Tariff increase by AbaQulusi Municipality

Lolo Madonsela
AbaQulusi Local Municipality has passed the budget to increase tariff rates by 5%, effective from July 1, 2020.
In his budget presentation, Acting Municipal Manager Mncedisi Maphisa said, “Zululand Municipality, as well as AbaQulusi Municipality, has undertaken a critical assessment of its capital infrastructure requirements. The assessment indicates that the current municipality is unlikely to sustain its long-term ability to supply water and the district municipality will have no other choice but to provide funding for infrastructure upgrades. A tariff increase of 5% from July 1, 2020, for water is proposed. In addition, 6kl water per 30-day period will again be free of charge to all indigent community members.”
Even though the National Treasury encouraged the municipalities to keep the increase in rates, tariffs and other charges as low as possible, Maphisa indicated that, “The municipality must, however, take into account the labour and other input costs of services, the need to ensure financial sustainability, local economic conditions, the affordability of services and the indigent policy.”

Also read: AbaQulusi Municipality tables draft budget

Maphisa said that in the 2019/20 financial year, there was a 0% increase for property rates due to the implementation of the new property rates register; however, this year there will be a 7% increase.
On the sale of electricity and the impact of the tariff increase, Maphisa said that NERSA was responsible for price determination of the bulk cost for electricity.
“The price determination by NERSA that municipalities should use is a 6.22% increase as per guidelines. The municipality has submitted the request to NERSA for approval and the outcome will be sent to the municipality, once approved by the NERSA board.
“An analysis of the municipality’s consumption patterns is currently being done to calculate more accurate tariffs and be submitted to NERSA for approval. The tariff increase is between 4% and 6,22%. The section is supposed to be ring-fenced, but due to the theft of electricity in the form of tampering and bypassing of meters, it is not possible and again, as in the past, the shortfall of approximately R50 million must be funded from other revenue sources within the municipal revenue stream.”
He highlighted the fact that registered indigents will be granted 50kWh per 30-day period free of charge.
Maphisa also cited that the upgrading of the municipality’s electricity network has become a strategic priority; especially substations and transmission lines.
“The approved budget for the energy section can only be utilised for certain committed upgrade projects and to strengthen critical infrastructure; for instance, substations without backup supply. It must be noted that Eskom will receive an amount of R15.7 million to perform electrification and this will then have to be maintained by the municipality,” explained Maphisa.
The budget showed that the overall impact of the tariff increases on household bills has been kept to a 5% increase; except for rates (which increased by 7%) and electricity (which increased by between 4% and 6,22% for all households, including indigent households).
Sanitation and refuse removal increased by 5% respectively.

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