Whose water is it anyway?
The National Water Act 36 of 1998 has caused a lot of upset since its enactment into law, and although it was not created to frustrate farmers, it seems to have caused the greatest frustration and confusion in the agricultural sector.
It is important to point out that the reasoning behind the Act was to ensure just and equitable use of water, having taken into consideration that South Africa is a water scarce country, and the drought experienced specifically by the Western Cape in the last couple of years has been a fierce reminder to all water users, regardless the sector, that South Africa has no water. In essence, what water is left in the country, for the sake of preservation, has become a national resource, that is like, if one was to find gold on their land, the gold does not automatically become theirs to mine, it belongs to the Government.
The implications of this "nationalizing" of water are many, including raising questions like
If I sell my land, is it worth less or more now since the water does not belong to me?
Can I transfer my water use rights to someone else, and if so at a price?
Land that has existing water rights, meaning that, the seller has a water use license that is under his name to use water on that farm, has more value than a seller who has no water rights on the farm.
Simply because, the seller that has a water use license can have the license amended to reflect the new owner/s as new licensees, this is in terms of Section 50 of The Water Act, automatically allowing the new owner to continue the business of the farm.
However, the sale agreement cannot, like in the past, specifically have a clause that includes a price on the water and the fact that the property has water rights, because the Department of Water and Sanitation is the custodian of water and therefore water cannot be sold.
The only compensation that can be considered and therefore included in the purchase price, is the expenses the seller incurred in securing the license and not necessarily for use of the water itself.
In the case of the seller that has no water use license on the land, even though there is a water source on or near the property, it would disingenuous to have the presence of a water source as a consideration as to the value of the land. As the purchaser / new owner would still have to apply for a water use license for the property, incur additional costs, wait for possibly 300 days for a decision and still not have any guarantee that DWS will grant the license.
Transfer of Water Use
In terms of Section 25 (1) The Department of Water and Sanitation (DWS) does authorize irrigation water use license holders to transfer water temporarily to be used for another reason or to be used on another property for the same reason. This has been done in agricultural practice, years before the Act came into play, with the only difference being that in the past, land owners would sell or lease this use of their water, where now the Act does not allow it. In practice, many farmers, still take this approach to transferring of water at a price, but again the issue of it not being theirs to sell crops up again. There is nothing wrong however in charging the transferee for the rates and services attached to the water use and reasonable compensation for any inconvenience caused including the duration of the use of water.
The other part of Section 25 allows a water use license holder to surrender their license wholly or in part, to facilitate a new water use license application for the use of water from the same source in respect of another land, with the condition being that the surrender only becomes effective if and or when the application is granted by the DWS.
In the above scenarios, one can tell that the transfer or surrender of water cannot be made permanent on the will of the license holder, which has led to frustration by land owners, who have felt that their ability to make decisions about their properties that are beneficial to them, is discriminatory and impacts negatively on their constitutional rights. The North Gauteng Court has been approached regarding the transfer of water as envisioned in the Act and will hear this matter on the 30th of October 2019, this not being the first time the courts have been approached, and the Department of Water and Sanitation has always defended these cases and have so far won in all matters brought against them.
In this particular case, the Constitutional Court might be the court that is the best suited to give direction as to what is just and what is equitable in the use of water for everyone.
About the author: Katli has a bachelor of laws (LLB) from UNISA and a PG Dip ,Management Principles from Henley. She has a wealth of experience in the private business sector and previously headed up the African Franchise of a UK Executive Search Firm, specializing in global markets and Investment Banking throughout emerging markets, particularly in Africa and the Middle East. She is also the co-founder and still currently a director of Kreamfields, an established waste management company focused on sustainable manufacturing, growing the circular economy and regenerative design of waste material, which she and her co-founder launched as start-up. The company currently employs over 50-people and were listed in Forbes Africa 30 under 30 (Forbes Africa Magazine 2018), 100 Mandela's of the Future and were awarded Global Citizen "Visionary for sustainable outlook and activism", by Hewlett Packard. Katli is passionate about assisting clients in the agri- commercial and related sectors to find value added solutions to their compliance needs and challenges. She specializes in water rights use licenses and applications, advising clients under the new act, and within a BEE and socio-economic framework, thus ensuring that the transformative goals of the act are realized and improving the chance of success of the application. She also empowers clients with up to date advices on any developments in the legislation and/or at a national departmental level. Katli assists with the act 70 of 70 applications, and facilitates and initiates BEE empowerment projects/ investment deals.
For more information contact: Katli Ngwane email@example.com
Author Katli Ngwane, Katika Consult