Cape Town - Municipalities across South Africa have been lashed in a new report by NGO SA Cities Network. Releasing the “people’s guide” to its State of City Finances report, the network said the key focus was the impact on consumers of increased electricity and water tariffs, amid all-round rising costs.
Among key findings are that most lower-income households pay a greater share of their income towards tariffs than those with higher incomes; and that the cost of all service packages increased in all cities, except Nelson Mandela Bay and Mangaung. Cape Town hiked all its service package costs at well above the average growth for the nine cities. The increase was driven by higher water charges combined with the abolition of the free 6kl for non-indigent households.
The report said metros had three primary means of sourcing income: revenue generated independently via taxes and services; the local government equitable share (a share of national revenue allocated to municipalities to subsidise indigent households); and grants from the national and provincial government.
The Socio-economic Rights Institute of SA’s Kelebogile Khunou said: “On top of that, there are also administrative costs that the City enforces.”
The report said South Africans were using less electricity due to sharp price increases and load shedding, which meant less money for municipalities - themselves under pressure to find money to fund service delivery.
Electricity is a major component of municipal finance - the surplus from electricity sales is the largest own-revenue source for cities after property rates, according to SA Cities Network.
“Cities use electricity sales surpluses to cross-subsidise low-income residents; 40% of households are serviced at cost to the system. A quarter of households account for half of total residential electricity use, so any change in higher-user customer demand impacts city budgets.”
From 2009 to 2018, Eskom prices trebled, resulting in customers reducing electricity use via energy efficiency, theft or switching to solar power.