The city of Cape Town does not make a profit on the sale of electricity



The same goes for all revenue services and tariffs.

Some 65% of the revenue from the electricity tariff is used only to purchase electricity wholesale from Eskom. And it now costs 17.8% more.

The city has absorbed as much of this massive increase in Eskom as possible, but it is simply impossible to absorb such a large increase, while its operations are already very efficient thanks to the work done over the years to reduce weight and improve business operations.

Because the City manages its distribution network efficiently, we are able to reduce our rate increases to a level below Eskom’s costs.

There is no doubt that many residents face unprecedented financial challenges. When developing the budget, we focused on how best to help and support residents, while keeping this organization healthy enough to perform its primary function, which is to provide basic and essential services. .

Therefore, you would have seen the 3.4 billion Rand of aid to the indigent being allocated, an incentive for debt cancellation of 4.1 billion Rand and continued support to all those severely affected by Covid- 19.

No other metro has been able to absorb so much of the costs of this large increase in Eskom. If we could have avoided the increases, we would have done it in the blink of an eye. But we have to be realistic. Providing services costs money and input costs increase every year, most often above inflation.

Rate increases have been kept to a minimum to allow the City to continue in a sustainable manner, while protecting residents and covering the costs of providing services.

As the city has stated on several occasions: It is a mistake that it relies on R18 billion in reserves that are not being used. This is constantly claimed by the StopCoCT Facebook group and this misrepresentation which is never corrected because it does not fit their agenda.

It is not true that the City is sitting on huge unallocated sums of money. R11 billion of the R18 billion is earmarked for use. This allows the City to finance a significant portion of its capital program with internal funds, rather than external borrowing, which would incur interest.

The remaining 7 billion rand is our working capital, which represents about two months of average spending.

National Treasury guidelines state that a municipality should have between one and three months of working capital. The consequences of failure to maintain these reserves are evident in many other municipalities across the country.

Independent research reports confirm the city’s sound governance and prudent financial management.

Additionally, even industry bodies and public institutions that have done their own analysis of the City’s fares and fares, say the City has the lowest fare increases of any subway in the country, and the rate lowest penny. .

* Alderman Ian Neilson, member of the Mayor’s Finance Committee and Deputy Mayor Executive.

** The opinions expressed here are not necessarily those of the independent media.

Cape Argus

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