Storm over water levy

KZN cities, Umgeni in row over drought levy.
KZN cities, Umgeni in row over drought levy.

A storm about the drought levy is brewing between Umgeni Water and six municipalities.

The South African Local Government Association (Salga) KZN has put its foot down against the drought levy being imposed by Umgeni Water.

The water utility introduced a 15% levy this year to keep itself afloat financially, while the drought tightens its grip on the province.

However, Salga KZN has proposed that these payments be deferred to the 2017/18 financial year, which only starts in July next year.

The association said the six municipalities that receive water from Umgeni Water, including Msunduzi, were only informed about the charge “way after” their planning for the new financial year, and they had not made any provisions in their budgets to foot the bill for the charge.

Water and Sanitation Minister Nomvula Mokonyane only approved the increase late in June. The levy was only confirmed by Umgeni Water when councils had also approved their 2016/17 municipal tariffs, the association said.

Salga KZN spokesperson Unathi Nxumalo said the association has made Umgeni aware of the proposal.

Nxumalo said residents of these municipalities will ultimately foot the bill.

“We request that our members, the municipalities, are given adequate time to inform the end user about this drought levy, as it will affect the billing to them at the end of the day,” she said.

Even if an agreement is reached to defer the payment, the parties involved will have to negotiate the 15% charge.

“Municipalities have advised they cannot afford the 15% that is proposed. Salga, as a mediator in this matter, is working tirelessly to negotiate and ensure that it is reduced,” she said.

On Tuesday, uMgungundlovu District Municipality and Msunduzi Municipality representatives said they could not afford the levy, as they were already working under stringent budgets.

“We would have to reassess our budget and possibly make sacrifices in the mid-year adjustment budget to accommodate the levy,” said uMgungundlovu spokesperson Mbali Ndlovu.

“Unfortunately the cost has to be absorbed by the consumer, resulting in a higher tariff. uMgungundlovu has already started working on the possible tariff models to ease the impact on the consumer.”

She said the restrictions mean that the municipalities will pay more for less water. “Municipalities have to achieve restrictions of at least 15%, which is intended to encourage conservative use of water while the water reserves are under pressure due to drought.

“The levy on the other hand is imposed to help Umgeni Water stay afloat amid reduced sales and higher overhead costs due to extra costs introduced in their management of drought.

“Both the drought levy and the restrictions are contradictory in effect. The drought levy in effect becomes a penalty for saving water,” she said.

Msunduzi spokesperson Thobeka Mafumbatha said the municipality will consult with consumers once it has “exhausted” negotiations on 2017/18 tariffs.

Umgeni Water spokesperson Shami Harichunder said the levy is inevitable, and added that the drought continues to impact on the utility’s system.

This has included a reduction in revenue and an increase in costs due to the implementation of emergency schemes and higher energy and chemical usage, he said.

“Umgeni Water has adopted prudent cash flow management and re-prioritisation or postponement of capital expenditure to the value of R2,3 billion as an overall response plan to the drought. Controllable costs are also down 17% below budget.

“While … implementation of the levy should ideally have been included with the bulk tariff for 2016/17, this was not possible because ministerial approval had not been received at that stage,” said Harichunder.

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