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IOLProperty - South African Property For Sale
Tuesday May 08, 2012

Cape Town defends 'normal' 10% surcharge on electricity supplied by Eskom

Hidden charges in Cape Town's draft budget would lead to the average ratepayer paying a 10 percent surcharge on electricity, says the Greater Cape Town Civic Alliance - which has accused the city council of excessive profit-taking, to the detriment of ratepayers.

A draft budget of R24 billion in operating expenditure and R5bn in capital expenditure was tabled by the city council last month for public comment before its adoption, probably at the end of this month.

In its submission, the alliance says that these "concealed surcharges" and high costs could force people off their properties.

The city says this is nothing new and residents have always paid a 10 percent surcharge on electricity.

The opposition ANC has also expressed its unhappiness with the draft budget, saying it is "not a people's budget".

Henri Wolfaardt, the alliance treasurer, showed the Cape Times an extract from published budget data that notes the item "surcharge", which is a 10 percent "tax" included in the selling price of electricity.

"This is not disclosed to the public anywhere. The bigger the increase charged by Eskom, the bigger the surcharge becomes," he said.

"A close study of the budget revealed that for some unexplained reason, the citizens of Cape Town are not fully informed of the implications of the budget. The everincreasing municipal charges and cost to the household will force people to sell their properties in order to just survive and make a living in these difficult economic times.

"Profit on power sales averaged at 38 percent over the past six years.

"It would appear that the citizens of Cape Town will be asked to pay a mark-up of at least 77 percent on Eskom electricity costs. We would have expected the city to limit the mark-up on Eskom power, especially in view of the financial hardships this will exacerbate.

"The alliance realises that responsible fiscal management requires drastic steps, but we believe that the time has come, for the City of Cape Town to consider some austerity measures, which should not always be a burden on the ratepayer and consumer.

"Some savings can be brought about by cutting down on the number of sub-councils, for instance."

Wolfaardt said "enormous" salaries were paid to sub-council chairpersons, which seem to be a "job for pals".

Ian Neilson, deputy mayor and mayoral committee member for finance, said the Cape Town city council had for many years had a 10 percent surcharge on electricity sales.

The constitution allowed for surcharges to be levied on municipal services.

"There is no change on this practise in the current budget," Neilson added.

"This income makes a contribution to services that are funded mainly from rates.

"That allows the city to provide much-needed services that are not tariff-funded, such as libraries, health services, community halls and street lighting."

ANC chief whip Xolani Sotashe, who is also a subcouncil chairman, said that at a meeting of subcouncils it was "unanimously" agreed that residents' views had not been taken into account.

"We said this (public participation) was a waste of time...

"They were just consulting for the sake of compliance," said Sotashe.

Cape Times

 
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