New draft regulations published on 19 May 2023 by the Department of Water & Sanitation (DWS) around water use licence applications in the agriculture sector has created concern for all in this space.
The new draft proposal stated that farmers who draw 250 000 to 500 000 cubic metres of water require 25% of black shareholding for their water use licence to be granted, while 50% black shareholding is stipulated to use more than 500 000 cubic metres. To draw more than a million cubic metres of water, 75% black shareholding is required. DWS has indicated that this is due to the fact that most of South Africa’s water resources are held by water use entitlements issued prior to 1998. In a statement DWS said that the revised draft regulations have introduced proposed thresholds of abstraction volumes of water against the level of black ownership in applications submitted for new water use allocations. This is done to ensure that there is transformation of water use allocations.
Subsequently, DWS clarified by saying: “..the transformation requirements categories as envisaged in the current review of Regulations are only applicable to applications for new water use licenses and are not applicable to renewal of existing water use licenses, nor to the water use applications which will arise out of compulsory licensing (compulsory licensing refers to the process of re-licensing water use allocations which were made prior to the National Water Act coming into effect).”
The Department further confirmed that 98,5% of the available water resources in South Africa are currently allocated and that the transformation requirements would only apply in the context of new water use licence applications relating to the remaining 1,5% of water resources.
In its current state, the proposal means that depending on how much water needs to be extracted and stored, applicants for all new licenses will likely have to be at least 25% black owned – a difficult requirement for family owned farming businesses. It is to be seen whether this draft will go through in its current format. Concerns about the potential impact on food security have been raised.
Always solutions driven
The Bravura team will keep a close eye on any new developments and as always, look to offer our clients in the agricultural industry our innovative views on potential solutions.