Eskom budget buster

Late tariff hike will throw our numbers out, says city

ESKOM’s proposed 22.7 percent tariff hike has caused consternation for the City of Cape Town’s draft 2015/16 budget. Mayor Patricia de Lille said the R37.3 billion draft budget, including its electricity tariff, had been based on the 12.69 percent increase already announced by Eskom.

“We are very concerned that this application has come so late in the process for drafting budgets by municipalities.”

After announcing the 12.69 percent hike, Eskom approached the National Energy Regulator of SA (Nersa) for an additional 9.58 percent, bringing the total to 22.27 percent.

The city had proposed a 10.8 percent hike, but may need to up this by about 10 percent if Eskom’s application succeeds.

The city is also awaiting the outcome of negotiations for salary increases. Deputy mayor Ian Neilson said the city had allocated R9.7bn across all departments for these increases. “But the difficulty is that we don’t know what these increases will be.”

The draft budget will be released for public comment and then referred back to the council with amendments in May.

However, a tariff escalation by Nersa

would “throw our numbers out”, said Neilson.

“… The city is also a consumer of electricity and another Eskom increase will throw a wobbly for our other tariffs too.”

Eskom’s Nersa- approved 14 percent increase for bulk purchases, and the continual reduction in electricity and water sales, has contributed to the city’s above-CPI tariff increases. The city has set aside R8bn to pay Eskom for bulk purchases, but this figure was also dependent on Nersa’s decision.

De Lille said that despite the looming tariff changes, the city had kept its service charge increases as close as possible to the Consumer Price Index of 5.9.

The plan is for rates, refuse and electricity to go up 10.83 percent, and 11 percent for water and sanitation. Disposal rates will increase by almost 13 percent.

Meanwhile, Neilson said the city had, in the draft budget, prioritised spending for the next financial year on the further rollout of the MyCiTi service, and on additional resources and overtime for safety and security.

The city had also allocated R23 million for overtime costs, of which R15m would be used for safety and security and R52m for fuel. An extra R54m would go towards improving safety and security at council amenities.

Utility services would get the lion’s share of the capital and operating budgets – R2.9bn of the R5.7bn capital budget and R15.4bn of the R31.6bn operating budget.

A “big chunk” of operating and capital budgets had also been allocated to Transport for Cape Town. While most is for the MyCiTi service, a considerable sum would be for road refurbishments, while R2.6bn of the operating budget would go towards ramping up the public transport system.

An amount of R437m has been allocated from the capital budget for the services needed for human settlements.

About 47.5 percent of the capital budget was spent on renewing and maintaining council assets.

More than 80 percent of the city’s income was self-generated, so it was “not largely dependent on national government”, with R11bn in electricity sales and R6.6bn in property rates adding to the R33.5bn revenue.

Neilson said the city was working with national government to introduce a gas-supplied power station, to reduce dependence on imported energy. Possible sites included Saldanha and Cape Town harbours.

ECONOMIC Opportunities MEC Alan Winde has predicted a future in which agricultural produce from the Western Cape plays a major role in feeding the world.

Delivering his budget speech for agriculture yesterday, Winde said the time had come to start dreaming big.

“We are in the midst of a successful harvest season, and it has been reported to me that the quality of our produce is higher than ever before. It has also been a productive harvest, where employers and employees have worked together to get the job done.”

The MEC said his budget outlined a set of practical action plans, linked to measurable targets.

“In total, R742 million has been allocated to agriculture to create an enabling environment in which our farming and agri-processing operations can grow the agricultural economy and create employment in the sector.

“Creating jobs for the people of our rural areas is the only way in which we can sustainably address our biggest challenge: poverty,” he said.

Winde said over the next five years they would work to ensure a 70 percent success rate of all land reform projects.

“It is our goal to improve market access for all agri-businesses in the Western Cape. The Western Cape produces over 50 percent of South Africa’s agricultural exports. We will support agri-business to strengthen their export position by growing exports from their current value added of R16.3 billion.”

Winde noted that markets such as the European Union were increasingly demanding environmentally friendly and socially responsible farming practices. “We also know that farming this way is the right thing to do for our planet and our people. In this respect, we aim to ensure that 1 200 farmers and farmworkers in the sector receive ethical trade training.”

He said the province was also a major exporter of meat, so to ensure that the animal population remained and that the province could respond speedily to any animal disease outbreak, the Veterinary Services programme would receive R76.2m.

Winde said an investor-friendly environment was needed if the province wanted to play a role in feeding the world.

“Some of our agricultural and agri-processing businesses have started to lose faith in the system, and particularly in government. Farmers lose faith in investing when politicians take policies such as the 50/50 land proposal off the table, only to start the debate again a few months later,” he said.

The ANC criticised the department for failing to address issues of transformation, the plight of farm workers and tackling farm evictions across the province.

ANC MPL Sharon Davids said the farm support development proposed by the provincial government said nothing about assisting black farmers to enter the agricultural industry.

“The evictions of farm workers and dwellers must come to a stop.”

Davids said the department should take a stand against this.

“Go to the extent of creating a team within the department dedicated to monitoring evictions.”