.4.1. Section 20 of the bill provides that the duty to provide services may be carried out either by the municipality itself or by a water services provider in terms of a contract with the municipality. The effect of this provision is therefore that water and sanitation services may be provided by private sector enterprises who have entered into contracts with municipalities to supply services.

2.4.2. The chamber agreed to make amendments to clauses 11(3)(a) and the following insertion of a subclause (3) to clause 20 of the bill:

11(3) In ensuring access to water services, a water services authority must take into account -

(a) alternative ways of providing access to water services by public sector water service providers

20(3) A water services authority must provide reasons for a decision to contract with a private sector water services provider to the Minister and its consumers on request.

2.5. Regulation of water use by industrial users

2.5.1. Concern was expressed about the proposed regulation of water use by industry provided for in clauses 7 and 8. These clauses deal with access to water for industrial use which is defined in the bill as 'the use of water for mining, manufacturing, generation of electricity, transport and construction'.

An industrial user currently obtaining water from a source other than the municipal water system is required by s 7(3) of the bill to apply, within five years of commencement of the bill, to the municipality for approval to continue as before, or if approval is refused, to switch to being supplied by the municipal system.

2.5.2. It was agreed to amend section 7(4) as follows:

If approval is refused that person must within a reasonable specified period switch to the manner approved by the water services authority.

 

2.5.3. A further difficulty relating to section 7 and 8 related to the five-year phasing-in period during which industrial users were to be brought into municipal supply systems. Concern was expressed that the effect of a five-year phasing in period to establish institutional control over the provision of all water services may delay the process of equalising the access to water.

2.5.4. The following amendment was agreed to section 7(3):

  7(3) Any person who, at the commencement of this Act was -

(a) using water for industrial use; or

(b) disposing of industrial effluent, in a manner which requires the approval of a water services authority may so continue but must apply for approval within five years from the date of commencement of this Act, and if approval is refused, switch to the manner approved by the water services authority within a specified period.

2.6. Supplying of water services by industrial users

2.6.1 It is a basic principle of the bill that water service provision is the duty of local government. At the same time, the bill envisages that in certain circumstances industrial users in control of non-municipal water supply infrastructure (mines, for example) could assist a municipality to supply water services to consumers. section 8(1)(b)(ii) therefore provided that where permission was granted by a municipality to an industrial user to continue using a non-municipal source of supply, such permission 'may include a condition that water services must be provided to others'. While constituencies supported the principle underlying this provision, concern was expressed that the section could be interpreted as placing a duty on industrial users to supply water regardless of the practicability of doing so and at their own cost. The following amendments to the clause to further regulate the possibility of imposing a duty on industrial users to supply water other than for their own use and to clarify that the costs associated with such supply would be borne by the municipality were supported.

2.6.2 The meeting supported the following amendments to clause 8(1)(b)(ii) and to clause 8(2):

8(1) Any approval required from a water services authority in terms of section 6 or 7-

(a) may not be unreasonably withheld; and

(b) may be given subject to conditions, which-

(i) must be reasonable, and

(ii) may include a condition that water services must be provided to others: provided that an agreement has been reached between the person referred to in section 6 and 7 and the water services authority on the manner of payment for such services to be provided, and on the manner of compensation for any costs of reticulation and other charges that may be incurred by that person in respect of such service, which agreement may not be unreasonably withheld.

(2) In determining reasonableness under subsection (1), regard must be given to -

(a) the cost

(b) the practicability

(c) the quality

(d) the reliability

(e) the technological and managerial advisability; and

(f) the economic and financial efficiency, of providing the water services in question.

2.6.3. It should be noted that the amendments to section 8(2) address both the reasonableness of a grant or refusal of approval to continue using a non-municipal source of supply and the reasonableness of any condition attached to the grant of approval. These amendments therefore go to the concerns expressed by constituencies surrounding the condition that industrial users may be required to assist a municipality in fulfilling its duty to supply water and further regulate the discretion of the municipality to grant or withhold permission to an industrial user to use a current non-municipal source of supply. The amendment addresses the concern of constituencies that the determination by industry of its optimum source of water supply was a decision based on technological, economic and financial factors. The amendment therefore requires local government to take similar factors into account in the making of its decision to grant or withhold approval to an industrial user to use a non-municipal water source.

2.7. Norms and standards for tariffs

2.7.1 Constituencies supported the power granted by the bill to the minister to regulate national tariff standards. Amendments were proposed to the DWAF to ensure that the regulation of tariffs included consideration of the option to cap tariff rates to prevent the possibility of runaway tariff increases by local authorities. In addition it was proposed that some of the concerns expressed by constituencies over the policy of cross-subsidisation endorsed by the White Papers on Water Policy and on Water Supply and Sanitation may be addressed by requiring the minister to consider the possibility of requiring ring-fencing of income generated by tariffs.

2.7.2 The meeting proposed the following insertions in clause 10(3) relating to the factors to be considered by the minister when setting national norms and standards for tariffs.

(3) In prescribing the norms and standards, the Minister must consider-

(e) the capping of tariffs for the provision of water services:

(f) the ring-fencing of income generated by the recovery of such tariffs;

2.8. Setting minimum standards for service levels

2.8.1 Constituencies expressed concern about the lack of adequate definitions of key concepts relating to service levels in the bill such as 'basic water supply' and 'basic sanitation'. The bill provides for these terms to be prescribed by regulation of minimum standards by the minister. It was anticipated by representatives that the determination of such standards could become an area of considerable contention between the government and user sectors. The chamber proposes the prescription in the bill of minimum standards for access to water services and sanitation. Once prescribed in the bill, such minimum could be improved on or raised by subsequent ministerial regulation but could not be lowered.

2.8.3. The meeting agreed that the DWAF and individual constituencies would consider ways to specify mechanisms in the bill for ensuring that the procedures for setting of water service standards were open and transparent. In addition constituencies would suggest options for redrafting to ensure that the objects of standard setting and the factors to be taken into account when determining standards were clearly prescribed and were acceptable to all.