Mogalakwena: A Unique Water Partnership

In early 2003, the Municipal Infrastructure Investment Unit (MIIU) completed one of its more complex partnerships. As with many municipalities in the Limpopo Province, water supply is an ongoing challenge for Mogalakwena, formerly Potgietersrust. With the many recent changes in local government, limited resources, and a semi-arid climate, Mogalakwena has struggled with bulk water supply for the past 10 years. Several planned projects, including a new pipeline from the Doorndraai dam, failed to materialize in 1999 due to limited finances and institutional problems.

The area’s largest industry, Anglo American Platinum Limited (PPL), uses the sewage effluent from the town’s wastewater treatment plant to process water in its mining operations. The lack of an adequate bulk water supply was also limiting PPL’s future expansion potential. In mid-2002, PPL approached the Municipality with an offer to finance the construction of the new Doorndraai pipeline.  Because the pipeline would also lead to increased sewage flows, the company offered to make improvements in the wastewater treatment facilities. 

The Municipality approached the MIIU in November last year to assist in putting this unique partnership together. An MIIU grant agreement was quickly negotiated and consultants selected, with MIIU staff playing an advisory and quality control role.  Most of the work was completed by mid-2003, but much of the effort over that period involved consultation with the many stakeholders involved, including the local community, the Lepelle Northern Water Board (the operator of the existing dam and pipeline), Waterberg District Municipality (the statutory water service authority), the Department of Water Affairs and Forestry, and the Department of Environmental Affairs. 

The Partnership consists of eight different contracts, a main general agreement, with additional specific agreements dealing with individual project activities.  In general the partnership includes a series of Buy Operate and Transfer (BOT) concession contracts between PPL, the Water Board and the Municipality.  PPL will retain ownership of the assets during the concession term but will transfer those assets to the public entities once the capital investment is recouped.  The Water Board and the Municipality will continue to operate the facilities during the concession period. Also included in the partnership is an exchange of property between PPL and the Municipality for future mine housing to accommodate the 2,000 new employees to be added as the mine expands.

Along with the 16 megalitre pipeline, there will be a six megalitre addition to water treatment works and a nine megaliter upgrade of the wastewater treatment facilities.  The total project value is approximately $27 million.

The partnership represents a unique win-win situation for all stakeholders. The Municipality will get a new, badly needed 16 megaliter per day pipeline.  The PPL mine will get a guaranteed supply of process water for its expansion plans.  PPL expansion will mean a considerable boost for the local economy.

Success story was provided by Municipal Infrastructure Investment Unit (MIIU) on October 2003

Rand Value is R190 million; U.S Dollar value derived from R7=$1 exchange rate