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Daily Maverick
11-06-2025
- Business
- Daily Maverick
Paying more, getting nothing — the Nelson Mandela Bay ward whose capital budget was slashed to zero
'I have been a ward councillor for 25 years and this has never happened to me,' said DA caucus chief whip Gustav Rautenbach. The capital budget for Lorraine and its surrounding suburbs — which makes up Ward 8 — has been slashed from R1.2-million to zero in the draft budget scheduled for discussion and a vote on Thursday. It is one of four DA-led wards in the metro that have been allocated no capital budget — and there is no mechanism for residents to appeal against the decision. The DA caucus chief whip, Gustav Rautenbach, said on Tuesday that there were rumours that the ward might still receive about R500,000 — but this had not been confirmed. Ratepayers are facing increases of 5% for property rates, 5.50% for water, 5.50% for sanitation and 6% for refuse collection, as well as a 12.8% increase in electricity prices if it is approved by the National Energy Regulator of SA. Last year, Ward 8 used its capital allocation to tar and repair part of Circular Drive, a major arterial road. But for the next year, Rautenbach said, there would be no capital allocation. 'It is very problematic,' he said, 'because this means that the Integrated Development Plan and the budget are not talking to each other. 'I think it is important to note that this doesn't mean that no potholes will be filled or no sewage spills will be fixed,' he said. 'That would come from the operational budget.' However, it does mean that no big new projects will be scheduled for the ward in 2025. 'We contribute millions to the municipal treasury,' said Rautenbach. 'Parts of this ward are old and must be replaced. How is that fair?' Lorraine has 122 townhouse complexes with around 3,000 houses, in addition to freestanding homes. 'I would say there are about 21,000 residents who live here,' said Rautenbach. Two of the main roads in the area, Dijon Road and Luneville Road, require major work. 'We don't even have an office,' said Rautenbach. 'We don't have a community hall, and we have no recreational facilities.' He said they had received only R100,000 for a humanitarian fund, like all other wards in the metro. Short-sighted 'This is very short-sighted from the municipality,' he said. 'Because it should be clear that the only direction in which Gqeberha can grow is in this westerly direction. 'I am very upset. Residents are making their contributions, and they are getting nothing.' Three other wards are facing the same outcome. However, Ward 41, represented by Luyanda Lawu, the mayoral committee member for safety and security, is set to receive about R48-million in the upcoming budget and R42-million and R37-million, respectively, for the next two financial years. The ward has several informal settlements that need major infrastructure projects. Last week, the budget was once again 'noted' in the council as Nelson Mandela Bay Executive Mayor Babalwa Lobishe said negotiations around ward allocations were ongoing. According to the budget document, the metro faces 'significant challenges' with the new budget, including: A declining collection rate; The poor financial performance of the electricity service, which now operates at a huge deficit; Escalating electricity and water losses that are at unacceptably high levels; Allocation of the required operating budget provision for newly created infrastructure and facilities, with a consequential impact on the level of property rates and tariff increases; Allocation of the required budget provision for the rehabilitation and maintenance of infrastructure; Underfunded mandates, such as the Library Services, negatively affect the municipality's budget; and Financial commitments emanating from previous council decisions, such as the insourcing of security guards, which become an ongoing cost on the municipality's payroll. DM
Daily Maverick
04-06-2025
- Business
- Daily Maverick
Nelson Mandela Bay faces electricity crisis: proposed 12.8% tariff hike sparks controversy
Citing spiralling non-technical electricity losses, the Nelson Mandela Bay Municipality's application for a 12.8% electricity tariff increase has revealed that the metro's electricity department will not generate any revenue or surpluses this year. However, there is some relief for old-age homes and residents of housing estates and residential complexes. '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
