Ratepayers can’t cope

2009-08-27 00:00

LOCAL residents are reeling in the face of electricity and rates tariffs since increased charges have shown on their accounts for the first time this month.

ANC ward councillor Les Naidoo told The Witness that since the bills started arriving two weeks ago, more than 50 residents are flooding his office daily. He said he is lucky to get home before 10.30 pm since the bills began to arrive, because of the increasing number of residents seeking his assistance.

Naidoo said residents in the northern suburbs have been hit particularly hard and many feel they are paying rates on over-valued properties. The process surrounding the valuation roll is flawed and has created major problems for pensioners and the poor, said Naidoo. He said some property values have escalated dramatically and people who were previously classified as indigent now have to scramble to find money to pay their rates as some are in reality living in R40 000 homes that have been valued at R280 000.

“The destitute are in serious trouble and I don’t know how these people are going to survive. Their circumstances have not changed since last year. If they can’t pay, what happens to their homes? As a ward councillor I have to answer, but I don’t have answers. What do I tell these people?” said Naidoo.

DA ward councillor Rodger Ashe said that although people were warned and expected the increase, he has had complaints from some of the residents in his ward who have told him they are under immense strain.

Ashe said the council needs to make savings this year and pass them to ratepayers.

IFP ward councillor Dolo Zondi said he has yet to receive complaints about the increased electricity tariffs, but this is largely due to the fact that many residents in his ward make use of pre-paid meters and could therefore manage their consumption.

Eastwood Community Forum (ECF) chairman Fred Wagner said destitute residents came crying to him last week after receiving bills of between R600 and R1 000. He said a pensioner whose monthly pension was R1 200 was distraught after receiving an electricity bill of R 1000. “This means she now has basically nothing to live on,” said Wagner.

There have been reports that some Copseville residents have been chopping wood in surrounding areas and using this to heat water to save costs.

Raffick Janghi, who lives in the area, confirmed this and said he has helped people get pallets to collect wood for cooking.

Resident Simphiwe Mkhize is still reeling from the shock after opening his bill from the Msunduzi Municipality. From paying less that R700 for lights, water and rates, his account has increased to well over R1 200. Mkhize said he moved to the suburbs to improve the lifestyle of his family, but at this rate he is considering going back to the township.

“How are we going to pick ourselves up? These increases have not taken into account that people are trying to build themselves up; faced with bills like these, we are never going to be able to do this,” he said.

Mkhize’s other gripe is that he feels that not enough was done to warn residents about the massive increases in their bills. He said that if there had been notification about the increases it was totally inadequate.

Pietermaritzburg Chamber of Business president Andrew Layman said it is unfair that the local electricity price has increased even further beyond the Eskom price, particularly for the industrial sector.

“The municipality has exploited the Eskom increase in order to increase its own profit,” he said.

The president of the SA Chamber of Business, Professor Alwyn Louw, criticised the Msunduzi Municipality at a summit held at Durban’s Sibaya Conference Centre recently. He said the municipality’s 27,5% electricity charge works out to be more in real terms than Eskom’s 33,3%.

The municipality may face reduced revenue and an increase in bad debts as a result of residents failing to pay.


IT is a pity that the Chamber of Business views the electricity price of the Municipality as exploitation meant to increase its profits. If anything, the municipality is struggling to balance its electricity books given the increased demand for electricity infrastructure maintenance, replacement, upgrading and rehabilitation. The following facts are true:-

1. Msunduzi Municipality increased its tariffs by 27,5% instead of the 31,3% and 34% increase granted for Eskom and municipalities respectively by Nersa. The municipality applied the increase to the existing tariffs in a similar way to that done by other electricity utilities. The applied weighted average tariff of 27,5% gives a cost structure of the electricity business comprised of 62% Eskom costs. The effective tariff increase for the benefit of municipal operations is no way near the 34%. We [would like to] know of any other method applied by other municipalities different from the way it was done by Msunduzi.

2. The municipality has absorbed inflation costs in water, sewage and refuse removal charges.

3.The cost structure of the electricity business of the municipality is not only comprised of the bulk purchases from Eskom, but includes asset repairs, maintenance, refurbishment, replacement, salaries, transport and overhead costs. All these costs are not static and not an unwarranted increase as assumed by the Chamber of Business. The municipality, like Eskom, is also facing the challenges of electricity infrastructure rehabilitation, upgrading and maintenance. The inflation component and costs related to increased demand for electricity quality service have to be accommodated in any tariff increase and this was not adequately accommodated in the electricity tariffs. The same customers who are complaining about the tariff increase will be the first complain if poor quality of service is provided.

4.Municipalities are facing similar economic liquidity challenges like any other business. Failure [of consumers to pay for] municipal services will ultimately lead to failure of services. The approach therefore should be to ensure cost- effectiveness of business operations without compromising on quality, innovation and business re-engineering. The shareholders should also accept taking a reduced return on investment and profits during this period to avoid shedding jobs.

5.The municipality has since opened a window for discussion with industries that are in financial distress regarding service charges … because of the need to sustain employment for our residents. It is also important to note that any discount given to companies requires a budget adjustment, a process that is rigorous and characterised by stipulated timelines by National Treasury.

THE municipality’s property valuation roll has been steeped in controversy.

The municipality is gearing up for a court case after refusing to pay an outstanding balance of R1 million to the appointed contractor despite having already paid it R24 million.

At a meeting of the executive committee (Exco), councillors complained that they were inundated with complaints from residents who were dissatisfied at the assigned property values.

At the meeting, ANC councillor Themba Zungu said that according to the agreement, the valuers did not do their jobs properly because they did not enter every house.

ANC councillor Pops Chetty agreed with Zungu at the meeting: “Thousands of people marched to the city hall to complain, so let’s go to court because we have evidence that they didn’t perform.”

Residents have lodged objections in their thousands and until the municipality gives feedback, residents have no choice but to pay rates according to the assigned values.

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