Nelson Mandela Bay faces electricity crisis: proposed 12.8% tariff hike sparks controversy
'The phenomenon of increasing electricity bulk purchases and spiralling decreases in electricity sales has reached unprecedented levels, to the point where the electricity service has become unable to generate its own revenue or any surpluses as per the historical model for this service,' the Nelson Mandela Bay municipality stated in its application to the National Energy Regulator of SA (Nersa) for an increase of 12.8% across the board for all categories of electricity users.
The metro's non-revenue electricity losses for the financial year that ended in March 2025 stood at R1.049-billion, caused by factors including meter tampering and illegal connections.
The draft budget for the metro, which was noted last week by the city council and was scheduled to be debated on Thursday, 5 June, also stated that the electricity department would have to be subsidised by municipal rates to remain viable.
Opposition parties said the electricity department would bankrupt the city if a successful turnaround plan were not implemented.
Earlier this year, the metro's executive mayor, Babalwa Lobishe, tried unsuccessfully to have R449.8-million relating to 30 tenders in the electricity department written off without the matter being investigated by the Municipal Public Accounts Committee.
Nersa has, this year, decided to make all the municipal applications for electricity price increases public and has asked that the public send their comments.
'Nersa requires that all municipalities calculate their electricity tariffs based on the costs incurred in supplying customers,' said Nersa spokesperson Charles Hlabela. This is a legal requirement in line with a high court ruling obtained by the Nelson Mandela Bay Business Chamber.
'This requirement will be enforced to all municipalities for their 2025/26 electricity tariffs. Should the municipality fail to comply with this requirement, it will face a risk of having its tariffs not approved,' said Hlabela.
He said Nersa valued input from all stakeholders and would consider written submissions alongside a thorough analysis of each application.
Further issues were also touched on by the metro in its application.
In its motivation for the electricity tariff increase, the municipality stated: 'The business of the Electricity and Energy Directorate is continuously plagued by a scourge in electricity theft, tampering and illegal connections as well as tariffs which were historically not cost reflective.'
The metro, which derives R7.5-billion a year from electricity sales, said two main factors had led to the increase:
Eskom bulk purchases had been increased by 12.74%; and
Municipal salaries had been increased by 7.75% in line with the collective bargaining agreement.
The metro said it was gearing up to implement an advanced metering infrastructure programme to reduce energy losses, improve revenue protection and enhance operational control.
Some relief
It offered some relief for residents of residential complexes and old-age homes, who had been incorrectly billed under the industrial and commercial bulk supply tariff, 'despite the actual end-user being classified as a residential customer in the NMBM Consolidated Billing System.
'This also comes as a direct result of numerous complaints received from this cohort of customers who deemed the current tariffs unfair, as they were being treated in the same way as businesses due to the tariff structure.'
The application acknowledged that 'preventative maintenance and innovative switching methods can be game changers, ensuring that the system can handle fluctuating demand while reducing unexpected failures.
'A proactive approach could also lead to efficiencies in resource allocation as preventative maintenance often costs less than reactive repairs.'
However, the application continued, 'It is unfortunately not possible to increase the Repairs & Maintenance Funding Allocation to the desired level.'
The metro promised to do so within the next three years.
It said there was no 'growing interest' from private generators or businesses looking to take advantage of wheeling arrangements.
'Illegal connections, tampering with metering equipment, infrastructure vandalism and access to properties are the dominant challenges faced in some of the electrification areas. Customer education, awareness interventions, audits and replacement of illegal connections with legal connections continue to receive special attention.
'The influx of people migrating to the metro and the associated need for accommodation result most of the time in the illegal construction of informal housing, contributing to the Electrification Programme complexity,' said the metro in its application. DM
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Maverick
8 hours ago
- Daily Maverick
July fuel price will cost an extra R25 a tank, on average
We got it wrong… South African motorists won't be seeing a fuel price drop this July. Instead, pump pain is back with a vengeance. Minister of Mineral and Petroleum Resources Gwede Mantashe announced that South African motorists face a fuel price increase set to take effect on Wednesday, 2 July. This adjustment reflects a combination of local and international factors influencing the cost of fuel. While earlier reporting anticipated a decrease on the back of a stronger rand and soft oil prices, the monthly review process, which takes into account global crude oil and petroleum product prices, importation costs such as shipping and the rand/dollar exchange rate, revealed a different reality. Your wallet is about to feel the squeeze: Key factors behind this month's fuel price adjustment: Crude oil prices: The average Brent Crude oil price rose from $63.95 to $69.36 per barrel during the review period. This increase was mainly due to geopolitical tensions in the Middle East, particularly between Israel and Iran, raising concerns over potential supply disruptions. International petroleum product prices: Following crude oil trends, international prices for petrol, diesel and illuminating paraffin increased, contributing to higher basic fuel prices by 68.45 cents per litre for petrol, 100.48 cents per litre for diesel, and 83.20 cents per litre for paraffin. Propane and butane prices slightly decreased. Rand limiting the damage: The rand strengthened against the dollar, moving from 18.11 to 17.84 rand per dollar, which helped reduce the fuel price contributions by more than 15 cents per litre for petrol and about 16 cents per litre for diesel and paraffin. Slate levy: The slate balance was positive at R5.213-billion in May. Accordingly, the slate levy remains unchanged at zero cents. Octane differentials: The price difference between 95 and 93 octane petrol grades is adjusted quarterly. This quarter, changes in the Basic Fuel Price differentials mean retail prices for these grades will differ by fuel-pricing zones. Supply cost recovery for LPGas in Western Cape: A 14% increase in Supply Cost Recovery on LPGas imported through the Port of Saldanha Bay has been approved as an interim measure for 24 months. This raises the maximum retail price of LPGas in the Western Cape to R36.08/kg. This rise in costs is already causing concern among everyday South Africans who rely on fuel for their livelihoods. Kagisho Sefako, who works in the transportation industry in the Western Cape and depends heavily on petrol, said the increase would hit his budget hard. 'We were still enjoying petrol decreases last month, and now this increase will really hit my budget for July. When petrol goes up, everything else follows,' he told Daily Maverick, worried about the impact on his daily expenses. Echoing these concerns, Alberto de la Vega, a teacher in the Free State, expressed frustration. Already spending a significant amount on fuel, he said the increase would strain his pocket even further. DM
Daily Maverick
a day ago
- Daily Maverick
After the Bell: Why wealth redistribution through taxation is our lifeline
If the flow of tax money stops, we are doomed. It is money that pays for social grants, for schools, for the school nutrition programme, for antiretrovirals, for electricity for so many people. Whenever I am feeling very worried about our country, whenever something happens that makes me really fear for our future, there is a fact I sort of cling to. One of those steadfast dynamics that really means so much. It is that despite everything, and all of our arguments about inequality and poverty daily, richer people give a huge amount of what they earn to poorer people. And we do this through tax. Considering how often we grumble and gripe about the government, it is almost a miracle. But an absolutely vital one. If this flow of money stops, we are doomed. It is money that pays for social grants, for schools, for the school nutrition programme, for antiretrovirals (ARVs), for electricity for so many people. It is also this flow of money that gives us each a huge stake in our society. I remember writing during the pandemic that one of the selfish reasons I would support a basic income grant is that it would help me sleep more easily at night. I worry a little that this flow of money is coming under a little strain. For a long time people in the government have wasted money, and wasted it big time. And so many others have just stolen it. Earlier today, it was confirmed that Brian Molefe, Anoj Singh and Siyabonga Gama have finally been arrested for their role in a locomotive contract at Transnet. When we realise the damage that has been caused at Transnet, and how it is still having an impact on us now, we must look at these three as a big part of the cause. Mind-blowing And some of the facts that we already know about them are mind-blowing. I mean, Singh was working as the finance director at Transnet for two years. During all of that time, he did not access his salary once. Being finance director at Transnet is one of the big jobs in this country; it must require long hours and intense effort. I'm talking about weekend meetings, hours spent trying to sort out the finances. And you don't access what you get paid for it once? Seriously? To my mind, just that fact alone proves he must be guilty of corruption. What else was he living on? But the real surprise in this story is that we are surprised. So many people have been shown to have stolen government money and got away with it. I mean Gama and Molefe are getting paid by the government right now. They're both Members of Parliament. I'd remind you which party they represent, but I think you know already. The examples of how people steal money just mount up. It gets to a point where, unless it is particularly crazy, you don't really notice any more. Yesterday the Sunday Times showed how currently suspended Road Accident Fund CEO Collins Letsoalo has spent R10-million on security. He had more guards than anyone apart from the president and the deputy president. Seriously, who does he think he is? Zunaid Moti? In Joburg, a city with a budget of at least R83-billion, it seems the possibilities for wastage and corruption are literally endless. It appears that the bosses at City Power have been finding jobs for their relatives despite the fact it doesn't have enough money to pay Eskom the full amount it owes. Arguments about tax I worry that arguments about tax are about to get a little more heated. SA Revenue Service (Sars) Commissioner Edward Kieswetter made important waves when he said that there was no need to raise VAT by 2 percentage points earlier this year. Instead, he claimed that, with a bit more money, he would be able to increase the tax take by R800-billion. That's a huge amount of money. An unbelievable amount of money. To do this, Sars is going to get a lot tougher; it will be going after more people and investigating cases more thoroughly. I think we'll start to hear about more disputes soon. I suspect that more often we are going to hear people who owe Sars money complaining, not about the technical and legal aspects upon which tax depends, but about a broader principle. They're going to say that their money is not going to social grants and school nutrition programmes and ARVs. They're going to say, a lot more loudly than they do now, that the money they pay to the government is being wasted. I hope that Molefe and Singh and Gama are brought into court soon. I think a State Capture case that gets to the point where a high-profile suspect ends up testifying under oath will really make everyone feel better. Once we get there, we might start to see justice being done. And that might remove some of the pressure. But money is still being wasted. And stolen. Huge amounts of it. And I don't see that stopping for a while. DM
The Citizen
2 days ago
- The Citizen
DA opposes additional R184m funding for Polokwane Softball Stadium
Quick read The DA in Polokwane has opposed an additional R184 million allocation to complete the international softball stadium. The project is jointly funded by the municipality and the Limpopo Department of Sport, Arts and Culture. R69 million has already been spent since the stadium's initial approval in the 2019/20 financial year. The DA says co-funding the project will strain other capital projects funded through the Integrated Urban Development Grant. Projects at risk include roads, waste facilities, electrical upgrades, and rural sports infrastructure. Delays have been caused by vandalism, COVID-19, business forum disruptions, and cash flow problems. Full story below Full story POLOKWANE – The DA in Polokwane has voiced its opposition to the additional R184m in funding allocated for the completion of the Polokwane Softball Stadium. Read more: Polokwane Softball Stadium gets R184m boost after years of delays The municipality confirmed last week that the municipal council and the Limpopo Department of Sport, Arts and Culture have pooled resources to finalise the long-delayed project, with completion anticipated in early 2026. According to municipal spokesperson Mantlako Sebaka, the stadium has already cost the municipality R69m approved during the 2019/20 financial year. In 2023, the DA said it actively opposed the municipality's co-funding of over R90m, warning that the expenditure would affect other capital projects funded through the Integrated Urban Development Grant. These projects include road upgrades, waste transfer stations, electrical infrastructure, and the development of rural sports facilities. DA councillor Jacques Joubert reiterated the party's stance, saying the project has been plagued by challenges, including vandalism, business forum stoppages, Covid-19 delays, and cash flow issues. He added that in 2023, the projected cost of completing the stadium was estimated at over R251m, which the party viewed as unrealistic for the municipality's financial capacity. Sebaka said the current project scope includes the completion of general external works, the grandstand, mechanical and electrical installations, and the roof. Joubert added that the DA has requested the Municipal Public Accounts Committee to investigate possible poor planning and financial mismanagement related to the project. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
