Durban - The steep rise in electricity tariffs was not the fault of the eThekwini Municipality and the City had fought hard to avoid the increases.
That was the message that eThekwini mayor Mxolisi Kaunda sought to communicate to the business community during a breakfast meeting in uMhlanga yesterday, where he briefed them on the new tariffs being proposed.
The City is on a road show presenting its R66 billion budget for the 2023/ 2024 financial year.
“The current economic climate has made above-inflation tariff increases inevitable. The three biggest contributors to the increases are out of our hands, that is the Eskom increase, Umgeni Water Board increase, and salary increase,” said Kaunda.
The 2023/2024 proposed tariff increases are:
- Property rates: 8.9% on average
- Water: 14.9% for residential users and 15.9% for business.
- Sanitation: 11.9% for residential and 12.9% for business.
- Electricity: 21.91% increase for all, subject to National Energy Regulator of South Africa (Nersa) approval.
- Refuse: 8% for domestic and 7%-9% for sundry and business.
The steep increase for electricity, Kaunda said, was largely due to the 18.65% tariff increase approved by Nersa for Eskom.
“We had tried to engage with Nersa to say do not increase the tariffs this much. Their tariffs were increased by 18% and we had to add the 2% in order for the City to be able to run its electricity infrastructure.”
He said keeping the City’s increase at 2% was a huge compromise to protect residents.
He said based on the needs of the unit and the fact that over the years their tariffs have not been cost-reflective, the increase by the City should have been about 5% or more.
Business people present at the meeting said they were concerned about the electricity tariff increase. They said this, combined with the slow growth of the economy, could lead to job losses.
“The money to pay this increase has to come from somewhere, and it might have to come from salaries,” warned one business person.
Janus Horn, a businessman and member of the Manor Garden Ratepayers Association, who was not at the meeting, commented yesterday that the rates and tariff increases would be a big blow to businesses and result in job losses.
“All I can say is unemployment, unemployment, more unemployment. Businesses are going to close. At the present moment businesses are battling to survive.”
He said that crime, including a recent spate of shootings, and the closure of beaches created a negative sentiment towards the city.
“It is not good news for me as a business owner, just the rates alone. We are going to battle to survive. If a company cannot survive, it reduces staff,” he said.
Speaking on the breakdown of the proposed budget, Kaunda said the total budget for 2023/2024 is R66bn, comprising an operating budget of R57.9bn and a capital budget of R8.1bn.
It is expected to be approved at the end of May and start operating in July.
“The combined water and sanitation capital budgets over the next three years is R5bn. This demonstrates our commitment to resolve water and sanitation infrastructure challenges,” Kaunda said.
He said water has a capital budget of R1bn in 2023/2024, which will be spent on the Southern Aqueduct project and the replacement of the water pipes system.
Over the Medium-Term Revenue and Expenditure Framework (MTREF), R2.1bn will be spent on the replacement of water pipes and other water loss interventions.
He said sanitation has a capital budget of R1.18bn to be spent on the upgrading of various wastewater treatment works and alternative sanitation technology.
Over the MTREF, R2.8bn will be spent on the expansion and upgrade of wastewater treatment works.