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Thousands of Nelson Mandela Bay’s poorest residents will lose some of their free basic services as the municipality tightens its belt.
The move, according to councillors, is the direct result of years of financial mismanagement, soaring non-revenue water losses and punitive tariffs that have pushed struggling households deeper into debt.
The city wants to roll out electronically controlled water meters to indigent households in a bid to slash excessive consumption and stem mounting financial losses that are costing the municipality about R600m a year.
Infrastructure and engineering acting executive director Joseph Tsatsire tabled a management intervention report on the Assistance to the Poor (ATTP) beneficiaries during a committee meeting on Thursday.
The purpose of the report was to present a strategy to address water losses associated with indigent beneficiaries registered under the ATTP programme.
The proposed intervention would see the installation of reconfigurable water demand management devices that would limit households to the monthly allocation of 6kl of free basic water, dispensed in daily portions over the course of the month.
In the last financial year, the beneficiaries received 8kl.
Tsatsire said consumption by indigent households was sitting at about 15kl-20kl monthly on average, far exceeding the limits.
The devices are also intended to curb water losses caused by leaks and excessive consumption while improving billing accuracy.
“But before we install, we actually have to go into the property, fix all internal leaks and then install a device that will sustain an equivalent amount of 180l per metered connection and will cut itself off at midnight, reopen again, and provide the next 180l,” Joseph said.
“Cumulatively, it will actually give you the 6kl of water so that you don’t have any water that’s going to go beyond the threshold.”
According to the report, the municipality at present absorbs about R600m annually for water consumed above the free basic allocation, with the costs written off as impaired debt.
The report said that due to the indigent status of the beneficiaries, the municipality was experiencing significant financial and physical water losses, primarily resulting from internal leakages and excessive consumption beyond the allocated free basic threshold.
“These challenges have a material impact on revenue sustainability and water resource management,” the report reads.
“Additionally, the Nelson Mandela Bay municipality has been, for a long time now, flagged by institutions such as the auditor-general and National Treasury as having excessive water losses as reported in the annual report/s as well as the audited annual financial statements of many years.”
According to the report, when councillors tabled the 2026/2027 to 2028/2029 budgets for approval, various strategies for revenue enhancement and cost containment were approved.
“Water and electricity losses are among the key strategies that respond to cost containment.
“We must be aware that all the listed strategies have been submitted to the National Treasury, as with regard to the budget, though it is a funded budget, red flags were raised when the National Treasury was conducting a budget assessment on May 18, necessitating that a radical approach to improve the status quo be implemented.
“This item is in response to the strategies approved by the council on June 8 and submitted to the National Treasury.
“When the National Treasury conducts the 2026/2027 mid-term engagement in February 2027, it will require the implementation status of the strategies and will also assess if there is any improvement in the financial position of the municipality.”
The ATTP programme has about 70,000 registered indigent households and is funded through the equitable share allocation, providing basic services such as water, sanitation and electricity.
According to the report, the municipality has for years provided free basic services at levels excessively higher than those prescribed by national policy, prompting the National Treasury to instruct the city to align its benefits with the national limits.
A significant number of indigent households are unable to afford consumption beyond the 6kl.
“As a result, the city says internal leaks and inefficiencies often lead to excessive water consumption,” the report reads.
“Consumption above the free basic allocation results in high accounts that the beneficiaries are unable to settle, resulting in the council continuing to embark on costly write-offs that always attract audit qualifications and material irregularities that have unintended consequences.”
If the metro failed to curb water wastage, it could be forced to write off a staggering R4.4bn in unpaid water debt over the 2026/2027 medium-term revenue and expenditure framework period, the report said.
For the 2025/2026 financial year, the metro set aside R2.4bn to cover water and sanitation debt, which it does not expect to recover.
However, debt impairment exceeded this amount, coming in at R3.33bn.
During the meeting, Tsatsire said the management of the policy would be key to ensuring the city stuck to its guidelines and policy.
He said the city would embark on an extensive public participation programme.
DA councillor Dries van der Westhuyzen said the report appeared to use the ATTP as a scapegoat for high non-revenue water losses.
“For about three years now, I’ve been saying our punitive water tariffs are one of the main reasons why our collection rate is suffering, and our non-revenue water is so high,” Van der Westhuizen said.
“I think if we had managed our budget and we’d managed our non-revenue water better, we quite possibly wouldn’t have been in this situation.
“This report talks about 70,000 people on our register.
“I remember, I think it was in 2021, we had 120,000 people on our register.
“It’s commendable that we have so many people who have dropped off the ATTP register but we support the recommendation.”
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