REUTERS
Durban – Any hope that Pietermaritzburg residents might have had that the Msunduzi Municipality would reconsider charging 10 percent more for water and electricity were dashed on Monday when the 2013/2014 draft budget was approved by its executive committee.
All that is left now before the increases take effect in July, is for the budget to be approved by the full council on Friday, which is a formality.
The tariffs were higher than those proposed by eThekwini Municipality, which were 5.5 percent for electricity and 9.5 percent for water.
The electricity hike was also more than the 7 percent approved by the National Energy Regulator (Nersa).
Msunduzi chief financial officer Nelisiwe Ngcobo said an application, backed by strong motivation, had been sent to Nersa for permission to go over the 7 percent tariff increase.
While a decision had not yet been made, Ngcobo was confident the increase would be approved saying that other municipalities had also applied for 9 percent and 10 percent increases.
If the increase was not approved the municipality would “cross that bridge”, she said.
All other tariffs, such as rates and refuse removal, would go up by 5.5 percent.
Businesses were up in arms over the increases for water and electricity.
Pietermaritzburg Chamber of Business chief executive, Melanie Veness, said in a submission on the draft budget that the proposed increases far exceeded inflation and were unaffordable.
She said the municipality was told that, if it created the kind of operating environment in which businesses were paying higher tariffs than those in neighbouring municipalities, businesses would move away.
In a report on the budget to the executive committee on Monday, municipal manager Mxolisi Nkosi said that when the rates, tariffs and other charges were revised, local economic conditions, input costs and the affordability of services were considered to ensure the financial sustainability of the city.
Discounting Eskom’s 7 percent price increase, in the form of lower consumer tariffs, would erode the city’s future financial position and viability.
He also said that the consumer price index was not a good measure of the cost increases of goods and services relevant to municipalities.
“The basket of goods and services used for the calculation of the CPI consists of items such as food, petrol and medical services, whereas the cost drivers of a municipality are informed by items such as the cost of remuneration, bulk purchases of electricity and water, petrol, diesel, chemicals and cement,” Nkosi said.
Julie Smith, of the Pietermaritzburg Agency for Community Social Action, said that if the budget was approved without the municipality having conducted a study on what poor households were able to pay, and without ensuring a subsidisation mechanism to accommodate them, the majority of households would not be able to afford water and electricity.
“We are extremely worried about this situation… it will hurt the poor and working class most severely and the negative implications will crash across all society.”
The Mercury
