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GRAAFF-REINET NEWS - Notice is here-by 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) on 27th of May 2021 (as ratified on 21st June 2021) and Annual Operational and Capital Budget on the 21st of June 2021.
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 2021.
Copies of the approved 2021/2022 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.
The following table represents an overview of the proposed 2021/22 Medium-term Revenue and Expenditure Framework:
Total operating revenue has decreased by 8.5% or R57 million for the 2021/22 financial year, compared to the 2020/21 Adjustments Budget.
The decrease is because of the decrease in anticipated proceeds from sale of land in comparison to the prior year. There is a general increase in revenue, with exception to the above-mentioned sale of land, as result of tariff increases and continued implementation of cost reflective tariffs.
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. This process is anticipated to be completed by end of 2021/2022.
For the two outer years, operational revenue increases by 0.7% and 3.5% respectively.
Total operating expenditure for the 2021/22 financial year amounts to R484 million, resulting in a budgeted surplus of R99.7 million. Compared to the 2020/21 Adjustments Budget, operational expenditure decreased by 5.1% in the 2021/22 Budget. 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 1.8% and 2.3% respectively. The 2022/23 and 2023/24 budgets reflect operating surpluses of R102 million and R123 million, respectively.
The major operating expenditure items for 2021/22 are employee related costs (35%), bulk electricity purchases (24%), depreciation (10%), Repairs and Maintenance (6%) and other expenditure (25%).
Funding for the 2021/22 Operating Budget is funded from various sources, the major sources being service charges such as electricity, water, sanitation and refuse collection (44%), property rates (8%), Other revenue (18%), grants and subsidies received from National and Provincial Governments (30%).
To fund the 2020/21 Operating Budget, the following increases in property rates and service charges will be applicable with effect from 1 July 2021:
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 R86.9 million for 2021/22 is R37 million or 74.1% higher than the 2020/21 Adjustments Budget, this is due to more capital allocations from national government and a loan of R15 million to be raised in 2021/22.
The Capital Budget over the MTREF will be mainly funded from government grants and subsidies, as limited internal funding is available. Capital expenditure for 2022/23 will amount to R130.1 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 new policies were workshopped with Councillors.
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: 56/2021
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