The government wants to radically restructure local government by decentralising functions to give more powers to officials in charge of water and electricity.
The proposal is contained in an Operation Vulindlela document presented at the cabinet lekgotla this week.
The document also proposes that the mandate of the Public Service Commission (PSC) is extended to professionalise local government.
The restructuring may see some metros establish separate entities for water and electricity — as the case in Johannesburg — or simply decentralise the system, giving heads of department complete control of their finance, human resources and supply chain management units. This would result in the budgets for water and electricity being ring-fenced so municipalities do not divert funds to other areas.
Operation Vulindlela is a government programme aimed at determining priorities and translating political objectives into actionable strategies.
It was established in October 2020 by President Cyril Ramaphosa to support the cabinet with implementation of priority reforms.
Operation Vulindlela has identified a growing problem with the delivery of water and electricity in all municipalities.
It believes reform is required at local government level as few municipalities are equipped to manage the delivery of water and electricity, leading to widespread service delivery failures.
“The local government crisis is now a direct threat to the viability of water boards and Eskom, which are together owed more than R130bn and rising,” the Operation Vulindlela document states.
“The most immediate crisis is in the delivery of water & sanitation and electricity distribution, which threatens to undermine the progress being made in these sectors.”
It states that in most countries water and electricity are managed by separate, professional utility companies, which it believes could be municipal entities. The creation of such entities would professionalise systems and staff at local government level and ring-fence revenue from services for reinvestment in infrastructure and maintenance.
“The current model of service delivery for water and electricity is producing a vicious cycle of deteriorating performance.”
The government, through Operation Vulindlela, is proposing a shift to a utility model for water and electricity services at local government level.
You need to ring-fence revenues. Water must be self-sustaining. Water maintenance and operation is supposed to be funded from revenue of water
— Sean Phillips, water & sanitation director-general
It proposes that this is first implemented in metros such as Tshwane, Ekurhuleni, Nelson Mandela Bay, Mangaung, Buffalo City, Cape Town and eThekwini.
“Require all metros to establish or appoint ring-fenced, professionally managed independently licensed utilities for water/sanitation and electricity within two years, with support from National Treasury cities support programme and line departments,” it says.
Water & sanitation director-general Sean Phillips said the proposal to restructure local government does not necessarily suggest the creation of new utilities. Municipalities could decide to decentralise and give department heads more powers to run their sectors. There should be correlation between the revenues collected for water or electricity and the budgets allocated to them.
“You need to ring-fence revenues. Water must be self-sustaining. Water maintenance and operation is supposed to be funded from revenue of water,” he said.
Phillips said heads of departments currently have no control over finances, human resources, supply chains and logistics.
“If the head of water & sanitation’s revenue [is not] connected to the amount collected from water, they have no incentive to prioritise — to make sure your meters work — because whether the meters work has no relation to how much budget you get. You just get a budget from the city. The revenue from water just goes to the central pot,” he said.
“What we’re saying is they can always reach an agreement with the city that the city continues to have integrated bills which include rates and taxes ... but there must be a strong relationship between the revenue collected for water and the budget allocated to water. The water function must have enough incentive for increasing revenue, which means reducing leaks, and allocate more on resources on maintenance.”
Operation Vulindlela also proposes that the mandate of the PSC be extended to local government.
This would mean the PSC would pay closer attention to the qualifications and experience of municipal officials before they are appointed to senior positions.
“Standardise and professionalise the appointment of senior officials in local government. Ensure that all municipal managers and CFOs meet the minimum standards for qualifications, experience and integrity, and extend the mandate of the Public Service Commission to oversee compliance at local government level,” the document proposes.
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