Government defends plan for race-based water licences

The government has defended its plans to introduce black shareholding requirements for new water use licences, saying it is doing so to correct the racial imbalance created by SA’s apartheid past.

Water & sanitation minister Senzo Mchunu rattled the commercial agriculture sector with proposed regulations to the Water Act that will require farmers to have a black shareholding of 25%-75% to obtain water licences, depending on how much water they extract or store.

Most of SA’s water resources are still held via water use entitlements that predate 1998, while a smaller fraction was set aside through water use licences granted since then.

The department of water & sanitation said in a statement on Monday that both sorts of water allocation are heavily skewed towards historically advantaged individuals. The draft regulations aim to address this disparity.

 The draft regulations were published for comment in the Government Gazette on May 19, and interested parties have until July 18 to provide input.

Analysis of the 5.83-billion cubic metres of water set aside under existing lawful water use allocations showed 98.5% (5.74-billion cubic metres) of it was in the hands of previously advantaged individuals, and only 1.46% (90-million cubic metres) was held by historically disadvantaged individuals, said the department.

The department said that 75.93% (313-million cubic metres) of the 412-million cubic metres of water allocated via water use licences had been granted to previously advantaged individuals, and only 24.07% (99-million cubic metres) to previously disadvantaged individuals, it said.

SA’s largest agricultural federation, Agri SA, said the proposed regulations would have a devastating effect on agriculture and food production, as they would force the transfer of ownership of the ability to lawfully use water.

The government indicated previously that farmers with existing lawful water use entitlements would at some stage be required to apply for water use licences instead, but it was not clear when this would be, said Agri SA legal and policy executive officer Janse Rabie. Irrigation farmers would be affected directly as they were large water users.

The proposed regulations “placed a sword over their heads” and created such a climate of uncertainty that it threatened property transactions and plans for future investments, he said.

Farmers who wished to invest in new water storage facilities such as dams were already required to apply for water use licences, and would face a similar challenge if the draft regulations were implemented in their current form.

Agri SA supported transformation, but it needed to be done in a manner that maintained a stable and investment-friendly environment, he said.

If the regulations were enacted in their current form they would have a chilling effect on property transactions.

“A property changes hands with the water licence [or water use entitlement]. The ability to lawfully use water is vitally important, and the buyer is always going to ask [about this]. If there is uncertainty, it is certainly going to affect property values,” he said.

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