Johannesburg metropolitan council and Suez Lyonnaise des Eaux, an international water company, signed a five-year management contract for the management of the council's water utility.
The South Africa Municipal Workers' Union condemned the move as "privatising the city's water to a multinational."
Anthony Still, executive director of Johannesburg water said the challenge facing the utility was to reduce unaccounted water from 40 percent.
The contract entails paying Suez Lyonnaise a fixed fee of R25m should it meet delivery targets and a R20m incentive for human resource development, capital expenditure, reducing sewer overflows and customer service.
Source: Suez Lyonnaise des Eaux