Umgeni Waters early ventures into the rural water services market

[The 1997 Water Services Act] has created new opportunities for water boards. Water boards can become more commercially focused with a view to increasing income whilst at the same time creating increased employment opportunities. The Government welcomes water boards taking up secondary activities on a commercial basis. Umgeni Water is clearly a leader in this.

(Kasrils 2000)

Post-apartheid, the new South African government was faced with the enormous challenge of providing potable water to all of its citizens. Preoccupied with haste—and to some extent the dominant global ideology (see Peet 2002)—it chose to subcontract much of the construction of new rural water projects. Under the Community Water Supply and Sanitation programme, private companies have been able to submit proposals for rural schemes and tender competitively for the construction of these (see Bakker and Hemson 2000; Hemson 2003b). The successful bidder then goes on to construct the scheme, before taking over its running for a set period. At the end of this, the water supply scheme is then handed back to the local Water Services Authority. In most cases, this authority is either the local or the district municipality. Somewhat depressingly, many of the projects have proved unsustainable and many communities have been left with defunct water infrastructure and an enforced return to alternative (and often dangerously polluted) water sources. In other cases, charges to rural residents have been set at an incomprehensibly high level. With prepayment systems being favoured on many projects, large numbers of households have found themselves simply unable to afford to pay for the new water supplies (Hemson 2003; Bond 2002; Thompson 2003). In the meantime, the national government was able to boast the 7, 8 or 9 millionth new consumer to be receiving clean water (see Kasrils 2003). For much of the 1990s, the rural water sector became a sphere in which many new companies cut their teeth in trying to make money out of the rural poor.

Umgeni Water, though not a private company, was one of those able to cash in on the small boom in government funds, which, at the time, were being soaked up by new entrepreneurs. Between 1996 and 2002, the organization was able to claim R104 million from the government in order to implement rural projects in five district municipalities in KwaZulu Natal (Umgeni Water 2002:15). By June 2002, it was supplying water to over 27,000 metered households in the province. This was after the "hand over" of a further 15,000 customers back to eThekwini municipality (Umgeni Water 2002).

In 1997, Umgeni Water Services, a commercial subsidiary was established under the new freedoms opened up in the 1997 Water Services Act. Interestingly, the rural projects were not included under this subsidiary. Instead, these were considered to be part of Umgeni Water's primary (and therefore non-commercial) activities. On the surface, however, any commercial activities undertaken by the organization are supposed to be "ring-fenced" within the subsidiary. Thus, if these projects were considered commercial ventures, Durban's bulk-water tariffs were not to finance them. This point is important, because, from the start, Umgeni Water's rural projects tended to run seriously over budget and were often deeply inefficient. Several of their projects were also criticized for being over-engineered with little chance of ever being able to recover the costs laid out in them. The enormously costly Vulindlela water project located outside Pietermaritzburg is a case in point (Hemson, personal communication). For some in Umgeni Water, it is a sign of the organization's engineering prowess (Lusignea, personal interview, 11 December 2002), for others it is a costly white elephant. In some ways, this criticism might be considered unfair—surely rural residents are entitled to the same level of service as urban dwellers? However, when one considers that an individual network connection can cost as much as R80,000 under Umgeni Water and as little as R5,000 under eThekwini Water Services (Bailey, personal interview, 5 November 2002), the apparent inefficiencies in such projects become all the more stark. As I discuss later in this chapter, the handover of these inefficient projects back to local municipalities has generated a whole new set of tensions.

Whilst responsibility for such rural schemes remained Umgeni Water's, further debts began to mount. Desperate to see such projects running more efficiently, the entity became eager to ensure that residents were billed for the true running costs of individual schemes. Again, to a limited extent there was not necessarily anything particularly new in this. From the mid 1980s, as a water services provider in parts of KwaZulu, Umgeni Water had made steps to ensure that water would be provided for residents of informal settlements through a "kiosk system". Later, however, in 2002, such attempts to ensure payment for all costs began to reach new, far crueller heights. Thus, when Umgeni Water learnt of the vandalism of water meters in Ntembeni, a settlement in Inadi (on the outskirts of Pietermaritzburg), managers within the organization presumed certain households were trying to subvert the payment system. Whether anyone in the community was responsible for the destruction or not, the entire settlement had its water supply disconnected. With the community lacking a clean water supply for a month, the South African Human Rights Commission initiated court proceedings against Umgeni Water (Mkhulise 2002).

Such aggressive measures to ensure full cost-recovery are often seen as a clear manifestation of a strategy of accumulation by dispossession (Harvey 2003; see also McDonald and Ruiters 2004). In the case of Ntembeni, we see the messy way in which such a process has developed. Thus, with the state opening up new opportunities for water boards to be able to bid for rural water contracts, Umgeni Water was able to provide water services to rural communities previously lacking any clean drinking water. This is a clear step forward for such communities and it would seem to matter little if this water is provided by a local municipality, a private company or a commercialized water board as long as people do retain access. In failing to make a return on its investments, however, Umgeni Water then embarked on a more overt strategy of dispossessing a community of a vital resource on which it depends but for which some are unable to pay. Thus, we do not see a dramatic transfer of the means of existence in the manner in which the Highland clearances of the nineteenth century took place (Marx 1976: ch. 27). Instead we see an encroaching process, driven less by aggressive state-backed appropriation and more by the gradual integration of water into capitalist relations of production. The state, therefore, plays an ambiguous role in this,4 helping to prise open the rural water sector to capital (and thereby driving through the divorce of the majority from their means of existence), whilst also seeking to ensure that more and more citizens are connected to the water network. Likewise, the state has actively publicized its free basic water policy, and yet has refused to intervene when organizations such as Umgeni Water disconnect residents for non-payment (see Kasrils cited in Bond 2002:264). Ultimately, this shows the process of struggle involved in the accumulation process. It should not be viewed in terms of well-worked out, smooth running laws, but rather a process struggled over and contested—often through such simple acts as the vandalizing of a water meter. These struggles become crystallized in the state (albeit not in a direct manner) (Poulantzas 1978), whilst, at times, the state serves as something of a mask through which such struggles are hidden from view (Abrams 1988).

In spite of Umgeni Water's apparent strategy of dispossessing people of water for nonpayment in order to ensure healthier profit rates (or perhaps partly because of it), it soon began to look increasingly unlikely that the organization would ever break even with its rural water projects. The bulk-water side of operations was already heavily subsidizing the losses being made over the rural projects. Summarizing this cross-subsidization, the 2002 annual report notes that:

It is the costs relating to these rural water schemes that have resulted in the 19.5% tariff (reduced from 22.3% due to Umgeni Water cost-cutting and efficiency savings achievements) increase for the 2001/2002 year. Without the cost burden of these schemes, Umgeni Water would have been able to pass an increase of 8%.

(Umgeni Water 2002:29)

Thus, it became increasingly urgent for Umgeni Water to offload the inefficient projects along with their debts. This generated a new round of tensions with eThekwini Municipality (News 24 2001). In a curious reversal of the position 20 years earlier, the municipality thus found itself fighting hard to ensure it did not have costly infrastructure (and its associated debts) foisted upon it (Bailey, personal interview, 14 February 2003).

Much of this battle was reflected in future debates over what constituted a permissible tariff increase.

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