POLOKWANE – The biggest shocker is water tariffs which had been increased by 10,5%, followed by electricity with 8,5%, while sanitation, refuse removal, assessment rates and all other tariffs were increased by 6%.
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Proposed increases for the Mid Term Revenue and Expenditure Framework budget (MTREF) for the 2019/20 financial year are 9,5% for electricity, 10,25% for water and 6,5% for assessment rates and 6% for other tariffs. The 2020/21 proposed increases would see yet another 10 % increase for water and electricity, 6% for assessment rates and 7% for other tariffs.
The revenue by source from water was budgeted to be R313,385 million for 2017/18, but was lowered to R220,845 million in the 2017/18 adjustment budget. In the MTREF period, revenue is budgeted to be R248,45 million for 2018/19, ending with R301,309 million in 2020/21. Electricity service charges are expected to increase from a revenue of R972,299 million in 2017/18 up to R1,054 billion in 2018/19, R1,155 billion in 2019/20 and R1,270 billion in 2020/21. Bulk purchases for electricity from Eskom and water from Lepelle Northern Water for 2018/19 has been budgeted at R915 million. This would leave the municipality with a profit of R387 million on water and electricity.
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“We have to ensure that the municipality remains financially sustainable as we are under constant pressure to maintain our level of service delivery to the fast growing population of our area,” Mayor Thembi Nkadimeng rationalised the increases.
Total operating revenue
The total operating revenue of the municipality of R3,6 billion, has grown by 8,4% for the 2018/19 financial year when compared to the 2017/18 adjustment budget.
According to Nkadimeng, communities cannot afford sharp increases on rates and tariffs and the municipality has consulted all stakeholders on proposed tariff increases for 2018/19 and their inputs have been taken into consideration. “We have also considered the economic, social, and financial factors in determining the increases,” she said. “It is imperative on our part as council that we maximise financial efficiency and embrace the principle of value for money.”
She said the municipality will ensure it radicalises the local economy by empowering the SMME’s through its procurement systems. “In order to ensure we are able to heighten the pace of service delivery and to provide sustainable services, we continue on the path of sourcing alternative approaches on funding,” she said.
Regarding indigent households, she said the municipality will continue to provide pensioners earning a monthly income of less than R8 300, and above the indigent threshold of R3 500 per household, to get rebates of 80% on assessment rates. In addition to the supply of basic services to rural areas, the urban indigent package will include the following:
• R100 000 of the market value of the property excluded from assessment rates.
• 6 kl of free water per household per month.
• 100 kWh free electricity per month.
• 100% rebate on sanitation, refuse removal and on the electricity basic charge.
She said the employee-related cost is expected to increase with 6,2%, in line with Salga bargaining agreement, which is CPIX+1. Bulk purchases of water is to increase by an average 6%, bulk purchases of electricity is to increase by an average of 6% and the debt collection rate is expected to reach 89,5%.
Polokwane Housing Association (PHA)
As the parent municipality to PHA, the municipality has recapitalised the entity by repaying their existing loan in order for the entity to be independent and financially sustainable. “We budgeted R11 million per annum for operational expenditure and R90 million for Ga-Rena Phase 2 in the next three years in order for PHA to be self-sustainable,” she said.
Capital budget projects
Capital projects will be funded from grants to the amount of R1,25 billion while R670 million will be funded from own funds and borrowings.
The capital budget includes R33,3 million for sport and recreation, R492,2 million for the Bus Rapid Transit (BRT) infrastructure, R311,9 million for roads and stormwater, R300 million for water supply and reticulation, R392 million for sewer reticulation and R69 million for electricity infrastructure. The budget has grown by 6,3% from the 2017/18 adjustment budget.