OUR CITY NEWS: City drains R3.4bn from Johannesburg Water, leaving entity stranded and projects stalled

On the last day of June, the City of Johannesburg took R3.4-billion out of Johannesburg Water’s (JW’s) account — leaving the entity with a balance of zero. Only on 9 July was money from the ringfenced funding transferred back into the account.The City’s sweep left JW unable to settle R1.8-billion in creditor debts at the end of June. Ringfencing of the utility’s funds officially began on 1 July.This startling revelation is contained in a progress report to the Presidential Johannesburg Working Group (PJWG) — the intergovernmental intervention team established by President Cyril Ramaphosa to address major service delivery and governance issues in the City of Johannesburg.The ringfencing of JW’s revenue is part of the turnaround plan to get the entity back on its feet and was approved by the city council in 2024. More recently, Ramaphosa’s National Water Action Plan has reinforced the idea that revenue collected by the entity should go towards water issues, and not be used to fund other municipal entities or services.JW paid bulk supplier Rand Water on 23 July, but that was for the June invoice. July’s invoice still has to be paid, and it is due on Friday, 31 July.The City’s raid on its bank account left JW unable to continue with projects and operational contracts, with most suspended. Crucial infrastructure projects, like the fixing of leaking reservoirs, have ground to a halt because there is no money to pay contractors.In the report to the PJWG, it was noted that while the ringfencing of revenue began on 1 July, revenue-sharing agreements were still being developed by the City’s Group Finance department. Daily transfers of money to JW only started on 9 July.The report noted that the “lack of consistent and predictable receipts compromises the ability to plan to pay creditors and continues to build pressure at JW” while the finer details of the revenue sharing are still being worked on.Johannesburg’s executive mayor, Dada Morero, earlier this year said 70% of JW’s revenue would be ringfenced, with the remaining 30% going to City coffers.By late May, Joburg Water’s overdue payments had jumped from R374-million to R671-million. According to the PJWG, these backlogs severely delayed infrastructure projects — causing a combined 1,445 days in delays, R481-million in cost overruns, and R676-million in lost production. JW attributed 85.1% of its late payments to severe cash-flow constraints.In his foreword to the third-quarter report presented to the City Council, JW’s managing director, Ntshavheni Mukwevho, said the entity’s capital budget for the 2025/26 financial year is R1.704-billion. The capital expenditure for January 2026 to March 2026 was R586.517- million, translating into an overall performance of 34% against a quarterly target of 65%.“Our programmes were affected by the CoJ cash-flow restrictions, which triggered project suspensions in most areas of the business. The entity is continually engaging the shareholder’s group finance to have this matter resolved,” he said. Joburg Water's director, Ntshavheni Mukwevho. (Photo: Sharon Seretlo / Gallo Images) Delayed projects and not enough stockHurst Hill 2, a reservoir that has been leaking for years and is responsible for the water issues plaguing Emmarentia, Greenside, Parktown West and Melville, was supposed to have been fixed by April. Work on the project is at 20% and, according to JW’s official channels, has an estimated completion date of December. It seems highly unlikely that this will be achieved, given the lack of money.Reservoir projects in Alexander Park, Jabulani, Ennerdale, Dunkeld and Meadowlands have also stalled, and most are at less than 29% completion.The lack of money has also led to increased water losses, with JW unable to meet its targets for curbing them. By the end of March, Johannesburg Water was losing 49% of the water it bought from Rand Water, exceeding its target by four percentage points.Clean water leaks from a hole in St Swithins Avenue in Auckland Park, Johannesburg, on 28 July. (Photo: James Oatway / Our City News) JW said the target was not met due to budget constraints affecting the full implementation of water demand management interventions like infrastructure upgrades and rehabilitation, PRV (pressure-reducing valves) repairs and maintenance, and clearing the backlog of leaks.In its third quarter, JW noted that between January and March, 34,130 water pipe bursts were repaired and 52,979 sewer blockages cleared. However, the water infrastructure failure rate increased to an average of 4,108 bursts per month, compared to the average of 2,960 per month for the 2024/25 financial year.The number of sewer blockages reported increased from 4,921 per month in the 2024/25 financial year to a monthly average of 5,915.JW’s cash crunch also means that stock it needs to carry out repairs is not available because contractors have not been paid. This has affected the replacement of manhole covers and fire hydrants.Civil society wants answersCivil society water justice initiative WaterCAN has demanded answers on how the City is continuing with its sweeping practices, saying ringfencing means nothing if the utility still cannot access the cash it needs to pay suppliers, maintain infrastructure and keep water flowing.“The City must stop treating Johannesburg Water as a cash cow and return the approximately R6-billion it owes the entity. Without that, ringfencing is just a slogan, not a solution,” said WaterCAN executive director Dr Ferrial Adam.Adam said the City had reportedly swept more than R6-billion from the utility’s bank accounts over the current term of office. These transfers have been treated as loans to the shareholder without fixed repayment terms, leaving Johannesburg Water unable to predict when funds will be returned or made available for operational needs, she said. Dr Ferrial Adam of WaterCAN. (Photo: Outa) “The crisis also exposes a broader problem within the City. Johannesburg Water is not the only municipal entity under financial strain. If City Power cannot pay its creditors and electricity supply becomes unreliable, Johannesburg Water cannot pump, treat and distribute water. These entities do not operate in isolation; the financial distress of one service quickly affects another, leaving residents to bear the consequences,” she said.Adam said Ramaphosa’s National Water Crisis Committee (Watercom) initiative should formally escalate Johannesburg Water’s financial crisis as a matter requiring urgent intervention.“This is the first real test for Watercom. If it is serious about addressing the country’s collapsing water infrastructure, it should start with the City of Johannesburg. Don’t tell residents how many projects are planned. Tell them whether Johannesburg Water has the money to implement them.”WaterCAN has also called on the City of Johannesburg to publicly disclose the precise mechanism by which water and sanitation revenue is being ringfenced and to confirm that JW has direct and predictable access to its revenue.The City was asked to respond to the draining of JW’s bank account, but had not replied by the time of publishing. DMThis story was produced by Our City News, a non-profit newsroom serving the people of Johannesburg.