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BUSINESS NEWS - Notice is hereby given that the Dr Beyers Naude Municipal Council has in terms of section 24 of the Municipal Finance Management Act, no 56 of 2003, approved its Integrated Development Plan (IDP), Annual Operational and Capital Budget on the 21^st of June 2022. 

As required in terms of section 17 of the Municipal Finance Management Act, the Budget, Integrated Development Plan and Supporting Documents were tabled and advertised for representations / submissions by the local community, Provincial and National Treasury in April and May 2022. 

Copies of the approved 2022/2023 Annual Budget, Detailed tariff listing, Integrated Development Plan and supporting documents are available at the administrative units and public libraries in Graaff Reinet, Aberdeen, Nieu-Bethesda, Willowmore, Steytlerville, Rietbron, Jansenville and Klipplaat, as well as the municipal website at www.bnlm.gov.za

The following table represents an overview of the proposed 2022/23 Medium-term Revenue and Expenditure Framework:

The municipality is showing an operational surplus, however the budget remains unfunded, when we consider the current outstanding debtors’ and creditors’ balances. As it stands, agreements have been entered into with some creditors, but the full Eskom balance remains payable immediately, until such a time as an agreement is signed.

There is a general increase in revenue, as result of tariff increases and continued implementation of cost reflective tariffs. This however is set-off by the anticipated decrease in the proceeds from the sale of land.

Total operating revenue has decreased by 0.4% or R2.6million for the 2022/23 financial year, compared to the 2021/22 Adjustments Budget.

The municipality completed investigations into cost of supply and a baseline tariff was established for each service in 2019. Thorough investigations were also concluded on electricity tariffs, the effect of the wheeling agreement with Eskom and management has completed physical verification of bulk consumer meters. The intention of the physical verification was to ensure that all possible tampering is identified for these users, correct meters are installed and are functional and to ensure that each user is linked to the correct tariff. A lot of work has been performed and the project is expected to continue into the 2022/23 financial year. For the two outer years, operational revenue increases by 11% and 0.7% respectively.

Total operating expenditure for the 2022/23 financial year amounts to R537.5 million, resulting in a budgeted surplus of R77.1 million. Compared to the 2021/22 Adjustments Budget, operational expenditure increased by 0.9%. 

The municipality is currently struggling financially, and cost containment measures are implemented. Cost containment measures include a monthly curb on overtime, acting allowances and travel expenses. It also includes the stopping of non-essential procurement. 

For the two outer years, operational expenditure increases by 4.5% and 4.3% respectively. The 2022/23 and 2023/24 budgets reflect operating surpluses of R120 million and R101 million respectively.

The major operating expenditure items for 2022/23 are remuneration (council and employees) (34%), bulk electricity purchases (24%), depreciation (12%), Repairs and Maintenance (5%) and other expenditure (25%).

Funding for the 2022/23 Operating Budget is funded from various sources, the major sources being service charges such as electricity, water, sanitation and refuse collection (52%), property rates (7%), grants and subsidies received from National and Provincial Governments (30%).

To fund the 2022/23 Operating Budget, the following increases in property rates and service charges will be levied with effect from 1 July 2022:

• Property rates: Increase with 6%
• Water: Increase with 6%
• Refuse: Increase with 6%
• Sewerage: Increase with 6%
• Sanitation: Increase with 6%
• Electricity: Electricity tariff will increase with 10%. Please note that the increase is subject to approval by NERSA.

The municipality has conducted a cost of supply study on all tariffs in 2019. The study revealed that almost all the services are currently being rendered at below cost which puts enormous strain on the cash flow of the municipality. It was therefore imperative that these tariffs be changed to include baseline tariffs. Due to the poor economic conditions and covid-19 revenue and tariffs could not be increased with more than the proposed 3.9% by National Treasury.

The original capital budget of R65.9 million for 2022/23 is R3.3million or 4.85% lower than the 2021/22 Adjustments Budget, this is due to less capital allocations from national government for 2022/23. The Capital Budget over the MTREF will be mainly funded from government grants and subsidies, as limited internal funding is available. Capital budget for 2023/24 will amount to R113.6 million.

The budget provides for assistance to the poor and includes the following social package:

• Water – 6 kl free
• Electricity – 50 kwh free
• Refuse – 100% of monthly cost free
• Sanitation – 100% of monthly cost free
• Property Rates- 100% of assessed rates

All budget related policies have been reviewed and workshopped with Councillors and top management. The policies were subjected to public participation.

The municipality has conducted a cost of supply study on all tariffs. The study revealed that almost all the services are currently being rendered at below cost which puts enormous strain on the cash flow of the municipality.  

It is therefore imperative that these tariffs be changed to include the new baseline tariff. The indigent support is also available to assists indigent households that have limited financial ability to pay for municipal services. Please visit our municipal offices for applications.

Dr EM RANKWANA
MUNICIPAL MANAGER
NOTICE NUMBER: 72/2022

CLICK HERE TO DOWNLOAD THE COMPLETE  ANNUAL BUDGET AND INTEGRATED DEVELOPMENT PLAN FOR 2022/23 BREAKDOWN.

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