24 February 2016

South Africa: Water, Electricity Losses Cost More Than R6bn

Finance Minister Pravin Gordhan has announced a number of initiatives to help underperforming municipalities improve revenue collection, record keeping and infrastructure spending.

A significant number of municipalities fail to collect the money owed to them, while the valuation rolls on which property rates are based are often out of date.

Many municipalities are also plagued by illegal electricity and water connections, due to ailing infrastructure and poor maintenance. The eight metropolitan municipalities alone forfeit R6.5bn annually through losses in water and electricity.

Gordhan said if municipalities cut these losses by a mere 4.6%, it would already make up for the R300m reduced municipal allocation stated in his Budget Review.

He said municipalities should spend between 6% and 8% of their operating budgets on maintenance and repairs. In reality, most of them only spend about 3% on these.

Municipalities will receive a subsidy of R335 per household per month to provide free basic services to over 9 million households, but this is significantly higher than the reported 5.3 million who have reportedly received such services.

"This shortfall must be addressed," Gordhan said.

Source: Fin24

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