BILLING AGENT POLICY

1. BILLING AGENT POLICY POLICY ON WUAs ACTING AS BILLING AGENTS

2. PREAMBLE [1] • Policy sets out the process by which WUAs & IBs can undertake billing of water use charges on behalf of DWAF • This function can be performed in terms of Section 58(1) of the NWA • The specific arrangements between the WUAs/IB that undertakes the billing agent function will be formalized by contract • The policy will be implemented on a voluntary basis.

3. APPLICATION OF THE POLICY [2] Sec 58 of the NWA empowers the Minister to direct any Water Management Institutions to act as billing agent. This also include Irrigation Boards (IB), however this will be a transitional arrangement for IB as they will have to transform into a WUA to continue acting as billing agent. All collecting agents will be referred to as Billing Agents (BA) in this presentation.

4. RELATIONSHIP BETWEEN BA AND DWAF [3] Each prospective BA will enter into a contract with DWAF prior to assuming billing function, the contract will specify: • Time frames and provision that are specific to the circumstances of the BA. • The duration of the contract will not exceed 3 years and is renewable by agreement • Delegation in terms of section 63 of the NWA will occur only in respect of suspension and restrictions of water use (section 59(3) of the NWA) • If all remedies available to the BA have failed, the BA may approach DWAF through their regional directors for assistance in instituting civil action against defaulters, at the Departments expense.

5. CHARGES TO BE COLLECTED [4] As per the Pricing Strategy there are four types of charges that are to be collected: • Water Resources Management Charges (WRM) – This charge is payable by all users taking water from the countries water resources for irrigation, mining, industrial, municipal use and for commercial afforestation. The charge is also applicable to waste discharge related water management activity. • Water research levy – This is charges in terms of the Water Research Act and payable to the Water Research Commission (WRC). The charge is applicable to users receiving water from government water schemes including water services providers like municipalities, water boards and WUA/IB. • TCTA (Trans-Caledon Tunnel Authority) charge – This charge is currently applicable to water users dependent on water from the Vaal River and Berg River systems and is based on actual measured use. This charge in future will be charged by the proposed infrastructure agency. • Wastes Discharge Charge System (WDCS) – This is the yet to be implemented charge which provides for the management of water quality. This charge is broken down into an incentive and mitigation charge.

6. CONDITION TO UNDERTAKE BILLING FUNCTION [5] All billing agents will be required to: • Develop systems and procedures for the issuing of bills and recording of transaction • Keep proper accounting records in line with GAAP (Generally Accepted Account Practice) • Keep proper records of all debtors in accordance to GAAP • DWAF to be given access of individual debtors record upon request WUA that do not have effective systems to run a billing agent may approach DWAF for support, such application will be considered upon merit The quality of debtors records should be of a sufficient standard to enable such information to be used as acceptable evidence in a Court of Law DWAF reserves the right to make random checks on WUA debtors records DWAF reserves the right to immediately terminate the BA agreement if the BA does not keep proper accounting and debtors records or is ineffective in collecting water use charges.

7. CONFIRMATION OF REGISTERED USE [6] To confirm registered members of a BA • DWAF will send out a list of confirmed members to each BA, prior to or together with the invoice • The BA must affirm in writing that the list is correct • Should the BA not agree with the list then it must provide a reconciliation statement pointing out variance to DWAFs records • If DWAFs list is found to be less that the BAs list then DWAF must register the additional volumes • If DWAFs list is greater than the BAs, then the BA will charge in accordance to DWAFs list and will take measures to updates its records and charge all relevant users • The BA must keep records of changes to membership and changes in contact details as well as changes in volumes registered to each member

8. STEPS IN THE BILLING PROCESS [7] • DWAF will issue a consolidated invoice to the BA • BA will issue individual invoices to each member/user • BA receives and record payment • 44 days after DWAF issued invoice, BA must pay the full amount recovered from members to DWAF • In cases of short payment the BA will pursue all possible avenues to recover amounts due by defaulting water users including Section 59(3) processes (stopping or restricting water supply) to those water users whose account is in arrears for more than six months. • The BA will provide DWAF with a monthly reconciliation of debts in arrears and will also provide a written progress report on the status of each outstanding debt in excess of R5000 which is in arrears for 90 days and longer • After the BA has forwarded the full amount received as per the consolidated invoice, DWAF will credit the BA’s account for the commission due 30 days after receiving payment with the consolidated invoice • The BA agreement will include a detailed list of historical arrears of each client including the age of each debt for once off commission on arrears.

9. COMMISSION PAYABLE

10. BILLING AGENT • With regards to collection of arrears the commission is a once off payment registered at the time of signing the BA Agreement • If a debt at the time of signing the agreement is 60 days in arrears and money is only collected after 360 days, then the commission payable will be 8% and not 10%. • The policy does not apply retrospectively and therefore no compensation will be payable for past collections.

11. THANK YOU