Council To Be Asked To Approve Multi-Year Tariff Increases

SEPTEMBER 18, 2014

The Nelson Mandela Bay Council will tomorrow be asked to approve multi-year tariff increases for the next three years to the 2017/18 financial year with property rates said to increase by 9.5%, 10% and 10.5% over the period.

The electricity increase will remain static at 7.39% as approved by the National Energy Regulator of South Africa (NERSA).

However, this may change should Eskom apply to NERSA for the tariff determination to be reopened following the announcement by government of a R225 billion bailout for the state-owned enterprise.

In terms of the recommendations by Mayor Ben Fihla to Council, the tariff increase for water will be 13% over each of the next three financial years; 12%, 13% and 13% respectively for sanitation and 11%, 12% and 13% for refuse.

In his report to Council, CFO Trevor Harper states that there are “certain issues that could have significant financial implications for future budgets,” one of which is the need to maintain the collection rate at the targeted figure of 94%.

Others factors include the “adequacy” of budgetary provisions for maintenance and infrastructure backlogs; staffing requirements and the resultant impact on the personnel expenditure rate, and unfunded mandates such as the provision for roads and libraries.

Unfunded mandates are where the metro performs a function on behalf of the province but does not receive adequate financial compensation.

Harper also points to the need to replenish the Capital Replacement Reserve and the final level of bulk electricity and water tariff increases.

With regard to maintenance backlogs, Harper says that executive directors have been handed the task of finalising the “assessment and quantification of all maintenance backlogs in order to address such backlogs within a reasonable timeframe.

“Essential maintenance must be accorded priority and budget provisions must not be reduced in favour of other demands with short-term benefits.”

In terms of the multi-year budget, a total of R2.74 billion has been allocated for repairs and maintenance over the four-year period between the 2014/15 and 2017/18 financial years.- MetroMinutes.

 

Photo Caption: Nelson Mandela Bay Mayor, Ben Fihla. Photo courtesy of www.myPE.co.za