Water and Sanitation Services South Africa Ltd (Queenstown)

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In August of 1992, Water and Sanitation Services South Africa Ltd (WSSA) beat two other companies to win the management contract for the water utility of Queenstown, South Africa. On April 1, 1994, following democratization, the contract was extended to cover Greater Queenstown, which extended the old municipality’s boundaries to include the areas of Mlungisi and Ezibeleni. WSSA then serviced a population of 170,000, up from 22,000. Other than the Queenstown contract, WSSA also won 10-year management contracts in Stutterheim (17,000 people) in 1993 and in Fort Beaufort (15,000 inhabitants) in 1995. In 1989 the old Queenstown Municipality was experiencing financial problems which were affecting its ability to adequately provide municipal services. This led to alternative service delivery options being investigated. The result was a management contract between the municipality and Water Services South Africa (WSSA). This resulted in the operations, maintenance and management of water and sanitation systems becoming the responsibility of WSSA for an initial period of 15 (and later extended to 25) years. WSSA was to be monitored by the municipality and was under obligation to report on the quality and quantity of water supplied. A monthly report was submitted to the municipality in this regard. The contract was signed with the Suez-Lyonnaise des Eaux (known as SUEZ as of March 2001) subsidiary Aqua-Gold, which subsequently became WSSA. WSSA was wholly owned by Lyonnaise Water Southern Africa (Pty) Ltd, itself a joint venture between Suez and Group Five/Everite, a South African construction, manufacturing and property development group. The initial contract covered management, operation and maintenance of Queenstown's 50km pipeline and pumping station, 5000 house connections, a 40,000m3/day water treatment plant, 100km of sewers and a 15,000m3/day sewage treatment plant. It also provided bulk water for the Mlungisi and Transkei townships and contracted to extend the sewage treatment plant. Issues of public interest such as the setting of tariffs, standards and level of service were the responsibility of the municipality. The municipality was responsible for paying the contractor at a rate calculated from a combination of a fixed charge component and a variable charge calculated per kilolitre of water metered at the point of sale to the consumer. According to one report, by 2000 unaccounted for water had been reduced from 45% to 21%, the number of reported bursts fell from two per year to 0.2 per year per kilometre of pipeline, the number of reported sewer overflows fell from 19 to 13 per year per kilometre of network, 65% of ageing water pipes in Mlungisi and Ezibeleni were replaced, and benchmarking based on international best practice was introduced. However, other reports indicated that poor residents did not experience these benefits directly. Also, due to problems of non-payment, income had decreased and further tariff hikes were being sought. None None