1. Bulk Water Supply Contracts
Water Forum
14 September 2016
Group Legal Services
Tshidi Moalusi
Matshidiso Moalusi

2. PURPOSE
BWSC
Agenda
Agenda
Bulk Water Supply Contracts are tools which governs the relationship between Water Boards and Municipalities
History of the BWSC
Key role players in contracting: from both sides
Operations, Water Quality, Planning, Finance and Legal Services.

3. APPLICABLE LEGISLATION
Municipalities have a constitutional mandate to ensure access to water. Schedule 4 B
Rand Water, is a state organ in a contractual relationship with the Municipalities in assisting the Municipalities to realize its mandate: section 155 (7) Const.
Applicable legislation in relation to the Bulk Water Supply Contract
The Rand Water Board Statutes (Private) Act no 17 of (rights and obligations saved),
The Constitution of South Africa, 1996,
The Water Services Act 107 of 1998,
Intergovernmental Relations Framework Act 2005,
Public Finance Management Act ,
Municipal Finance Management Act

4. BRIEF HISTORY
Rand Water used to be governed by the Rand Water Board statutes (Private) Act no 17 of 1950 which was later repealed by the Water Services Act 108 of 1997.
The Private Statute made provisions amongst others for the following:
Construction of pipelines, entering into contracts for water services and how payments were made.

5. CURRENT LEGISLATION
The Constitution of the Republic of South Africa,1996
Section 27 of the Constitution provides that everyone has the right to have access to sufficient food and water .
The highest law in the land, all other laws are derived from its principles. It grants people the right to have access to sufficient water.
The Water Services Act 108 of 1997
Section 3 - Right of access to basic water supply and basic sanitation
Section 3(1) – Everyone has a right of access to basic water supply and basic sanitation.

6. CURRENT LEGISLATION
Section 4 - Conditions for provision of water services
4. ( 1 ) Water services must be provided in terms of conditions set by the water services provider.
In terms of section 4(2)(c) (i)- (vi) the conditions must provide for:
(i) the technical conditions of existing or proposed extensions of supply:
(ii) the determination and structure of tariffs;
(iii) the conditions for payment;
(iv) the circumstances under which water services may be limited or
discontinued;
(v) procedures for limiting or discontinuing water services: and
(vi) measures to promote water conservation and demand management.

7. BULK WATER SUPPLY CONTRACT
CONTRACTING
Section 19 (1)(b((i) A water services authority may enter into a written contract with a water services provider. 3 OPTIONS ONLY
Sections 76, 80 and 40 Municipal Systems Act
The parties enter into Bulk Water Supply Contract.
Meaning the parties cannot enter into a gentleman’s agreement.
Where the contract has terminated, the parties enter into Revival Contracts during the interim period pending negotiations for a new BWSC clauses, such as: financial risk clauses, operational risk amongst others.

8. BULK WATER SUPPLY CONTRACT
CONTRACT TERMS
Financial clauses mitigation of risk:
Accounts for payment of bulk water supply charges (Clause 26–BWSC)
Special payment arrangements (Clause 27- BWSC)
Action or omission of the Municipality (Clause 30- BWSC)
Operational clauses:
Interruptions in Supply (Clause 11—BWSC)
Modifications to Processes (Clause 11.4–BWSC)
Meter testing (Clause 12.3 –BWSC)
New meters to be installed (Clause 12.8–BWSC)
Water Quality Clauses
Demand Management Clauses
Planning
General Legal Clauses

9. BULK WATER SUPPLY CONTRACT
SECTION 19 CONTRACT REGULATIONS
Definition of Contract as per Water Services Provider Contract Regulations-
“contract” means an agreement or renegotiated agreement in writing between a water services authority and a water services provider in terms of which the water services provider is to provide water services with or without capital investment.
The regulations outlines provisions for the following aspects of the contract:
Definitions
Objects of contract
Scope of contract
Water use licence
Performance targets and indicator

10. BULK WATER SUPPLY CONTRACT
CONTRACTING REGULATIONS
The regulations outlines provisions for the following aspects of the contract
Obligations of the Water Services Authority
Cession
Arrangements in respect of existing employees
Commencement, amendment, breach and termination
Property rights
Assets
Financial
Consumer charter
Disclosure and monitoring
Information required by authority

11. BULK WATER SUPPLY CONTRACT
CONTRACTING
The regulations outlines provisions for the following aspects of the contract cont…
Financial records
Operational records
Access to information by consumers
Annual reports
Warranties
Insurance
Dispute resolution
Prevention of corruption
General

12. PERTINENT ISSUES
Rand Water faces range of issues in respect of bulk water supply, these includes
(SALGA METRO CONSULTATION)
Conditions for Payment
Stringent clauses are required to cater for non-payment by Municipalities : Risk profiling – Clauses
2. Dispute Resolution--IRFA
If there is failure by both Rand Water and the Municipality to agree, the Dispute Resolution clause is invoked

13. VIS MAJOR / DROUGHT 3. Drought – Clause 14 of the BWSC
A Drought clause is imperative to include
In terms of the contract, a Drought is defined as : Any event, series of events or changes in water allocation which impact or impacts on the availability of raw water to the Rand Water and consequently on the agreed quantity of water to be provided to the Municipality
Rand Water bears the onus of keeping up to date with all factors relating to the quantity of water available for supply
Rand Water bears the onus of providing the Municipality with a written warning, which must be furnished no later than 7 days within the implementation of the Water Restrictions due to drought

14. Thank You