Committee Wants Discussions on Municipal Electricity Surcharges

OCTOBER 29, 2014

The National Assembly’s Trade and Industry Committee wants National Treasury and the Cooperative Governance and Traditional Affairs Department (COGTA) to discuss “the extent to which municipalities are charging exorbitant electricity surcharges to raise revenue”.

In a report, tabled in Parliament on the implementation of the Industrial Policy Action Plan (IPAP), with specific reference to the manufacturing sector, the committee says Treasury and COGTA should also discuss the overall funding of local government.

The committee says it may consider holding a colloquium with stakeholders to find a solution to these problems.

It says that high electricity and port tariffs have “contributed to the decline of the competitiveness of the manufacturing sector and therefore finding a solution to high administered prices is essential”.

In its evidence to the committee, the National Energy Regulator of South Africa (Nersa) expressed concern about the price of electricity and its impact on industry as well as households.

Nersa said a new funding model for municipalities should be developed “as the current model places increasing reliance on revenue generated from electricity”.

In its evidence, Eskom proposed that measures should be developed to align municipal tariffs with Eskom tariffs “that would level the playing field in the manufacturing sector.

“This should be done by ensuring there is sufficient fiscal support for municipalities to maintain infrastructure and to support other social services.”

It also proposed that a “national cross-subsidy framework” should be developed” that must “include the funding of subsidies and criteria for subsidisation of municipal services”.

The SA Local Government Association said metros, like Nelson Mandela Bay and municipalities with significant numbers of vulnerable and strategic sectors should be engaged “to encourage a coordinated approach to assist these sectors and to encourage moderation of municipal tariff increases.” - MetroMinutes.


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