Nelson Mandela Bay budget battle drags on

The Nelson Mandela Bay council is racing against time to approve its 2026/2027 budget after an attempt to adopt it failed on Friday, when it was noted rather than passed.

Councillors gathered at the Feather Market Hall, where mayor Babalwa Lobishe tabled the budget, while Bay CFO Jackson Ngcelwane did a presentation.

The meeting started nearly two hours late, as party whips were in a meeting as some councillors were unhappy with the budget.

A council must approve its annual budget at least 30 days before the start of the new financial year, which translates to no later than May 31 each year.

However, there is leeway as the adopted budget must be completely in place before the financial year begins on July 1.

Council chief whip Wandisile Jikeka said the party whips had met to discuss Friday’s proceedings and agreed there were lots of apologies from absent councillors dealing with the aftermath of the severe rains and bereavements.

“Due to recent floods, there are still people in halls and churches who need to be looked after.

“The first proposal lets the council consider the IDP and budget. Then come back on Monday and consider the rest of the agenda.

“In the meeting, it was raised that the consultations that were done with the CFO and even with the joint Mayco and budget are not yet reflected as they were proposed to the CFO.

“Then a proposal was made to allow the CFO to make a presentation in council.

“We ask questions, and when he comes back on Monday, he comes back with issues that were raised when we were asking questions,” Jikeka said.

Meanwhile, residents are expected to have to dig deep due to a proposed average 10.95% electricity hike.

They will likely pay 6.5% more for water, sanitation and refuse.

Property rates could also increase by 5.5%.

Lobishe said the municipality had been allocated a total operating grant of R2.6bn for the 2026/27 financial year, while its total capital grant allocation amounted to R1.5bn.

A notable development in the budget was the introduction of the R477.97m Urban Development Financing Grant, a new funding allocation for metro trading services, Lobishe said.

“The project planning must be on point to ensure that we tick all boxes, which will enable us to benefit from the incentive grant, which is aimed at promoting the operations of electricity, water, sanitation, infrastructure, and solid waste as the three prescribed independent business units.”

Lobishe said grant expenditure in the municipality must improve.

“We must see an improvement in the concerning levels of revenue collection going forward.

“We must also be stringent in our execution of the revenue enhancement strategy that we must adopt.”

Total revenue is anticipated to be R20.11bn, with total expenditure of R20.58bn.

This means the budget has a deficit of R469.76m.

After a May 18 meeting with National Treasury, it was found that the budget was unfunded, preventing it from being recommended for council approval.

The Treasury attributed the municipality’s financial strain in part to its Assistance to the Poor (ATTP) scheme, which provides the highest levels of subsidised electricity and water to indigent households in the country.

The report also identified the municipality’s low revenue collection rate as a major factor contributing to its worsening financial position.

However, in a letter dated May 28 and addressed to acting city manager Charity Sihunu, the National Treasury’s chief director for local government budget analysis, Jan Hattingh, provided further feedback, stating that after the municipality’s submission of final data strings on May 27, the budget was now considered funded.

“We wish to applaud and appreciate the city’s budget and Treasury officer for their excellent co-operation, as this is the critical foundation not only for prudent financial management but also to enable impactful and effective service delivery.

“Please be aware that this budget is funded on the margin, without any room for upward adjustments until the financial situation improves.

“This means the city must, throughout this budget implementation, embark on cost containment measures and aggressive debt and credit control measures coupled with revenue enhancement strategies to remain funded,” Treasury wrote.

During the council meeting, Ngcelwane said key priorities for the metro include strategic metering infrastructure renewal, replacement of refuse compactors and procurement of the enterprise resource planning (ERP) system.

ACDP councillor Lance Grootboom said when the municipality met with National Treasury on May 18, the budget was not funded and had to be revised.

“You’ve not told us what changes you made. You need to let us know what changes were made.

“It tells us there’s a deficit of R469m.”

He also questioned whether the municipality had understated its debt impairment.

Grootboom said the budget for purchasing bulk electricity exceeded service revenue by R1.5bn, saying the directorate was broke.

DA councillor Gert Engelbrecht asked Ngcelwane whether he believed the budget complied with the MFMA and PFMA.

“You would recall the only consultative process we had was with yourself, and there were no department heads or project managers present.

“That meeting was a waste of time because you couldn’t answer our questions.

“For Ward 6 as well as numerous wards reflected in western suburbs, no inputs that we made as the councillors or from residents are reflected in the budget or IDP.

“Are we truly hearing voices of residents?

“How do we justify tariff increases from 6% to 10.25% when, in fact, it’s the metro that loses over R1bn in electricity and water. We’re punishing residents for something we can fix in-house.

“We’re saying we’ve got a 100% collection rate for electricity and energy.

“How is this possible if we lose R1.5bn in electricity a year, as well as all the electricity theft we’re aware of?”

Responding to Engelbrecht, Ngcelwane said the 100% collection rate for electricity and energy was what the city bills versus what it collects, regardless of electricity losses.

Council will reconvene on Monday.

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