Big blow to households in South Africa next week

 ·26 Jun 2023

South Africans will have to find room to accommodate even more financial pressures as municipal rate increases come into effect on 1 July 2023 – with eThekwini residents facing some of the sharpest tariff hikes.

Municipalities tabled their budget proposals earlier this year, laying out their plans for tariff increases for residents – including property rates, electricity, water, sanitation, and refuse removal.

Addressing the reasons for the tariff increases, many municipal mayors said that above-inflation Eskom, water board, and salary increases have made tariff increases inevitable.

While the rate increases coming on 1 July are still steep and above inflation, some of the municipalities revised their draft rates downwards due to regulatory guidelines and public comment, among other things.

A notable example is eThekwini Metropolitan Municipality which, despite still having some of the steepest increases, revised its tariffs on 31 May 2023 due to sour sentiments from residents towards the staggering initial proposals.

This led to the municipality adjusting almost all of its rate hikes except water. The adjustments to eThekwini were:

  • Electricity tariff hike reduced from 21.9% to 18.49%;
  • Sanitation tariff hike reduced from 11.9% to 10.9%;
  • Rates tariff hike reduced from 8.9% to 7.9%;
  • Refuse tariff hike reduced from 8.0% to 6.9%.

“We have noted the response by residents to this increase,” the city said, “Hence we are tabling the revised figure.”

The city said balancing the budget against the increased pressure on households has been difficult. Tariffs need to be cost-reflective, it said, but also need to ensure there is enough money for service delivery. The revised tariffs are an effort to cushion the blow, it said.

Another determining factor for a change in rates was the recently published annual guideline and benchmarks for the increase in municipal electricity tariffs by Nersa.

Nersa proposed that municipalities only increase electricity tariffs by 15.1%, meaning municipalities – including the major metros – will have to limit their increases to this amount unless they have compelling reasons and a motivation to deviate.

eThekwini and the City of Cape Town are among six municipalities that have applied for increases above the guideline.

Both metros blame lower electricity sales for the additional increase, while eThekwini also says its expenses increased due to the July 2021 riots and April 2022 floods.

Additionally, according to Cape Town’s mayoral committee member for finance, Siseko Mbandezi, about 70% of Cape Town’s tariff income will go towards buying bulk electricity from Eskom, with the remaining 30% invested in service delivery and ending load shedding.

Rates coming 1 July 2023

Several notable municipalities have posted their final tariff increases for 1 July 2023, and most have adjusted their draft rates alongside eThekwini.

Buffalo City noted that it would not increase property rates for the 2023/24 financial year. This followed public outcry from East London residents that said the Buffalo City Metro’s property valuation results were way above market valuations.

The City of Johannesburg also reduced its property rate from a proposed 5.3% increase to just 2%, while Joburg and Buffalo City revised their electricity tariffs in line with Nersa’s guidelines.

However, some residents in South Africa are posed to step into deeper waters than others, with eThekwini Metropolitan Municipality implementing the steepest increases despite the revised drop in rates.

The Durban metro has the highest increases in property rates, electricity, water, and sanitation.

In contrast, the City of Cape Town will impose a 1.1% decrease in property rates. This is due to the new 2022 valuation roll that will come into effect in July. Cape Town plans to give residents a break for properties valued at less than R5-million, with the first R450,000 of the property value exempt from rates.

The table below outlines the updated tariff increases across several major metros from 1 July 2023 to 30 June 2024.

City of Joburg2%14.97%9.3%9.3%7%
City of Cape Town-1.1%17.6%8.6%8.6%5.5%
Buffalo City0%15.1%9.86%5.3%5.3%

Read: South Africa sniffing around for R30 billion in funding to tackle the water crisis

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