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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, tabled its Integrated Development Plan (IDP), Annual Operational and Capital Budget on the 26th of March 2024.
As required in terms of section 17 of the Municipal Finance Management Act, the Budget, Integrated Development Plan and Supporting Documents will be tabled and advertised for representations / submissions by the local community, Provincial and National Treasury in April and May 2024.
Copies of the tabled 2024/2025 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 tabled budget, the following table represents an overview of the 2024/25 Medium-term Revenue and Expenditure Framework:
Table 1 (Overview of the 2024/25 MTREF)
| Current Year | 2024/25 Medium Term Revenue and Expenditure | ||
Adjusted Budget 2023/24 R | Budget Year 2024/25 R | Budget Year +1 2025/26 R | Budget Year +2 2026/27 R | |
Total Revenue | 609 116 917.86 | 590 603 583.85 | 637 768 003.39 | 668 071 063.52 |
Total Expenditure | 645 348 995.35 | 653 780 715.35 | 683 854 628.25 | 715 311 941.15 |
Surplus/(Deficit) | (36 232 077.49) | (63 177 131.50) | (46 086 624.87) | (47 240 877.63) |
Capital Expenditure | 74 070 299.00 | 88 974 454.47 | 29 957 654.00 | 13 752 000.00 |
The municipality is showing an operational deficit, and 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 124 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). The municipality applied in September 2023 and was approved as from December 2023. The municipality is assessed monthly for compliance with MFMA circular 124. Upon meeting all the conditions, a compliance certificate is issued by National Treasury to the municipality as well as Eskom. There are various reporting compliance requirements that have been proclaimed through the MFMA circulars 124, 127 and 128. The municipality has included these reporting requirements in the monthly s71 and quarterly s52 reports.
There is a general increase in revenue, as result of tariff increases and continued implementation of cost reflective tariffs. 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 3% or R19 million for the 2024/25 financial year, compared to the 2023/24 Adjustments Budget. This decrease is becoming a trend as it was 6% (R33 million) in 2023/24 and is evident of the dire economic conditions the country is under.
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 2024/25 financial year. For the two outer years, operational revenue increases by 8% and 5% respectively.
Total operating expenditure for the 2024/25 financial year amounts to R653 million, resulting in a budgeted operating deficit of R63 million. Compared to the 2023/24 Adjustments Budget, operational expenditure increased by R8 million (1%). 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 4% respectively. The 2024/25 and 2025/26 budgets reflect operating deficits of R46 million and R47 million respectively. The major operating expenditure items for 2024/25 are remuneration (council and employees) (31%), bulk electricity purchases (20%), interest paid (11%) depreciation (10%), Repairs and Maintenance (7%) and other expenditure (13%).
Funding for the 2024/25 Operating Budget is funded from various sources, the major sources being service charges such as electricity, water, sanitation and refuse collection (53%), property rates (9%), grants and subsidies received from National and Provincial Governments (32%).
To fund the 2024/25 Operating Budget, the following increases in property rates and service charges will be affected with effect from 1 July 2024:
- Property rates: Increase with 0%
- Water: Increase with 4.9%
- Refuse: Increase with 4.9%
- Sewerage: Increase with 4.9%
- Sanitation: Increase with 4.9%
- Electricity: Electricity tariff will increase with 10.85%. 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 4.9% by National Treasury.
The original capital budget of R88.9 million for 2024/25 is R16million or 21% higher than the 2023/24 Adjustments Budget, this is due to more internally funded projects for 2024/25. 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 R88.9 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 workshopped with councillors. The policies will also be subjected to public participation.
There are no significant changes to the policies, and the minor changes will be presented to council before final approval of this budget.
Residents are urged to pay their municipal accounts monthly as this enables the municipality to sustain and improve the level of municipal services delivered to the community. The indigent support (FBS) 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: 40/2024
VISIT WWW.GRAAFFREINETADVERTISER.COM FOR THE COMPLETE
ANNUAL BUDGET AND INTEGRATED DEVELOPMENT PLAN FOR 2024/25 BREAKDOWN.
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