Gauteng's water supplier just reported almost R2 billion in profit, even as its staff costs spiked

Business Insider SA
The Vaal Dam overflows in 2011. (Gallo)
  • Rand Water, the state company that supplies Gauteng and surrounds with water, on Monday reported a 21% jump in profit for the last six months of 2017.
  • That was despite its staff costs increasing by more than a quarter.
  • Rand Water is preparing for far worse non-payment of bills by the municipalities it supplies.

In the last six months of 2017 it turned a profit of R1.8 billion, the state-owned Rand Water told its bondholders on Monday – an increase of 21.3% over the same period the year before.

Rand Water supplies the metros of Johannesburg and Tshwane with water, as well as several municipalities in provinces surrounding Gauteng.

Its interim financial statements show that its revenues increased by 10.6% – just about in line with a 10.2% increase in the price it charges for drinking water. But despite a 25.9% increase it its staff costs, which now average R73.6 million per month, its net income jumped as its other costs largely remained stable.

The company said the increase in its permanent staff costs, due to a number of appointments and salary increases, was only 9.8%. The far larger part of the increase was due to a big jump in contract labour costs.

See also: The controversial state company that supplies Durban with its water turned a R100 million a month profit – at the end of a drought

The cost of the raw water it buys, treats, and then sells, increased by only 7.4%.

Rand Water said it increased its provision for doubtful debts by R41 million in the last half of 2017 because of late or non-payment by municipalities. Its total allowance for doubtful debt from public entities – mainly municipalities – is now approaching half a billion rand.

Changing weather patterns will be a problem, the organisation warned, but its outlook is positive nonetheless. It is looking to both develop technology that will make it climate-change resilient and increase its efficiency.

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