The Nelson Mandela Bay municipality is facing pressure from the National Treasury to scale back its assistance to the poor (ATTP) benefits, to align with national guidelines.
Councillors previously rejected this at a committee meeting.
The city is expected to reduce the subsidies from July 1.
On March 3, national co-operative governance & traditional affairs (Cogta) local government budget analysis director Matjatji Mashoeshoe wrote to then acting city manager Sizwe Mvunelwa to formally raise the issue.
The letter stems from observations and recommendations made during the midyear 2024/2025 budget and performance review held on February 20.
“The city must implement its credit control and debt collection policy without any element of political interference and stick to the implementation of existing financial policies such as the [ATTP], cash management and investment policy, credit control and debt management policy.
“Any compromise on the implementation of any financial policies will cause financial sustainability challenges,” Mashoeshoe wrote.
The ATTP programme subsidises water, sanitation, refuse services, electricity and property rates for indigent residents and is funded by the equitable share grant.
The city is expected to implement reductions in basic service allocations, cutting water from 8kl to 6kl, electricity from 75kW/h to 50kW/h, and sewerage from 11kl to 9kl.
The move was unanimously rejected by the budget and treasury committee in April.
They argued the Eastern Cape was one of the poorest provinces, and indigent people needed assistance.
A report by acting CFO Jackson Ngcelwane, scheduled to be tabled at a council meeting, states that multiple consultation sessions have been held to emphasise the need for compliance.
“The National Treasury has stated that this request is non-negotiable.
“National Treasury has been up in arms with the city, resulting from the levels of the benefits afforded to indigent households that are greater than Cogta’s recommended guidelines.
“The argument from the side of the National Treasury is that anything incurred by the municipality greater than the national norm represents income foregone, which could have been used to finance other priorities.
“Once the city experiences any financial hardships, National Treasury will read the riot act against the city.
“The city may not have too many options but to accept the reduction of these allowances to be in line with the national norm,” Ngcelwane said.
Budget and treasury political head Khanya Ngqisha said the city was looking into finding other ways to supplement the free services.
“What was suggested in the mayoral committee is that as a municipality, we will look at where we can augment the laws from the ATTP fund so that the beneficiaries are not affected by this reduction of services.
“For instance, the electricity and energy directorate will give us technical advice in terms of what can be done to ensure that poor people continue to get the free service we offer them as they now are [receiving].”
The Herald
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