1. Transfer and Debt Burden as a measure of vulnerability
How bad is the situation
Kevin Jacoby
14 June 2013

2. Overview Excess burden of cost recovery? Explained Non-revenue water
Debt collection
Net debt owed for water services
IMPORTANT NOTES

3. Excess burden of cost recovery
When the consumer base from which revenue is collected is limited
If the base shrinks to a too small a ptn of total served an unsustainable burden might be imposed on those that pay for their services
This burden is aggravated by:
High level of non-revenue water
Large transfer costs (including the provision for bad debts)
Low debt collection percentages
The net increase in water service debtors

4. Non-revenue water (NRW)
International Water Commission (IWC) calculation
NRW includes:
Unbilled standpipes
Unbilled low cost housing
Unbilled indigent consumers
Metering inaccuracies (including theft and illegal use)
Mains leaks and bursts
Reservoir overflows and leakages
Service connection leaks

5. Free Water DETAILS NMBM Ethekwini Ekurhuleni Midvaal Stellenbosch
Amathole
Steve Tshwete
Cubic meters (m3)
Free water (non revenue) - bursts, reservoir overflows & leakage
Amount of water (m3)
14 400
Revenue (charged for) water
Total water served (outflow from purification works)
Amount of water(m3)
Percentage non-revenue water
38%
37%
33% 5%
16%
75%
26%

6. Free Water DETAILS Buffalo City George Overstrand CapeTown TOTALS
TOTALS METROS
Cubic meters (m3)
Free water (non revenue) - bursts, reservoir overflows & leakage
Amount of water (m3)
Revenue (charged for) water
Total water served (outflow from purification works)
Amount of water(m3)
Percentage non-revenue water
40% 5%
27%
23%
36%
32%

7. Debt collection ratio DETAILS NMBM Ethekwini Ekurhuleni Midvaal
Stellenbosch
Amathole
Steve Tshwete
DEBT COLLECTION PERCENTAGE
Year 07/08
98.60%
100.21%
88.39%
98.80%
102.22%
Year 08/09
91.70%
94.49%
89.60%
95.02%
30.00%
100.74%
Year 09/10
93.75%
96.31%
91.08%
96.70%
95.00%
43.00%
99.80%
Buffalo City
George
Overstrand
CapeTown
TOTALS
TOTALS METROS
94.61%
90.00%
98.67%
90.03%
78%
94%
93.84%
98.00%
95.37%
80%
92%
93.58%
97.00%
98.78%
91.97%
91%
93%

8. Growth in net debt OUTSTANDING DEBT FOR WATER SERVICES NMBM Ethekwini
Ekurhuleni
Midvaal
Stellenbosch
Amathole
Steve Tshwete
Water
Year 07/08
Year 08/09
Year 09/10
Sanitation/Sewerage
TOTAL

9. Growth in net debt OUTSTANDING DEBT FOR WATER SERVICES Buffalo City
George
Overstrand
CapeTown
TOTALS
TOTALS METROS
Water
Year 07/08
Year 08/09
Year 09/10
Sanitation/Sewerage
TOTAL

10. IMPORTANT NOTES
The impact measured does not include indigent consumers subsidised to threshold levels (ES);
The impact measured does not include service consumption in excess of threshold levels and financed from tariffs;
Those that do not receive the transfer find it unfair and will be disinclined to pay for services (aggravating the bad debt problem);
Distortions are induced on paying consumer behaviour (increased water tariffs);

11. IMPORTANT NOTES
Increasing water tariffs is a feasible and meritorious funding source for transfers on up to some limit;
Beyond this limit the water service tariff burden might be excessive;
Distortion effects will undermine the long run economic welfare of the whole community and the tariffs are viewed as unfair/inequitable by those on whom it is levied

12. The End
Thank you
Comments/questions?