Cape Town 101028. Deputy Finance Minister, Nhlanhla Nene is his 120 Plein Street office. PHOTO SAM CLARK, CA, Gaye Davis

Durban - Removing the authority of municipalities to supply electricity could be an option to help businesses function more successfully, according to Finance Minister Nhlanhla Nene.

He was speaking at a gala dinner in Pietermaritzburg and responded to allegations that unscrupulous municipalities were inflating electricity prices, making it difficult for businesses to operate.

Pietermaritzburg Chamber of Business president Paris Dlamini asked Nene to comment on this.

Nene said he was aware that some municipalities, which depended on electricity for income, abused the billing system.

“I agree there is a problem… it is a matter we have to deal with - even if it means getting to a point where we remove electricity from the hands of local government.”

Nene also said the government was under pressure to find other means of producing electricity to make it more affordable.

Ethekwini Municipality spokesman Thabo Mofokeng said electricity prices were regulated and approved by the National Energy Regulator of South Africa (Nersa) and that municipalities could not charge beyond what had been approved by the regulator.

“It is normal for customers to complain about charges for different services, including water, electricity and rates,and these are resolved on an individual basis,” he said.

Msunduzi Municipality spokeswoman Thobeka Mafumbatha said the municipality was unaware of allegations that municipalities were inflating prices.

“The tariff is regulated by Nersa,” she said.

Durban Chamber of Commerce and Industry chief executive Andrew Layman said he was aware of the allegations against some municipalities.

However, if the government removed the control of electricity supply from the municipalities, they would be forced to increase property rates to make up for the lost income.

“Ethekwini Municipality is more circumspect than some,” he said.

“Some years ago, the government planned to set up regional authorities to replace municipalities as distributors of electricity. The plan was abandoned. Municipalities strongly opposed the scheme. It is a complex issue,” said Layman.

Discussing other steps to help businesses thrive, Nene said it was essential to stabilise the micro-economic environment. The investment of billions on infrastructure development was key, of which a large portion would go to electricity generation and freight logistics infrastructure.

He said the government would make it easy for private businesses to expand into Africa.

“Africa presents great opportunities for South Africa’s private sector. About 25 percent of our manufactured exports are destined for sub-Saharan Africa.

“South African direct investment in Africa equals roughly 5 percent of our gross domestic product.

“The simplified tax and foreign exchange framework for companies with operations on the continent and elsewhere has been extended to unlisted companies, and the cap of such benefits for listed companies will be increased,” said Nene.

He said the government had also encouraged the growth of small and medium-sized firms with R6.5 billion in subsidies.

“An employment tax incentive encourages firms to provide work opportunities for young people,” he said.

The Mercury