MOSSEL BAY NEWS - Having just had to stomach the news of probably the highest yet South African fuel increases in April, Mossel Bay's ratepayers are set to feel the pinch of proposed municipal tariff increases for the 2019/2020 financial year.
The proposed increases are:
- Property rates: 15%
- Refuse removal: 15%
- Electricity: 12.9%
- The water tariff, based on normal expected rainfall scenario, will increase by merely one per cent, as will sewage tariffs. Both water and sewage are regarded as trading services intended to run a marginal profit.
At a special council meeting on Friday, the draft 2019/2020 second review of the fourth generation integrated development plan and draft budget for the 2019/2020 medium term revenue and expenditure framework and related policies were tabled.
The pinch will come from property rates, expected to increase by 15%, and refuse tariffs, which for another year face a steep 15% increase. In addition, electricity tariffs are said to increase by 12.9%.
Cost of supply study
When he introduced the motion, acting mayor Councillor Dirk Kotzé reminded council that the municipality is presently doing a cost of supply study on all its services with the intended implementation date of 1 July.
"The preliminary results on the efficiency of the various services, after the cost allocation of secondary costing, indicates that a shift is required from economical and trading services to property rates.
"The outcome of this study will influence the future rates and tariff charges," Kotzé said.
Property rates will increase by 15%. The increase in the tariffs for vacant land, both residential and commercial are higher than the increase in general for property rates.
"The first R15 000 valuation of any developed residential property, in terms of the Municipal Property Rates Act, is exempted and an additional rebate is granted on balance of the valuation up to a maximum of R35 000. The owner of a developed residential property will therefore not pay any property rates on the fist R50 000 of the value of the property.
"Refuse services are regarded as economic services and should generate a small profit.
"The increase of 15% is the third of approximately three increases in excess of the inflation rate.
"Mossel Bay Municipality opted for a phased in approach to contribute to the costs of the proposed new regional landfill facility for the Garden Route District municipal area. The alternative to fund means finding ways and means to reduce waste from Mossel Bay to this landfill site," Kotzé added.
He said the above inflation rate increases for refuse are because Mossel Bay Municipality is a tariff taker in this regard.
The electricity service is regarded as a trading service and is supposed to run at a profit.
The net profit on electricity sales is used to fund the deficit on the total budget and thereby subsidise property rates tariffs.
"The proposed increase for electricity is 12.9%, the average we envisage the Nersa increase for municipalities to be.
"Nersa approved tariff increases of 4.4% in October 2018, another 9.4% in April 2019, with a cumulative effect of 15.63%, to Eskom.
"Although Mossel Bay will be paying about 15.63% more for electricity purchased, the increase to the consumer will be limited to 12.9%."
The acting mayor said: "There is a reduction in the gross profit on electricity sales compared to the 2018/2019 financial years, which illustrates that the dependence on electricity tariffs to balance the budget has reduced. In addition, the Municipal Manager, Adv Thys Giliomee has been requested to explore the possibility of introducing a medium tariff for large electricity consumers to make investment in Mossel Bay more attractive.
Likewise, investigations into mitigating measures such as a category tariff to alleviate the plight specifically of farmers who contribute towards food security are ongoing.
The proposed budget and related documentation will forthwith be advertised for comment.
Council will consider all input received and will have to finally approve the budget before the end of May.
Councillor Jovan Bruinders (ANC) said his caucus had reservations about the proposed budget and requested that all councillors meet prior to the council meeting where the proposed increases will be ratified in order to "thrash out any possible differences".
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