Consumers face 12.2% electricity tariff hike

RESIDENTS and businesses in Nelson Mandela Bay will bear the brunt of Eskom’s national power crisis with a steep hike in the electricity tariff set to come into effect on July 1.

The 12.2% increase is expected to be implemented by the municipality every year for the next three financial years.

This is because Eskom will be charging the municipality 14.24% more for electricity.

Further increases of 9.5% for property rates, 13% for water, 12% for sanitation and 11% for refuse have also been proposed by the municipality.

However, ratepayers still have a chance to have their say when the draft budget and Integrated Development Plan goes out for public participation next month.

Any objections will have to be compelling to convince officials to reduce the tariffs, as the metro needs the increases to pass a cashbacked budget by the end of June.

It will be even harder to convince the municipality to reduce the proposed hike in the power tariff as it will also be forking out more to Eskom for electricity.

If the increases are adopted by the council, they will be for the new financial year starting on July 1.

The municipality’s R11-billion draft budget has shown a significant decrease in its costcoverage ratio – the amount readily available in its bank account.

While the national Treasury requires that a municipality has enough financial reserves to cover its expenses for three months, draft figures show the metro’s financial situation is so tight it would only have enough to cover expenses for a month.

This means that even if there were a slight decrease in the amount of revenue collected, the municipality could be heading for some serious financial challenges.

In the draft report, the metro gave the following reasons for its proposed electricity tariff hike: ý Employee-related costs increased by 8.6%; ý The cost of bulk electricity purchases rose by 14.24%;

ý The cost of repairs and maintenance of electricity infrastructure increased by 19.9%; and ý Providing for debt impairment. The DA and COPE did not accept the proposed increases tabled at yesterday’s joint budget and treasury and mayoral committee meeting, saying they would cripple businesses and households in the metro.

“I understand that tariffs must be cost-reflec-

tive, but as a party we’ll never agree to these increases,” COPE caucus leader councillor Khwezi Ntshanyana said.

“You [ANC] will have to ensure you have sufficient numbers [in council] to pass the budget because we won’t support these figures.

“We are waging a battle against Eskom which has failed to manage its own affairs.

“There are ugly twins killing municipalities in this country – water and electricity.”

DA councillor Angelo Dashwood said the proposed tariffs would hurt everybody, rich and poor.

“We will see job losses escalate because of these increases,” he said. “Many companies will be forced to retrench staff and then what will be left?

“They will be forced to close down because they will be non-profitable. We cannot support the electricity and water increases,” Dashwood said.

DA caucus leader councillor Retief Odendaal said the municipality was not collecting its overdue debt as it was supposed to.

“Prove that you have cut back on unnecessary expenditure and then we can go out and convince the public to support this budget,” Odendaal said.

ANC councillor Monde Vaaltyn called on highenergy users in the Bay to settle their arrear electricity bills. Some of the Bay’s biggest employers owe the municipality hundreds of millions of rands for their power usage.

They have been negotiating with the municipality to write off some of the money and it is understood that lower electricity prices have been negotiated for several of the companies, subject to certain conditions.

Deputy mayor Chippa Ngcolomba said a full report on the outcome of the talks would be discussed at the next council meeting on Tuesday.

He urged officials to consider alternative energy sources to prevent the metro from being over-reliant on Eskom. “The outcry from business and investors is always that it’s very expensive to do business with the metro. We need to think out of the box,” Ngcolomba said.