Cape Town - Eskom’s proposed 22.7 percent tariff hike has caused consternation for the City of Cape Town’s draft 2015/16 budget.
Mayor Patricia de Lille said the R37.3 billion draft budget, including its electricity tariff, had been based on the 12.69 percent increase already announced by Eskom.
“We are very concerned that this application has come so late in the process for drafting budgets by municipalities.”
After announcing the 12.69 percent hike, Eskom approached the National Energy Regulator of SA (Nersa) for an additional 9.58 percent, bringing the total to 22.27 percent.
The city had proposed a 10.8 percent hike, but may need to up this by about 10 percent if Eskom’s application succeeds.
The city is also awaiting the outcome of negotiations for salary increases. Deputy mayor Ian Neilson said the city had allocated R9.7bn across all departments for these increases. “But the difficulty is that we don’t know what these increases will be.”
The draft budget will be released for public comment and then referred back to the council with amendments in May.
However, a tariff escalation by Nersa would “throw our numbers out”, said Neilson.
“… The city is also a consumer of electricity and another Eskom increase will throw a wobbly for our other tariffs too.”
Eskom’s Nersa-approved 14 percent increase for bulk purchases, and the continual reduction in electricity and water sales, has contributed to the city’s above-CPI tariff increases. The city has set aside R8bn to pay Eskom for bulk purchases, but this figure was also dependent on Nersa’s decision.
De Lille said that despite the looming tariff changes, the city had kept its service charge increases as close as possible to the Consumer Price Index of 5.9.
The plan is for rates, refuse and electricity to go up 10.83 percent, and 11 percent for water and sanitation. Disposal rates will increase by almost 13 percent.
Meanwhile, Neilson said the city had, in the draft budget, prioritised spending for the next financial year on the further rollout of the MyCiTi service, and on additional resources and overtime for safety and security.
The city had also allocated R23 million for overtime costs, of which R15m would be used for safety and security and R52m for fuel. An extra R54m would go towards improving safety and security at council amenities.
Utility services would get the lion’s share of the capital and operating budgets - R2.9bn of the R5.7bn capital budget and R15.4bn of the R31.6bn operating budget.
A “big chunk” of operating and capital budgets had also been allocated to Transport for Cape Town. While most is for the MyCiTi service, a considerable sum would be for road refurbishments, while R2.6bn of the operating budget would go towards ramping up the public transport system.
An amount of R437m has been allocated from the capital budget for the services needed for human settlements.
About 47.5 percent of the capital budget was spent on renewing and maintaining council assets.
More than 80 percent of the city’s income was self-generated, so it was “not largely dependent on national government”, with R11bn in electricity sales and R6.6bn in property rates adding to the R33.5bn revenue.
Neilson said the city was working with national government to introduce a gas-supplied power station, to reduce dependence on imported energy. Possible sites included Saldanha and Cape Town harbours.
Cape Argus