The unique positioning of Durbans bulkwater supplier

His voice had taken on a kind of religious awe; it was as if he had spoken of some untouchable tabernacle which concealed the crouching greedy god to whom they all offered up their flesh, but whom they had never seen.

(Emile Zola, Germinal) Umgeni Water's operations are financed mainly through the sale of potable water and to a far lesser extent, tariffs charged for the treatment of wastewater. In addition, capital is raised through the issue of stock on the Johannesburg Stock Exchange (JSE). These stocks are consolidated into two highly successful gilt megabonds trading as UG50 and UG55 on the Johannesburg Stock Exchange.

(Umgeni Water 2004)

Umgeni Water occupies a vital position in the supply-chain of water to Durban. Whereas Swyngedouw (2004) makes reference to a process of local waters being transformed into global money, through processes of privatization around the world, this is occurring in Durban as Umgeni Water (ostensibly a parastatal entity) strives to ensure returns for bondholders on the Johannesburg Stock Exchange. Through peering into the dealings of Umgeni Water, we are able to chart something of a journey from the trickling taps of township residents to untouchable tabernacles hiding the crouching, greedy gods of the Johannesburg Stock Exchange. Equipped with some of the theoretical understanding acquired from the previous section, we are able to see some of the metabolic processes comprizing the socio-natural waterscape in Durban.

Umgeni Water has occupied such a crucial position since 1 January 1984. From this time on, the city has been required to purchase its bulk-water supplies from a third party. Originally termed the Umgeni Water Board, this third party was superficially created to act as a mediator between different users of the water abstracted from the Umgeni River. With Durban using 85 percent of this water, the municipality built up an extensive supply infrastructure along the river. Before the water board could take control of bulk water provision, the vast majority of this infrastructure needed to be purchased from the City

Council (Lynski 1982). For decades, the municipality had been opposed to the creation of a water board, arguing that it would give a third party unnecessary influence over the cost of water in Durban (Kinmont 1959; Macleod, personal interview, 27 March 2003). A mixture of pride and pragmatics seemed to drive much of this opposition although frequently it was couched in strict financial terms. Thus, early on, the City Engineer recognized that:

The present standing value of the assets of the Durban Water Undertaking on conservation and purification works must approximate £7,000,000; and it is difficult to visualise any Water Board which can be set up being able to purchase outright these assets. Further unless it does so, any new Board would be unable—for many years—to supply water to its consumers at a rate comparable with that which water is being retailed to the city today.

(Kinmont 1959:15)

Only two years later, the City was increasingly concerned that it should be granted permission to construct its own "urgent" augmentation of the city's bulk supplies. Thus, the same City Engineer was becoming far more strident in his criticism of the direction in which national government policy on water was moving:

It has been apparent for some time that the government has no intention of allowing Durban to proceed with its own Water Scheme, and that it intends to implement its own proposals, whereby Durban will be supplied with water from the Umgeni River at the entire discretion of the Department of Water Affairs, and at prices which will be decided unilaterally by the responsible Minister.

(Kinmont 1961:5)

Amidst the rising anger within the municipality, one of the recommendations of Kinmont's report was therefore to "protest to the highest level". However, in spite of the City's protests, the Umgeni Water Board was formed on 14 June 1974. Originally only serving the Pietermaritzburg and Midland areas, by 1984 it was supplying water to Durban City Council.

In retrospect, it seems quite clear that the reasoning behind the creation of the water board was political. Since its creation, it has served to exacerbate serious tensions in the structuring of Durban's water provisioning, as well as ensuring that tariffs are up to 30 percent higher than they might be without it (Macleod, personal interview, 26 March 2003).2 The political motive behind its formation is somewhat bizarre but worth relating. With the national government eager to ensure that greater legitimacy was afforded to its apartheid policy of creating separate Bantustans for Africans, the international status of these borders needed to be emphasized. To the national administration in Pretoria, it seemed that KwaZulu's potential future status would have been undermined if it was to be supplied with water from what was only a municipality. Instead, a third party, with the authority to sell water to separate states, would need to be created (Macleod, personal interview, 26 March 2003). As Kinmont had recognized 25 years prior to the handover of Durban's bulk supply operations, the creation of the water board really did have little, if anything, to do with the efficient management of water supply in the region. The current head of eThekwini Water Services, Neil Macleod argues that the lack of control exercised by the National Party in Durban exacerbated many of the tensions between the national and the local government. Although civic pride is often mixed with family pride in Macleod's case (it was his father who finally had to cede control of bulk supply operations), he argues that a secondary motive for the creation of the water board was a "way of stabbing the municipality in the back because it wasn't National Party controlled" (Macleod, personal interview, 26 March 2003).

In the midst of these tensions and struggles for control over bulk supplies, Durban fought hard for the highest price to be paid for the infrastructure it would eventually have to hand over. Thus, after having paid considerable amounts for the purchase of Pietermaritzburg's infrastructure, the water board reached an agreement in 1982 with Durban City Council regarding the acquisition of the Nagle and Shongweni dams.3 The amount paid was initially set at R203 million, later rising to R274 million (Umgeni Water 1982). It is difficult to assess what a "market" price for these dams might have been, but with their respective ages being 32 years and 55 years (the Shongweni dam was "pensioned off soon after it was purchased), it can be assumed that the amount paid was absurdly high and well above what the infrastructure would have been worth. Macleod now states (with a wry chuckle) that the national government's original valuation had been put at R14 million for the two dams (Macleod, personal interview, 26 March 2003). Durban, it seemed, had been able to salvage a little pride, even if, as Macleod notes in retrospect, "This drove an even greater wedge between the municipality and the central state" (ibid.).

Very rapidly, as Kinmont had predicted, the water board descended into serious debt. As had also been predicted, Umgeni Water was best able to recover this debt through the sale of water to the municipalities. Inevitably, Durban and Pietermaritzburg's tariffs rose rapidly. Thus, the cost of bulk supplies rose from 8.9 cents/kl at the time of the handover to a peak of R2.29/kl, before falling more recently to R2.14/kl. Much of this cost cannot, it seems, be adequately accounted for. As Macleod states:

At Durban Heights and Wiggins [purification works owned and managed by Umgeni Water], 75 percent of water is purified in these two works, the cost of the purification comes to about 78c/kl. The extra 25 percent of Umgeni's work pushes the cost of water up to R2.29 meaning that 25 percent of their business triples the costs of the operation. Something is going terribly wrong.

(Macleod, personal interview, 26 March 2003)

Clearly, things had gone wrong from the moment Umgeni Water was formed, and from the start, without clear government backing, it would have to fight hard for survival. Within the last decade, however, the situation has worsened. In part, this is due to the fact that, post-apartheid, new freedoms have been granted to water boards in order to allow them to compete more freely (DWAF 1997: ch. VI). The public service role has been downplayed, as water boards are now increasingly expected to bid competitively for contracts and raise more money from the private markets. In short, the water boards have been encouraged to commercialize. Thus, Umgeni has sought to respond in a far more entrepreneurial fashion to opportunities within the water sector. In its own corporate jargon:

More recently Umgeni Water has restructured itself to better position it to meet the challenges of becoming a globally-competitive business-based organization that is responsible and adaptive to the requirements of a globalized economy and intense developmental need. Notable achievements have been the appointment of a new and dynamic executive management team, and the development of a strategic plan that charts the course for the company to achieve its vision of being the number one water utility in the developing world.

(Umgeni Water 2004)

It is worth charting some of these new opportunities being sought by the "globally-competitive business-based organization".

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