On 19 May 2023, the Minister of Water and Sanitation published significant proposed amendments to the regulations governing the procedural requirements for water use license applications. The proposed amendments have caused division and backlash from various public interest groups and key role-players, with extreme concern being voiced by members of the agricultural sector.

According to the Department of Water and Sanitation, the purpose of the proposed amendments is to effect changes with respect to the fair allocation of water use, the amendment of procedural requirements for applications of new water use licenses, including but not limited to reviewing the time frames and fees linked to such applications. To this end, key proposed amendments include –

• the requirement to conduct an Integrated Water Use Licence Application in all applications that require authorisations in terms of the Mineral and Petroleum Resources Development Act; National Environmental Management Act; and / or any Specific Environment Management Act;
• shorter timeframes for the processing of application;
• the necessity of obtaining landowner consent in respect of any application;

• the automatic lapsing of a water use licence after 3 years of inactivity from the date of issue; and
• the possible requirement of providing security for post-licence rehabilitation in respect of certain applications.

While many of the above changes have been challenged on the grounds of impracticality, irrationality and, in some instances, unlawfulness, the proposed amendment facing the most criticism is the inclusion of strict requirements concerning Black Economic Empowerment (“BEE“).

To provide more context, comparative statistics in respect of issued water use licenses indicate that the water use licenses have been historically allocated to two specific groups, namely, Historically Advantaged Individuals (“HAI”) and Historically Disadvantaged Individuals (“HDIs”). The statistics indicate that 75.93% of water use licenses have been allocated to HAIs, while 24.07% have been allocated to HDIs.

One of the changes being advocated for by the draft regulations is the transformation of ownership. To achieve this transformation, the revised regulations include, inter alia –

• a B-BBEE Act scorecard, which assesses the level of compliance with BEE objectives and measures various factors including ownership, management control, skills development, enterprise and supplier development and socio-economic development;
• BEE Compliance Targets, which set specific targets for water use license applicants, emphasising the importance of black ownership, participation, and representation at various levels of the water sector. These targets aim to ensure the meaningful involvement of historically disadvantaged individuals and communities; and
• Reporting and Verification, which requires applicants to provide detailed reports on their BEE initiatives and progress towards meeting the compliance targets. Independent verification processes will assess and validate the accuracy of these reports, ensuring transparency and accountability.

In its clarification on the draft regulations, the Department of Water and Sanitation confirmed that the new transformation requirements proposed by the regulations would only apply to the 1.5% of water resources in South Africa that have not already been allocated and that the regulations were not intended to apply to applications for the renewal of existing water-use licenses, nor to water-use licence applications which will arise out of compulsory licensing.

Notwithstanding the above, a spokesperson from Agri SA has stated that, should these regulations be passed in their current form, they will have a devastating impact on the agricultural sector and its ability to provide the country with a secure supply of food. The regulations have been criticised by Agri SA as focusing solely on ownership, to the exclusion of all other relevant factors, which results in the total or partial loss of water resources for numerous commercial farming enterprises.

Given that the comment period in respect of the proposed regulations closed at the end of July 2023, it remains to be seen if and how the regulations will be revised to address the criticisms received by the public.

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