Repeated concerns on electricity management, security costs and capital expenditure were raised during the tabling of KwaDukuza municipality’s (KDM) mid-year adjustment budget.
The adjustment budget, which was presented to council last week, is a mechanism by which the municipality can evaluate first half financial performance and make changes as needed.
KDM’s operational expenditure was increased by R88.6-million for a projected annual budget of R2.226-billion.
This adjustment was largely owing to the increase in bulk purchases of R69.2-million, which was made on behalf of the electrical unit so that unauthorised expenditure would not be incurred.
Put simply, given energy losses of more than R162-million (e.g. illegal connections and unpaid electricity bills) at the end of January, KDM has to purchase more electricity than was originally budgeted for.
“There have been repeated warnings from the finance business unit saying that should we not get a control on electricity losses, the municipality could become financially unstable,” said Democratic Alliance caucus leader, Tammy Colley.
Echoing her sentiments, ActionSA caucus leader Nel Sewraj warned against the ever rising losses which could see the cost passed on to the consumer via increased tariffs.
“Residents need to know that KwaDukuza municipality currently makes a net loss on electricity purchases. And this is because electricity losses have escalated to 26%, the highest it’s ever been.
This is more than double the industry norm which caps at 12%. As it stands, the municipality is wasting the hard-earned monies of our residents to finance its energy losses,” said Sewraj.
Councillors again flagged rising security costs, which are a combined total for personal and infrastructure protection, that saw an increase of R10-million to R39-million.
There have been repeated complaints that these costs are not split into two separate cost units so that council can better understand the spending, but there remains no clarity more than two years later.
While welcoming the decrease in employee-related costs of R28.2-million, councillors queried an increase of over R3-million in overtime costs.
Of further concern was that the capital budget was decreased by over R66-million.
This follows a failure by relevant departments to timeously spend a grant of R109-million for infrastructure repairs following the April floods.
“You will recall that we were given six months to complete thirty projects. The allocated period proved to be inadequate,” said KDM mayor, Lindile Nhaca, who confirmed that an extension had been granted.
As projects go uncompleted, they will be rolled over into the next financial year for which less of a total budget will be available given new projects that come online.
Past spend is also used as a metric by the financial unit to evaluate budget allocation going forward.
Mayor Nhaca said the municipality had applied for a second tranche of flood repair funding to the tune of R1.2-billion.
The submission is currently under review by the National Disaster Management Centre.
“Service delivery should not be postponed. I wish to note that if we continue to delay the approval of our own Lekgotla resolutions, at some point during the course of our lives we will find ourselves wanting. Critically, we are in the second year of our term of office and yet we have been unable to approve a programme that will inspire confidence and begin to address issues that matter most for our people,” said Nhaca.
In terms of revenue, the municipality increased its budget by R38.67-million to a total of R2.46-billion.
This is partly owing to an increase in property rates of R36-million as new developments are registered, as well as an increase in electricity revenue of R11-million.
The electricity increase is owing to corrective measures by KDM in replacing faulty meters and billing issues, both of which were welcomed by councillors.
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