Ratepayers are likely to cough up more for services in Nelson Mandela Bay, paying 6% more for water, sanitation and refuse, while the proposed tariff increase for electricity is a whopping 18.49%.
Property rates could also increase by 5%, forcing residents to dig even deeper into their pockets.
The increases form part of the draft 2023/2024 budget that was debated at a joint budget and treasury and mayoral executive committee meeting on Thursday.
The tariffs, if agreed by the council on Monday, will come into effect from July 1.
The council has until the end of May to approve the draft budget with R16.2bn for operational costs of running the city, while R1.87bn is earmarked for capital projects.
In the draft budget for the 2022/2023 financial year, mayor Retief Odendaal wrote that the budget was prepared against the background of an escalation in arrear debt.
In January, arrears were sitting at R12.9bn with the biggest contributor being water debt which was at R6.8bn.
“It is important to note that the financial position of the electricity service is under immense pressure due to the extent of electricity losses, which impacts significantly on the financial sustainability of the municipality,” he wrote.
He said the salary and wage bill was also a major cost driver.
According to the executive summary, the municipality is faced with significant challenges that affect the budget, such as:
- The declining collection rate and load-shedding impacting on the financial sustainability of the municipality;
- Inability to budget for surplus on the operating budget, due to prior year commitments with financial implications on the budget;
- Poor financial performance of the electricity service;
- An inability to ensure that electricity and water losses are reduced to acceptable levels;
- Allocation of the required operating budget provision for newly created infrastructure and facilities, with a consequential impact on the level of property rates and tariff increases; and
- Financial commitments from prior council decisions, such as the insourcing of security guards which has become a permanent cost.
Odendaal said residents needed to brace themselves because they were going to be hit hard by the electricity hikes.
“Soon enough we will be conducting extensive public participation meetings that actually add value and we can’t go to the residents to tell them we will be taking more from them, but we also need to tell them what we will do to resolve our inefficiencies as a metro.”
Odendaal said other tariff increases were reasonable, but the electricity one would have a big impact on revenue collection while the electricity department was currently running at a loss.
“We need to turn this situation around and prove to our residents that we can cut back on our inefficiencies and not just run to ratepayers to fund our problems.”
ACDP councillor and political head for electricity and energy Lance Grootboom said the electricity tariff hike by Nersa would have a huge impact on consumers because electricity would be expensive.
This, he said, could lead to more people stealing power.
“This steep increase will also affect our revenue collection, while we are already suffering from non-technical losses in the department.”
Grootboom said the municipality needed to be firm and proactive to ensure those who bypassed meters and connected electricity illegally were removed from the city grid.
“We currently purchase electricity worth R4bn going to R5bn with these increases in the next financial year, and we are only getting about R4bn in return, which means we are running at a loss.
“When we conduct our public participation meetings for the IDP we are going to have to be very clear on our stand on this and how we as a city are affected.”
GOOD councillor and political head for safety and security Lawrence Troon said he wanted to know if there were no other means to collect revenue for electricity from residents to boost the city collection rate.
“Is there no way that when consumers buy electricity we deduct what is owed to us from their purchase because obviously when meters are blocked or removed, residents will make illegal means to get electricity?”
He said it was incorrect that when it came to water billing, ratepayers were charged ridiculous amounts on their accounts as a result of the city’s billing system.
“There is something very wrong in the water and sanitation department that contributes to the ills of our city, and our residents are the ones who end up suffering in the end as they will with the electricity hikes.”
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