Durban businesses appeal for lower tariff hikes

The Durban business community had asked that the City keep to the increases that had been approved by the National Energy Regulator of South Africa.

The Durban business community had asked that the City keep to the increases that had been approved by the National Energy Regulator of South Africa.

Published Apr 16, 2024


While the Durban business community urged the eThekwini Municipality to consider lower tariff increases for electricity, water and other services, the City said there was “no chance” of a zero percent increase.

For electricity, the business community had asked that the City keep to the increases that had been approved by the National Energy Regulator of South Africa (Nersa).

However, the City said while it would consider the suggestion, it was not possible to have zero increases as that would lead to the collapse of the municipality.

The business sector engaged with the municipality on Monday on the draft budget presentation.

The total proposed budget for 2024/2025 is R67.3 billion with an operating budget of R59.7bn and a capital budget of R7.6bn.

The draft budget shows that for the 2024 /25 financial year, the proposed increases are:

  • 7.9% increase for rates
  • 14% increase for electricity
  • 14.9% increase for water for both domestic and business use
  • 12.9% increase for sanitation, and
  • 8% increase for waste removal for domestic and 9% for business.

Palesa Phili, chief executive for the Durban Chamber of Commerce and Industry, detailed the concerns of businesses, saying while there were positives, there are still many concerns that include the tariff increases.

“When it comes to electricity, we would like (the City) to remember and consider the challenges we are faced with as businesses in the city. We would like you to reconsider the higher tariff increases, we would like the increase for electricity to be in-line with Nersa and the water increase is also too high.”

She also challenged the City on what it was doing to boost tourism.

“We have serious challenges when it comes to tourism and some of the things that we have discussed with the City have not been acted upon.

“We really need to have programmes geared towards promoting Durban. We know there has been negativity about our City ‘chasing away’ visitors,” she said, adding that the City needed to take action to deal with such views.

Andrzej Kiepiela, from the KZN Growth Coalition, said the City needed to take stock of its performance over the years, interrogate it and come up with solutions.

“We must ask why we are losing investment from the companies that were operating in eThekwini, why is the capital budget not delivering the same level as before (15-20 years ago), is the budget performing for us and is it generating the economic impact that we should have?”

He said the City previously built 13 000 houses or more a year.

“We are not going to deal with our problems if we do not generate growth in the economy. Durban used to outperform even Johannesburg when it came to percentage of GDP growth until a few years ago.”

Speaking on tariffs, Mzwamandla Sosibo, from SA Maritime Safety Authority, said there was a need to look at socio-economic challenges the communities are faced with.

“As we speak, if the community were to look into the rate of disconnections, it would suggest people are not affording the services. If people are not affording, there is need for a review.”

City manager Musa Mbhele said the City valued the relationship with business and some of the suggestions the industry had made are being implemented.

He said he understood the concerns about the performance of the capital budget and they would be engaging on the matter.

“You (Kiepiela) are correct about the capital budget. It has not been performing and there are many reasons for that,” he said, adding that among them was that the City was failing to spend 50% of its budget by December, which is half way into the financial year.

Another problem was the shortage of critical skills. “There is a lack of project management capacity within the organisation. We have also introduced a number of reforms in the supply chain management process.”

Addressing the issue of tariff increases, Mbhele said there was little to no chance of a zero percent tariff increase.

“To be honest and brutally frank, the cost of living is reflective of the economic situation that we are falling in. Eskom and uMngeni-uThukela said the tariffs are that high.

“The fuel, the salary, all these costs are brought to bear on how we do business. There will be tariff increases that are sensitive to inflation, but I can’t vouch for a situation where there will be no tariff increase because I will be running this institution into the ground,” said Mbhele.

The Mercury