THE City of Windhoek says it is on the brink of a major financial crisis because of rapid urbanisation and high unemployment.

As a result, the City Fathers have requested a meeting with President Hifikepunye Pohamba and Prime Minister Nahas Angula in a bid to convince Central Government to divert some of the income from taxes collected in the capital to the Municipality.

The City of Windhoek on Wednesday tabled its annual budget for the 2006-07 financial year.

"It is a watershed budget.

We have reached crossroads.

As it is now, we can make it (services) unaffordable for residents or make omissions," warned Dr Bjorn von Finckenstein, Chairman of the Management Committee.

With the looming cash crisis, Windhoek residents can expect to pay more for services.

The Council said it had no choice but to increase the tariffs after both NamWater and NamPower increased their charges.

NamWater increased the bulk purchase price by 11,5 per cent as from April 1.

This, Von Finckenstein said, had forced the City to increase the basic water tariff by 10 per cent.

The charges for refuse removal will go up by eight per cent.

The assessment rates will also increased by eight per cent.

As it looks now, matters can only get worse, councillors fear.

The City of Windhoek seem to be losing its fight on joining the controversial Central Regional Electricity Distribution Company (Central RED) and that will cut its income because electricity was the main income earner and helped the City cover some of its expenses elsewhere.

As from the beginning of next month, the City of Windhoek will increase the electricity tariffs by eight per cent on pre-payment and 15 per cent on unit charge.

There will be a zero increase on basic charge.

Von Finckenstein said NamPower increased its fees on units by 18 per cent and 2,6 per cent on basic charge while the Electricity Control Board will increase its levy with 11 per cent.

NamPower said the high rates it now has to pay South African power utility Eskom forced it to hike its bulk electricity tariffs.

Von Finckenstein said Windhoek was still investigating its possible participation in Central RED.

Windhoek Mayor Matheus Shikongo said the creation of "socalled REDs" without proper homework, in terms of possible negative impact on the local authorities, was "catastrophic if not self-destruction".

"In this context the City is hesitant to implement this concept in its present format.

We believe if the end-users of electricity are finding it very difficult to pay their account, when power is distributed by local authorities, it will even be worse when this service have to be rendered by a private entity, with profit motive and high operational costs to meet," Shikongo said.

Von Finckenstein said Windhoek was facing a four per cent population growth but it was not matched by equivalent income growth and unless reversed, through making it attractive for people to stay in rural areas, the trend threatened to eventually suffocate the City.

He said urbanisation was a national issue and needed to be addressed at the highest level.

"While the City presently is still able to cope with this challenge, a time will come, when it is no in a position to handle this any more.

While this is an infrastructural and financial challenge, it is also a planning challenge.

"It is impossible to plan for something where no exact figures exist," he said.

He said the majority of migrants were unable to pay for services, placing more strain on City coffers.

The unemployment rate in the City ranges between 35 per cent and 40 per cent.

The City Council approved the budget of N$1,43 billion.