The Water Trading Entity (WTE) was first established as a Water and Equipment Trading Account which was approved in 1983 through Circular SY3/6/B under the Exchequer Act, 1975 (Act No. 66 of 1975) as amended, and was subsequently amended by the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended, which converted it into a Water Trading Entity. Under the PFMA, 1999 (Act No.1 of 1999) as amended, the WTE was required to change from cash-based accounting to accrual-based accounting.

In terms of the National Water Act, 1998 (Act No. 36 of 1998), the Department is responsible for the regulation of water use in South Africa by ensuring that water is allocated equitably and used beneficially in the public interest, and it is also required to create a register of all water users in the country. The Act makes provision for cost recovery on services rendered by DWS to water users. It is against this background that the Department created the Water Trading Entity within its administration. It has been operating as an integral part of the Department with very limited segregation of functions from the Department’s Main Exchequer Account. The accountability for its functioning is vested in the Director-General of the Department of Water Sanitation who acts as its accounting officer. The funding of its activities comes from the Department’s equitable share as a transfer and through revenue collection from the various water schemes operated throughout the country.

Its main functions relate to the development, operation and maintenance of specific water resources infrastructure and managing water resources in specific water management areas. It is the goal of the WTE management to achieve financial sustainability and independence to reduce reliance on the fiscus.