Water and Sanitation Services South Africa Ltd (Stutterheim)

concluded

In 1993, prior to the democratic elections in South Africa, the Stutterheim municipality formed an affermage (lease) contract with Aqua Gold (now Water and Sanitation Services South Africa (WSSA)) to manage, operate and maintain water and sanitation services in the town. The council's objective was to streamline municipal functions, delegate management and improve efficiency by buying in the necessary technical skills to operate efficient water and sanitation services for the town of 35-40,000. 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. WSSA was to be responsible for the cost of operation and maintenance and the Council was to be responsible for all capital investment requirements. WSSA played no role in setting tariffs, which were tightly controlled by the council. WSSA was responsible for nearly all sanitation services (with the exception of the small network in the Mlungisi low-income area) including conservancy services and wastewater treatment. They were also responsible for all bulk water supply and treatment and for distributing water in the former white areas of the town. The STLC ran a parallel team of municipal workers to construct, operate and maintain water distribution at the tertiary and secondary level in the former township area of Mlungisi. The council had repeatedly resisted proposals from WSSA to expand the arrangement to distribute in these poorer areas and to take responsibility for customer services. The operating fee was calculated to cover the fixed expenses of WSSA plus a variable charge for the volume of water supplied and sewage treated. This variable fee represented approximately one-third of the monthly fee paid by the council. The nature and scope of the payment was structured to provide a number of incentives for the operator to ensure the ongoing maintenance of the system. The variable fee was based on the volumes of water used at the meter and sewage effluent treated. This meant that water leakages in the secondary network were not paid for by the council but WSSA. The project concluded in June 2003 as the municipality reassumed operational control of its utility. Studies indicated that by 2000 the average number of leaks in the system had declined by 70%; the average number of bursts in the water network had declined by 20-30%; the average number of sewerage blockages has reduced by over 40%; and UFW in Stutterheim town had steadily declined over the contract period from 38% in 1993, to 33% in 1997 and 24% in 2000. Water quality also reportedly improved dramatically. However, the municipality perceived the arrangement as being costly and this was one of the primary reasons for the sometimes difficult relations between the council and the operator. None None