Lekwa Local Municipality 2013/14 - Co-operative Governance and ...

Property RatesProperty rates cover the cost of the provision of general services. Determining the effective property rate tariff istherefore an integral part of the municipality’s budgeting process. The tariffs for property rates will be increasedwith 5.6%.National Treasury’s MFMA Circular No. 58, 59, 66 & 67 deals, inter alia with the implementation of the MunicipalProperty Rates Act, with the regulations issued by the Department of Co-operative Governance. These regulationscame into effect on 1 July 2009 and prescribe the rate ratio for the non-residential categories, public serviceinfrastructure and agricultural properties relative to residential properties to be 0, 25:1. The implementation ofthese regulations was done in the previous budget process and the Property Rates Policy of the Municipality hasbeen amended accordingly. The municipality has been granted extension in the implementation of the MunicipalProperty Rates Act until the end of June 2014. During the financial year of 2013-2014 the municipality has to do aGeneral Valuation which will be implemented as from 1 st July 2014.Sale of Water and Impact of Tariff IncreasesSouth Africa faces similar challenges with regard to water supply as it did with electricity, since demand growthoutstrips supply. Consequently, National Treasury is encouraging all municipalities to carefully review the leveland structure of their water tariffs to ensure:• Water tariffs are fully cost-reflective – including the cost of maintenance and renewal of purificationplants, water networks and the cost associated with reticulation expansion;• Water tariffs are structured to protect basic levels of service and ensure the provision of free water to thepoorest of the poor (indigent); and• Water tariffs are designed to encourage efficient and sustainable consumption.In addition National Treasury has urged all municipalities to ensure that water tariff structures are cost reflectiveby 2014.Better maintenance of infrastructure, new dam construction and cost-reflective tariffs will ensure that the supplychallenges are managed in future to ensure sustainability.A tariff increase of 5.6% from 1 July 2013 for water is proposed. This is based on the CPI assumption of 6percentincrease in costs and another 2.05 percent increase to gradually move towards the target of cost reflective tariffsin 2014.In addition 6 kl water per month will again be granted free of charge to all households. The municipalitywill phase in a process were only registered indidgent households will have access to 6 kl of free water.Sale of Electricity and Impact of Tariff IncreasesNERSA has announced the revised bulk electricity pricing structure. An 8%increase in the Eskom bulk electricitytariff to municipalities will be effective from 1 July 2013.The consumer tariffs had to be increased by 7.3% to offset the additional bulk purchase cost from 1 July2013.Indigent households will again be granted 50 kWh per month free of charge.The inadequate electricity bulk capacity and the impact on service delivery and development remains a challengefor Lekwa Local Municipality. The upgrading of Lekwa Local Municipality’s electricity network has become astrategic priority, especially the substations and transmission lines.The repairs and maintenance budget for 2013/14 for the Electricity Division can only be utilised for certaincommitted maintenance projects.249 | P a g e