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2008-05-14: Judgement of the Phiri case

Statement by the Executive Mayor of Johannesburg, Clr Amos Masondo, at the media briefing on the judgement of the Phiri case, Metropolitan Centre, Committee Room C, Braamfontein – Johannesburg

MMC for Community Infrastructure and Services: Clr Ross Greef
Members of the Mayoral Committee
Fellow Councillors
City Manager: Mavela Dlamini
The Media

On 30 April 2008, Judge M.P. Tsoka in the High Court of South Africa ruled, amongst other things, that:

· The City of Johannesburg's implementation of a pre-payment water system in Phiri in Soweto was unconstitutional and unlawful, and that the City must give households the option of a credit meter;
· Limiting free basic water to 6kl per household per month (25 liters per person per day on the assumption of 8 people per household) was reviewable, and that the City of Johannesburg must give each person 50 liters of free water per person per day.

The City of Johannesburg respects the Judgment that has been handed down. Immediately on receiving the Judgment we moved to halt our programme of rolling out pre-payment meters, until we could consider our legal position.

In close consultation with our legal counsel, the City of Johannesburg has now carefully studied the Judgment, and we today want to signal our intention to lodge an appeal to the Supreme Court of Appeal. Our basis for appeal will be set out systematically in legal argument. We believe the judgment has been distorted somewhat and would like to place our perspective on the matter.

What is the background to this case? This Judgment followed a challenge to the City of Johannesburg's Operation Gcin' Amanzi (or OGA as it is also known) by a small group of residents in Phiri, Soweto.

Operation Gcin'Amanzi began with a request by the Department of Water Affairs and Forestry (DWAF) to Water Services Authorities, including the City of Johannesburg, to address the impending crisis around water usage in South Africa, one of the water scarce countries in the world. DWAF calculated that further growth in Gauteng – South Africa's economic powerhouse – would not be sustained beyond 2014 if current habits and patterns of water usage continued unaltered.

Johannesburg responded proactively to this challenge with a comprehensive investigation into water losses within its boundary (jurisdiction). The study revealed that Soweto accounted for more than 60% of the commercial losses, due largely to poor and ageing infrastructure. Operation Gcin' Amanzi was initiated in 2003 with the clear objective of reducing the water losses and promoting ongoing water conservation. Operation Gcin' Amanzi was piloted in the Phiri area. The pilot had a number of dimensions, including:

· The upgrading of dilapidated infrastructure;
· Support to households with basic plumbing problems such as leaking pipes and broken taps;
· Education and awareness raising; and
· The introduction of pre-paid meters to assist households with debt management and the City of Johannesburg with credit control. The meters were programmed to dispense 6 kilolitres of free water per month, based on the nationally approved norm of providing at least 25 litres per person per day, assuming an average household of eight persons.

We would like to highlight our understanding of some of the facts.

1. Operation Gcin' Amanzi has been criticized for limiting residents' access to water, and on this basis has been incorrectly represented as being prejudicial to the poor. Care must be taken to avoid conflating provision of ‘free basic water' with ‘access to water'. Through the Operation Gcin' Amanzi project, the City of Johannesburg was able to roll out a metered supply system that was able to give stands a measure of free water. Before the introduction of this system residents were not getting free basic water – they were required to pay a flat rate for an unmeasured amount of water, deemed to be approximately 20 kilolitres per household per month. The fact that many residents did not or could not pay the deemed-consumption rate did not mean they enjoyed a much higher amount of free water before Operation Gcin' Amanzi. It is true that pre-payment meters mean that residents have to pay for water consumption over and above what the City can provide for free, but our view is that this does not mean that their access to a basic water supply, as required by Water Services Act, has been cut off.

2. The amount of water that households get for free is not determined by pre-payment meters. It is determined by the City's package of free basic services. We call this our social package. Since 2001 and 2002 this social package has been gradually expanded over time. Residents of Phiri are in a better position than they were in June 2002. The following are the facts:

In introducing the social package we started with 6kl of free basic water per month. We believed that this was a reasonable starting point in the light of the guidelines from the Water Service Act and its regulations. But we did not stop with 6kl. Today, a household on our indigency register automatically gets 10kl of free basic water, which is already 50 litres per household per day for any household with less than 7 people. For a household of 4 it is already 83 liters per person per day.

The studies showed that household sizes of 8 persons are reasonable assumptions and that a household size of for example 16 persons are not the norm.

· A household on our indigency register also gets free basic electricity of 100kwh per household per month, free waste removal and a measure of free sanitation.

· Any household with a pre-payment meter, regardless of whether they are indigent or not, also automatically gets a token for 4kl of free water for emergencies.

· As from this financial year households may also now approach the City and make representations that they need even more free water, on the basis of various considerations such as HIV&AIDS or household size.

· In moving households onto Pre-Paid Meters and offering them a chance to register as indigents we offered households a write off of previous debts owing to the City. This has been regarded by some as a cynical move to get households to accept Pre-Paid Meters. But we saw it as an integrated set of measures that relieved individual households of unpayable debt, and support them in the management of their finances going forward. This debt relief translated into money in the hands of poor households. We have done surveys and focus groups testing the views of residents towards pre-payment meters, and the results are always that pre-payment meters are welcomed by the majority.

· The international rights dispensations on access to water do not speak of free water, only about physical and economic access. So we must ask whether the price of water that households have to pay for beyond what they get for free is unaffordable. We are very sensitive to the circumstances of poor households, especially in this time of high inflation. But a differential tariff means that the tariffs that people pay on pre-payment meters are much lower than what people on credit meters pay. A household on a credit meter would today pay R47,10 for 15 kilolitres of water per month, while a household on a pre-payment meter would pay just R33,60 for the same amount (this is before additional benefits for registered indigents are taken into account). Before Operation Gcin' Amanzi a household was charged R68 for deemed consumption of 20kl. Today a household on the indigent register with free water of 10kl can get an additional 10kl for R51. This means that the same 20kl costs poor households about R17 less than it did before Operation Gcin' Amanzi was introduced 5 years ago.

· A unit cost of water for Joburg Water to supply is about R6.42 per kl. The price per kiloliter for consumers increases at various steps of tariff bands on a stepped tariff system. Up to the point at which a household consumes its 21st kl (priced at R8.50) a household is getting every kilolitre of water at below cost price. This is possible because we cross-subsidise from wealthier users.

Our social package continues to be refined and expanded. This is how the City of Johannesburg ensures that it is progressively realizing the right to water of its residents. In this regard, the Mayoral Committee will this week consider the final design for a major new poverty-targeting system which will be able to consider much more of residents' individual circumstances in managing the flow of free basic services, with different levels of assistance for different levels of need. Eventually, through better targeting we will be taking away some free water from those wealthier households who don't need it, and giving even more to poor households who do.

3. It is important to note that Operation Gcin' Amanzi has had multiple objectives. The fact that it was concerned with the conservation of water does not mean it was not equally concerned with how households can be given more stable and sustainable access to a reliable water supply, with a measure of free basic water that expands over time. Operation Gcin' Amanzi cannot be characterized as an initiative that aimed to deny or limit the access that Soweto residents have to water. But on the other hand it is also not appropriate to dismiss Operation Gcin' Amanzi's water conservation objectives as being inappropriate.

In a water stressed-country like South Africa, we cannot afford, as a society, to be throwing away millions of kilolitres of precious water. In this regard, Operation Gcin' Amanzi has been very successful. By April 2008 over 95 300 meters were installed out of a total of 170 000 targeted stands in Soweto, and the average water losses have declined [from 40% to 32% (average monthly usage of water in the metered households declined from 66kl to 12k]). A blanket rejection of all forms of pre-paid metering has severe implications for Johannesburg but also for other metropolitan, district, and local municipalities which have already, or are considering, the introduction of similar measures to encourage efficient resource usage. This is of deep concern in a national and global context of resource scarcity, where the sustainability of usage, and the management of demand, are critical considerations.

4. In our view Operation Gcin' Amanzi does not violate the equality provisions in the Constitution. It is true that the Operation Gcin' Amanzi was piloted in parts of Soweto, where there is a concentration of poverty, but this followed an objective assessment of where water losses were most severe. It was never the intention to only provide pre-paid metering in poorer parts of the City. Pre-paid metering is a potentially useful instrument for addressing inefficiencies in resource usage across the City, including within middle and higher income areas. The City of Johannesburg has been developing policies and plans for extending pre-payment metering to these areas.

We want to conclude by reiterating that we believe that the introduction of pre-payment meters, coupled with a dynamically expanding social package that gives poor households more and more water for free, is the best way to progressively realize the right of access to water on a sustainable basis in our context. We do not think that this approach is unreasonable and unlawful under the circumstances. Of course, we are always open to suggestions on how to improve the system.

Thank you