Sponsored Content
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, tabled its Integrated Development Plan (IDP), Annual Operational and Capital Budget on the 28th of March 2023.
As required in terms of section 17 of the Municipal Finance Management Act, the Budget, Integrated Development Plan and Supporting Documents are tabled and advertised for representations / submissions by the local community, Provincial and National Treasury in April and May 2023. The 21-day inspection period commences on 10 April 2023 until 11 May 2023.
Copies of the tabled 2023/2024 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.
In view of the, the following table represents an overview of the 2023/24 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.
However, MFMA circular 123 has highlighted the Municipal Debt Relief that is conditional, and application based, has therefore been sanctioned where Eskom will write-off all debt municipalities owe as on 31 March 2023 (excluding the March 2023 current account). This will be done over three national financial years and require as a critical qualification that municipalities monthly honour their current (monthly consumption).
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. The revenue is also affected negatively by the impact of the ongoing drought and loadshedding which cuts across all services as most depend on electricity.
Total operating revenue has decreased by 6% or R33.9 million for the 2023/24 financial year, compared to the 2022/23 Adjustments Budget.
The municipality completed investigations into cost of supply and a baseline tariff was established for each service in 2019 to 2022. 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 2023/24 financial year.
For the two outer years, operational revenue increases by 2% and 6% respectively.
Total operating expenditure for the 2023/24 financial year amounts to R544 million, resulting in a budgeted operating surplus of R3.2 million.
Compared to the 2022/23 Adjustments Budget, operational expenditure increased by 12.3 million. 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% and 7% respectively. The 2024/25 and 2025/26 budgets reflect operating deficits of R7.4 million and R16.7 million respectively.
The major operating expenditure items for 2023/24 are remuneration (council and employees) (35.23%), bulk electricity purchases (24.04%), depreciation (12%), Repairs and Maintenance (7.63%) and other expenditure (28.73%).
Funding for the 2023/24 Operating Budget is funded from various sources, the major sources being service charges such as electricity, water, sanitation and refuse collection (48.82%), property rates (8.23%), grants and subsidies received from National and Provincial Governments (36.63%).
To fund the 2023/24 Operating Budget, the following increases in property rates and service charges will be affected with effect from 1 July 2023:
Property rates: Increase with 8%
Water: Increase with 5.3%
Refuse: Increase with 5.3%
Sewerage: Increase with 5.3%
Sanitation: Increase with 5.3%
Electricity: Electricity tariff will increase with 21%. Please note that the increase is subject to approval by NERSA and this percentage may vary towards the final adopted budget.
The municipality has conducted a cost of supply study on all tariffs in 2019 to 2022. The study revealed that 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, revenue and tariffs could not be increased with more than the proposed 5.3% by National Treasury.
The original capital budget of R70.9 million for 2023/24 is R9.4million or 13% higher than the 2022/23 Adjustments Budget, this is due to more capital allocations from national government for 2023/24. The Capital Budget over the MTREF will be mainly funded from government grants and subsidies, as limited internal funding is available. Capital expenditure for 2024/25 will amount to R80.3 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 top management. The policies were scheduled to be workshopped with councillors in March, however the session was cancelled. The policies will also be 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: 35/2023
‘We bring you the latest Garden Route, Hessequa, Karoo news’
