The City of Ekurhuleni will not be increasing municipal tariffs that are within the control of the city, despite a considerable strain on revenue collection exacerbated by the Covid-19 pandemic, Finance and Economic Development MMC Nkosindiphile Xhakaza said on June 26 during a webinar discussing the City’s 2020/21 budget.
This means there will be no increases on the tariffs of assessment rates; sundry tariffs; refuse removal; burial and cemetery; and municipal bus services.
Xhakaza said this would be at a cost of R956-million to the city.
However, there will be increases on services provided by external stakeholders.
Therefore, the water tariff will increase by 15% owing to water research levy, chemicals, the cost of transporting water to households and energy costs, besides others.
Further, water entity Ekurhuleni Water Care Company (ERWAT) has proposed a tariff increase of 11% on sanitation. This is based on the increase in input costs such as fuel and chemicals and to address backlogs on sewer network maintenance.
Further, the city will be buying electricity from State-owned power utility Eskom at a 6.9% increase, but will be passing on an increase of 6.23% to 8% to the consumer, with the city to absorb the difference.
Xhakaza said that owing to the Covid-19 pandemic and subsequent lockdown, the city had been adversely affected, mainly in terms of revenue collections, with significant decreases in planned revenue collection, which was already under strain.
The City of Ekurhuleni has had to adjust its budget downwards from an approved Medium Term Revenue and Expenditure Framework (MTREF) capital expenditure (capex) of R7.4-billion in the current financial year to R4.9-billion in the coming financial year.
Xhakaza said the city would be following the Finance Minister's advice to adapt to the new situation brought about by the pandemic and adopt a “zero-based budgeting” approach.
Under zero-based budgeting, all expenses must be justified for each new period. Currently, the National Treasury provides budget forecasts for up to three years ahead.
The city's MTREF budget is R149.8-billion, and R46.6-billion is allocated for the 2020/21 financial year.
This 2020/21 financial year funding is broken down into revenue generated internally of R37.4-billion, grants of R7.3-billion and borrowings of R1.97-billion.
The revenue will be used to fund both the operating expenditure (opex) and capex.
Opex is broken down into internally generated funds of R36.9-billion, grants of R4.8-billion and no borrowings to fund opex.
Meanwhile, capex funding is broken down into revenue generated internally of R513.2-million, government grants of R2.4-billion and loans of R1.9-billion.
A key objective for the city remains reducing its overall burden of debt to release more resources for development.
Xhakaza said the city also had a responsibility to residents to lessen the impacts of Covid-19. It is, therefore, introducing credit control and debt management interventions to minimise the effects of the lockdown on ratepayers.
In light of financial pressures, the city is pursuing cost containment measures aimed at reducing spending. This includes reductions on non-essentials such as catering, advertising, special events, telephone calls, stationery and printing.
Moreover, Xhakaza indicated that there would be no travelling in the 2020/21 financial year.
The city will also undertake discussions with labour with regard to wage increases.
BUDGET SPENDING BREAKDOWN
The uncertain global economy and negative growth outlook for the country is impacting on the city, which Xhakaza cited as an important manufacturing hub for the country. However, the city is undertaking several growth strategies and imperatives in terms of the budget.
It has allocated R320.1-million in the MTREF and R116.6-million in the 2020/21 financial year to the Economic Development Department towards the revitalisation of its economy.
The key projects that it is investing in include the Reiger Park Enterprise Hub, the Ekurhuleni Fresh Produce Market, the Katlehong Automotive Hub and the Labore Industrial Park.
Further, R178.3-million has been allocated in the MTREF and R45.6-million in the 2020/21 financial year to actualise, besides others, the Aerotropolis Master Plan; and the provision of bulk engineering economic infrastructure in the city.
The city is also pursuing restorative justice for land, and agrarian reform through its Farm Release Programme, which has the objective to boost agricultural growth as well as create jobs.
Moreover, there is an ongoing process to identify 30 properties for industrial development. A further 99 properties, suitably zoned for commercial purposes, have been identified in townships.
The city has allocated R2.40-billion in the MTREF and R1.6-billion for the 2020/21 financial year to the Department of Human Settlements. The allocation will be going to, among other key projects, John Dube, Daggafontein, Leeuwpoort, Tembisa Extension 25, Clayville, and Chief Albert Luthuli megaprojects.
In terms of transport, the city is allocating R1.3-billion for the MTREF and R478-million for the 2020/21 financial year. Key projects in this area include the completion of the Vosloorus and Bluegumview taxi ranks and the construction of Integrated Rapid Public Transport Network bus stations, depots and proper stream crossings.
The city will also be investing R97-million in the MTREF and R59-million in this financial year for the procurement of a new transport fleet, including new buses.
The city is allocating the Water and Sanitation Department R2.1-billion in the MTREF and R668.9-million in the 2020/21 financial year. Key projects include the replacement of water meters; the construction of reservoirs; and network upgrade, repair and replacement of valves.
A further R675.1-million for the MTREF is allocated to ERWAT, and R206-million for the financial year, for wastewater treatment and plant upgrades. An amount of R470.1-million is allocated towards the upkeep of water network and clearing sewer blockages.
In terms of energy, the city is allocating R1.2-billion to maintenance and operations in an effort to deal with power interruptions and outages. The main areas of focus will be illegal connections, cable theft, refurbishment of substations, streetlights and meter tampering.
The city is setting aside R1.4-billion for the MTREF and R503.7-million for the financial year for electricity.
Key projects include the Thokoza Infrastructure Programme, for which the city has allocated R46-million. The other major projects in this area include the upgrading of substations; network enhancement; metering and the provision and maintenance of streetlights; and the electrification of informal settlements.
The city is also making progress in terms of independent power producers, he noted.
The city is allocating R1.2-billion in the MTREF and R452.2-million in the new financial year to the roads and stormwater department. Key projects include the upgrading of the N12 Daveyton interchange; doubling of Barry Marais off-ramp into Vosloorus; East township roads; pavement management system; and bridge management system.
An amount of R562.8-million is set aside for road refurbishment, potholes, patching and stormwater maintenance.
The city is allocating R280.4-million to the Ekurhuleni Metropolitan Police Department in the MTREF and R77-million in the 2020/21 financial year.
In the area of Emergency Medical Services and disaster management, it is allocating R257-million for the MTREF and R106.7-million for the 2020/21 financial year.
It is allocating R18.3-million in the MTREF to the Department of Health and R4.2-million for the new financial year. This investment will go to personal protective equipment, the roll-out of more Pele boxes and the maintenance of the Ideal Clinic Status.
The city is allocating R245.3-million in the MTREF to the Department of Sport, Heritage, Arts and Culture and R75.2-million for the financial year.
The city is allocating R705.4-million in the MTREF to the Waste and Environmental Resources Management Department and R274.3-million for the 2020/21 financial year.
Moreover, the Keep Ekurhuleni Clean programme is allocated R341.5-million over the MTREF.
The city is allocating R68.9-million for the maintenance of landfill sites and R46.6-million for parks.
The city is allocating R1.3-billion in the MTREF and R632-million in the 2020/21 financial year towards information and communications technology (ICT). Key projects will include server upgrades, data centre upgrades, call centre refurbishment, fibre roll-out and the enterprise resource planning. R270-million is allocated towards the repairs and maintenance of ICT infrastructure.
The city has allocated R627-million in the MTREF and R238-million in the 2020/21 financial year to the real estate department.