Minister's move may put water funding for 6 million people at risk

Johannesburg - Futuregrowth Asset Management, South Africa’s largest specialist fixed-income money manager, said governance issues at the water board serving the country’s second most-populous province raise the risk that its bonds could be suspended or terminated from the nation’s bourse, City Press newspaper reported.

Lawyers representing the fund manager that’s owned by Old Mutual wrote to Water and Sanitation Minister Nomvula Mokonyane and said she had flouted the Public Finance Management Act by illegally appointing Msizi Cele as the acting chief executive and accounting officer of KwaZulu-Natal province’s Umgeni Water, the Johannesburg-based newspaper said, citing the letter from law firm ENS Africa.

Mokonyane is undertaking follow-ups to allay investors’ fears and has done nothing that falls outside the prescripts of the Public Finance Management Act, Mlimandlela Ndamase, a spokesperson for the Department of Water Affairs and Sanitation, said by phone on Sunday. The minister is expediting the appointment of a new board, he said.

Umgeni Water, which provides drinking water to about 6 million consumers, is satisfied that the interim independent structures are sufficient to ensure continued strict adherence to good corporate governance, Shami Harichunder, a spokesperson for the utility, said in an emailed statement.

The appointment of the acting CEO is in line with the PFMA, and the company has received clean audit opinions from the auditor general for the past five years, he said.

Umgeni Water’s bond balance at June 30, its fiscal year-end, was R1.5bn, he said. It has remained within predetermined borrowing limits set by the National Treasury.

Staff at Futuregrowth didn’t answer a call for comment outside of office hours.

Umgeni Water said in February it needs at least R200bn to address a service backlog, almost double the country’s total budget for water and sanitation for the three years up to 2019.


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