Local government's electricity tariff hikes - an economic perspective

Good article from the Daily Maverick on municipal affairs.
 
Local government's electricity tariff hikes - an economic perspective
On Friday 18 November, in a small auditorium at the National Energy Regulator’s offices in Pretoria, a hearing was held on municipal tariffs for the forthcoming financial year. Only one interested party showed up to make a submission, but what it had to say spoke of an economic malaise that’s likely to affect all South Africans. By KEVIN BLOOM.

Ratepayers vs Municipalities

Article By Lea Jacobs 02 Nov 2011

Nobody responds well to bad service. Websites such as Hello Peter, set up to allow South Africans unhappy at the treatment they have received from various service providers to voice their concerns, are being flooded by complaints from disgruntled - and sometimes angry - consumers. Strangely enough, South Africans have never been regarded as a nation of complainers and it has been said that somewhere in the region of 80% of consumers will not voice their displeasure when they receive bad service, choosing instead to simply walk away and stop dealing with a company which doesn’t live up to their expectations.

This may be true in the world of business, but judging by the seemingly endless service delivery protests, the same doesn’t apply to government. People have been promised certain things and when the government fails to deliver, dissatisfied citizens are taking to the streets to voice their anger. One has only to turn the television on to see yet another service delivery protest happening somewhere in South Africa to realise that there are many hundreds, if not thousands, of unhappy people out there. However, blocking roads and burning tyres is not the only way to attract the government’s attention.

A growing number of citizens are voicing their dissatisfaction in a quieter, but by no means less effective, way. Refusing to accept what has in many instances become an intolerable situation, ratepayers are refusing to hand over their hard earned cash to underperforming municipalities, opting instead to pay the money owed into attorneys’ trust accounts.

The problem appears to be growing and in a recent report released by the Treasury it was noted that ratepayers in 42 towns across the country had declared legal disputes with their local municipalities and had, instead of paying the local authority, placed the money owed in trust.

Some took a stand earlier than others and as far back as 2008, residents of Sannieshof in the North West not only declared a dispute, but took over many of the town’s day-to-day operations, stating that not only were they able to get the job done correctly, they were able to do so at a fraction of the price that had been quoted to the municipality.

In a report aired on Carte Blanche some years back, residents complained that services in the small rural town were virtually non-existent. Raw sewage was flowing through the streets and into homes, there was no water and the town was falling into disrepair. Refusing to accept this, residents formed the Sannieshof Ratespayers’ Association and declared a dispute with the Tswaing municipality.

In a recent report, finance minister Pravin Gordhan slammed the practice, which is being implemented by more and more disgruntled South Africans, saying, “if you live in South Africa, you are using municipal services and you must pay for them. This kind of non-compliance with the law is not acceptable at all.”

He is absolutely right. Citizens who receive a service need to pay for it – but what about those who keep on paying without seeing results? Can you really blame them for becoming a little hot under the collar and choosing to withhold money in an effort to improve the situation?

It appears to be a bit of a catch-22 situation – how can municipalities continue to deliver services when they are not being paid to do so? On the other hand, how can municipalities expect payment for non-existent services?

No one seems to know what the outcome will be. However, one thing which has become increasingly clear is that South African ratepayers are no longer willing to listen to empty promises - they want action, and they want it sooner rather than later.
 

Kouga Council prepares for Thyspunt decision

This is a press release issued by Laura-Leigh Randall, media liaison officer at the Kouga Municipality.

THE majority of the Kouga Council supports the proposal that a nuclear power plant be built at Thyspunt, but further public consultation must be undertaken before an official commitment is made.

That was the outcome of a lively debate about the potential pros and cons of the proposed Thyspunt development at a meeting of the Kouga Council on Monday.

The debate centred around an item recommending that the Kouga Council approved in principle the development of the proposed nuclear power plant at Thyspunt.

Kouga Executive Mayor Booi Koerat said Eskom had asked for the Council to make an “in principle” decision so that it could start putting in place the working structures that would be required should National Government give the go-ahead for the Thyspunt development.

The mayor emphasised that no final plans were in place yet since the Environmental Impact Assessment was still being finalised and a Record of Decision (ROD) was expected next year only.   

He said the majority of the 26 councillors present at the discussions on Monday were in favour of approving the development in principle based on economic considerations.

“Their view was that the potential economic spin-offs of the development, both directly and indirectly, would serve as a much-needed lifeline for Kouga’s people. Residents are battling financially and Council cannot stand in the way of a project that could give our economy the boost it needs,” he explained.

He said that despite this majority view, Council resolved that a final decision would only be made after further public consultation.  

“The development is a highly emotive issue. That is why it is important that our final decision should reflect the will of the people and not that of individual councillors. Consequently, we resolved that a public participation process must be undertaken before a final commitment is made,” he said.

The mayor said those who had voted against the recommendation - “that the development of the proposed Nuclear-1 project of Eskom at the Thyspunt site be approved in principle subject to public participation meetings” – were mainly concerned that they were not well enough informed to make a final decision.

He said the municipal administration had, consequently, been instructed to assist all councillors with their Thyspunt queries to ensure an informed decision can be made.

“I would like to urge councillors to do their homework thoroughly and to consult their communities extensively before Council meets to make a final decision.

“As leaders, it is our responsibility to make tough decisions. We cannot sit on the fence indefinitely because we are worried that some might criticise what we decide,” he said.

“This decision might prove to be one of the most important resolutions this Council will make. Let us ensure we make a decision that is in the best interest of our community as a whole.”   

Questions at Oversight Committee Reportback

Questions asked by Trevor Watkins, Chairman of Jeffreys Bay Residents Association, at a public meeting at Humansdorp Country Club on 27 October 2011 to review 2009/2010 draft Annual Report of the Kouga Municipality Oversight committee. 

1. What is the name of the chairman of the Oversight Committee (OC)?
2. Please will the chairman of the OC comment on the contents of the OC report?
3. Looking at the Auditor General (AG) Report, it represents a situation of extreme concern. However this report is history, what can be done in the future? The Audit Committee only met twice, not 4 times as required by law. There are many failures related to the Audit Committee which may have contributed to this disastrous AG report.  Most of the committee does not live in the Kouga. I wish to recommend that the new Audit Committee be appointed speedily, that its members be recruited from suitably qualified Kouga residents, that the Audit Committee be required to fulfil its obligations in terms of its mandate, that it meets frequently and in full, and that its recommendations be acted upon by the Kouga Municipality(KM). Please comment on this recommendation.
4. Are the OC meetings open to the public?
5. Are the minutes of the OC meetings made public?
6. Will the OC minutes be made public in the future, and from when?
7. Does the OC provide oversight of council finances for the current year, does the OC only comment on the KM financial position as at 1 year in the past?
8. Do the public get any other opportunity to inspect and comment on the current KM financial position?
9. The JBRA offered to publish any questions asked of the OC on its blog and website, as well as the responses.
10. If the OC members are not held responsible for their presence on the OC, then they are just simply observers. What is the accountability of the Oversight Committee? If we get another AG report like this at end of 2011, who will be held responsible? Will they be liable to pay any compensation for losses occurring on their watch?
11. How much money is still owed to the KM by current councillors, and by past councillors?

Wat gebeur in ons wyke na die verkiesing?

Posted on behalf of Bennie du Preez


Mnr. en Mevrou AM Johnston woon in 'n stil en netjiese straat, naamlik Alikruik 8, aanliggend tot in park, wat in aanwins vir die gemeenskap moet wees. Is dit, oordeel self. Persoonlik en teen hulle koste maak hulle tuin om die struike en bome wat daar geplant is .Hulle betaal self vir in onderneming wat gras sny om die gras te sny.

Raadslede verdien +-R20 000 en R24 000 per maand van af die Munisipaliteit, bo en behalwe hulle gewone inkomste.  Hulle is blykbaar nie bereid om ’n sent in hulle wyke terug te ploeg nie, dws om so een maal per jaar vir die gras sny te betaal nie of om vir die vul van die ergste slaggat in ons paaie te vul nie.

Die Burgemeester het die vraag op ’n onlangse Inwoners verenging vergadering gevra, hoekom het die Opposisie toe gelaat dat die Munisipaliteit Kouga in so in finansieel gemors beland het. Die selfde kan natuurlik ook gevra word van die Inwoners Verenigings van Kouga Munisipaliteit.

Die DA het op baie vergaderings en navrae altyd die selfde antwoord, naamlik hulle kan niks doen nie. Omdat hulle nie ’n beheer is nie.

Kan hulle nie die helfte van hulle Munisipale salarisse af staan om die omstandighede van hulle wyke te verbeter nie, dan hoef die Johnsons wat pensioen trekkers is nie die parke in hulle omgewing te onderhou uit hulle maandeliks pensioen nie. Het hulle nie in reg om beter behandel te word vir hulle jare lange Belasting betalings en opofferings vir Jeffreysbaai nie.

Die vraag is gaan ons die inwoners van Kouga toelaat dat die Politieke partye se Raadslede wat verkies is tot Kouga Munisipaliteit hiermee wegkom, of gaan ons hulle tot verantwoordelik roep.

Electricity cost increases

To whom it may concern:

I have done some research with regard to our local municipality’s electricity tariff increases.

Interestingly, the actual tariff increases were as follows:
-          2010/2011 year :               from 58.25 cents per unit to 76.17 cents per unit equating to a 30.77% increase.
-          2011/2012 year :               from 76.17 cents per unit to 107.80 cents per unit equating to a 41.51% increase.

Nersa’s approved tariff increases were as follows:
-          2010/2011 year: 24.8%
-          2011/2012 year: 25.8%

In other words, I was paying 3.4 cents more per unit in the 2010/2011 year, and am now paying 16.3cents more per unit compared to the approved increases.

I had some discussions with co residents, and it appears we have the same problems
Is there some way we can identify whether the above is true/accurate and hold our councillors and council to account?

regards



Jaenre Blignaut CA (SA)
Managing Partner
Blignaut Chartered Accountants and Auditors
Jeffreys Bay | Durban

Reportback on the meeting between the JBRA and the Kouga Municipality

On 21^st September 2011 a much postponed meeting between the Jeffreys Bay Residents Association (JBRA) committee and the senior management of the Kouga Municipality (KM) was held at the municipal offices in Jeffreys Bay. Kouga municipality was represented by the mayor, Councillor Booi Koerat, the acting municipal manager, Sydney Fadi, and the Service Centre Coordinator, Japie Jansen.

The JBRA chairman compared the meeting to a shareholders meeting, where residents, as investors and shareholders in the Kouga Municipality corporation, grill the management on their performance to date and plans for the future. At stake is the decision for the stakeholders to continue investing into the future, or to cut their losses and withdraw investment.

The acting municipal manager, Mr Fadi, addressed each of the issues on the quite lengthy agenda with a refreshing honesty and directness.  He openly conceded that the KM was in a very poor financial state, that there were some very large creditors (NMMU around R15m, AG’s office around R5m, Eskom), and that only a fraction of these debts can be serviced per month. He said that this council had inherited a much worse situation than had been expected, or then had been described by the previous incumbents. Essentially, the KM was insolvent, with expenditure and debts far exceeding income. Payments were prioritised on a monthly basis.  However, some funds each month were reserved for infrastructure maintenance.  Thirty tons of tar had been recently acquired for pothole repair, which was now proceeding.

The KM has commissioned an investigation by auditors KPMG into past irregular financial practices. This report, due to be released soon, will form the basis of actions against staff suspected of financial wrongdoing. The MM stressed that the KM was determined to make a full recovery of all mismanaged funds, no matter who was responsible. 

Rates make up 40% to 60% of the KM income. In an effort to improve rates collections the KM staff has initiated a data cleansing project on all municipal records, which is now nearing completion. Once the KM is reassured that the data used for rates assessment and collection is reliable, they will be in a position to effectively prosecute non-paying debtors.

Salary payments currently consume 42% of the KM monthly budget, whereas the norm for municipalities should be in the 30% to 36% range. The KM has recently terminated the employment of 231 contract staff. These employees have taken legal action against the council to be reinstated.  The ex Chief Financial Officer, Ridwaan Abdullah has also appealed against his dismissal, and has won the case, requiring reinstatement.  A settlement has been reached with the former MM, Dr Rankwana, who has now left the KM.

Following the recent floods, disaster relief funding of R87m has been applied for from central government. It is uncertain when these funds will become available. These funds will be used for bridge construction and road and infrastructure repair. The MM stressed that any funds received for a specific purpose by the KM will be ring fenced and used only for the specified purpose.

The low cost housing development near Aston Bay has been put on hold while a revised Environmental Impact Assessment is drawn up. This report is expected before year end.  All agreed that the original plan involving 2400 housing units was unworkable and needed to be revisited.

The JBRA has applied to the KM for a seat on the Financial Oversight Committee (FOC) and on the Audit Committee. The Jeffreys Bay Residents Association is very disappointed that the council did not see fit to appoint Dr Gustav Barnard, a chartered accountant with the verifiable backing of at least 600 ratepayers in Jeffreys Bay,  to the Financial Oversight Committee.

The solution to the KM financial crisis is straight forward – cut expenditure ruthlessly, increase income through better debt collection, beg for assistance from less challenged sources, try to improve growth and job creation. The question remains as to whether the KM has the financial expertise and political will to take the necessary medicine.

Some significant steps have been taken to address the crisis in the municipality:

• Senior staff suspected of wrongdoing have been suspended or fired.
• A forensic audit report on financial irregularities has been commissioned.
• Full recovery of all mismanaged or misappropriated funds will be pursued
• 231 contract staff have been terminated, although still subject to arbitration
• A data cleansing project has been run to facilitate more effective debt recovery
• Disaster relief funding has been applied for
• The unsustainable low cost housing development is on hold and under review

Without question, many serious issues remain:

• Salary bill is still way over target, and must be dramatically reduced
• Fraud and corruption cases must be brought against suspect officials
• Wasteful and unnecessary expenditure must be identified and eliminated
• Major outstanding debts must be reduced
• Many critical infrastructure issues are outstanding and must be urgently addressed
• KM operations are still very inefficient. Adequate management oversight must be exercised
• Incompetent officials must be identified and either trained or removed rapidly

The JBRA stressed that their members were willing, keen and able to assist in various areas to assist in the KM recovery plan:

• Residents Expertise can be used on the Audit committee and the Financial Oversight Committee
• The KM can use the JBRA to communicate with residents in Jeffreys Bay
• The Mobilitate website administered by the JBRA can be used to communicate residents’ problems efficiently to the KM
• Residents can undertake projects in collaboration with the KM to resolve certain problem areas, for example, Caravan park, potholes, beach cleaning.

What is the way forward?  The KM’s credibility is very low amongst J Bay residents, due to years of corruption and mismanagement. The problems are very severe –

• huge debts,
• reducing income,
• Blue Flag status lost,
• tourism dying,
• businesses closing,
• unemployment growing,
• infrastructure collapsing.

For Jeffreys Bay to recover from this gloomy situation, all sides are going to have to show statesmanship, tolerance, honesty, cooperation, and insight.  The KM must communicate the problems openly and honestly with the residents, must stamp out corruption and mismanagement, must dramatically improve efficiency, and must be seen to do so.  In turn, the residents must acknowledge the scale and severity of the problems facing the KM, and must be willing to shoulder some share of the burdens ahead

• by keeping a close eye on the performance of the KM going forward
• by becoming involved in projects,
• by solving problems rather than just complaining about them.

If the KM fails, we will all suffer. If the KM succeeds in turning itself around, we will all benefit.

As a first step in open communication, the mayor, the MM and the Jeffreys Bay councillors have been invited to address a JBRA public meeting on Wednesday, 5^th October at 10am in the Newton Hall on the problems facing Kouga, and the plans to fix them. We still await confirmation of their attendance. All residents are strongly urged to attend and to get involved.

Issued by Trevor Watkins, Chairman, Jeffreys Bay Residents Association.