Continued load-shedding hurting metro’s coffers
Continued load-shedding until the end of June in Nelson Mandela Bay will hit the city’s coffers badly, it reported in its adjustments budget for the 2019-20 financial year.
With this in mind, councillors passed the 2019/20 adjustments budget on Thursday.
The adjusted budget has a surplus of R45,6m, part of which came from the IPTS grant that was moved from the capital budget to the operational budget to cover operational expenses.
On Thursday, councillors approved the capital budget of R1,64bn, which was R183m less that the approved budget for the 2019/20 financial year.
Combined with the operational budget, the city’s total budget for the 2019/20 year amounts to R12,6bn.
According to the adjustments budget report, load-shedding had an impact on the city’s finances.
“It must be noted that at the time of finalising this report, Eskom was continuously implementing load-shedding. If the status quo continues until the end of the financial year, this will definitely have a negative impact on the electricity revenue of the municipality. The electricity revenue is under significant strain,” the report states.
What it means is that the city is buying more electricity from Eskom but getting less money from residents buying power. This is largely due to illegal electricity connections.
While presenting the budget adjustments to a joint mayoral and budget and treasury committee meeting on Wednesday, Bay CFO Selwyn Thys said: “Electricity bulk purchases are increasing while selling decreases.
“The impact of this is that we’re not dealing with electricity losses effectively and this has an impact on finances. We’re selling R212m less, while buying R73m more electricity,” he said.
Thys said the capital budget figure was less due to the loan funding that had not yet been finalised, whereas the approved budget had accommodated the loan amount.
“As we sit here, the loan agreement has not been finalised yet.
“When council adopted the budget in June last year, it included loans up to R286m to fund specific projects to deal with water and electricity losses.
“We’ll only formally bring projects once loan agreements have been included,” Thys said.
At the Wednesday meeting, Thys told councillors that one of the reasons the loan had not been concluded was that the financial institution had raised concerns over media reports of the metro being possibly placed under administration by the provincial department of co-operative governance and traditional affairs.
"[The financial institutions] wanted a letter confirming the city was not under financial intervention. Once we confirm with the banks that we’re not under financial intervention from the provincial department of Cogta, I think it’ll clear the way for the loan to be approved,” he said.
The city plans to cut back employee-related costs and bring them closer to the National Treasury’s guidelines of 39%.
Employee-related costs will be brought down from R3,66bn to R3,61bn.
“There are specific issues affecting the salary and wage bill and one of those is our exposure to overtime,” Thys said.
“One of the issues in addressing this is the overtime policy. We need to finalise this. To achieve this, we have to reduce the total personnel budget by more than R49m.”
At Thursday’s council meeting, councillors agreed that Thys should not table the report as he had already presented it to the joint committee on Wednesday, where all parties were represented.