THE City of Johannesburg on Thursday approved its adjustments budget for the 2024/25 financial year amid protests and widespread unhappiness with the R230 electricity surcharge on prepaid customers.
The Municipal Finance Management Act (MFMA) makes provision for a municipality to revise an approved budget through an adjustments budget but only the mayor may table an adjustment budget in the municipal council and may only be tabled within prescribed limitations as to timing or frequency.
The municipal budget and reporting regulations only allow one adjustment budget to be tabled in council during a financial year and after tabling of the mid-year budget and performance assessment but not later than the end of February each year.
According to documents presented in council, the meeting approved more than R7.73 billion adjustment capital budget as well as budget requests to adjust the capital budget for the 2025/26 and 2026/27 financial years in conjunction with the medium-term budget process for the period between 2025/26 and 2027/28.
Additionally, the council approved raising the budgeted external long-term borrowing of R2.7bn, R2.5bn and R3bn for the 2024/25, 2025/26 and 2026/27 financial years, respectively, as per the adjustment medium-term budget using either a bilateral loan, development finance institutions (DFI) funding, bond issuance, asset-backed finance, private placements or combination thereof.
The meeting also gave the green light to raising of approved budgeted borrowing or revised budget as may arise of bilateral loans from any or combination of financial institutions such as Absa, FNB, Nedbank, Standard Bank, and Investec.
DFI funding is from development institutions such as the Development Bank of Southern Africa, Agence Francaise De Développement, German state-owned investment and development bank KfW, China Construction Bank, African Development Bank, European Investment Bank, International Finance Corporation, Asian Infrastructure Development Bank, BRICS’ New Development Bank, and any other financial institution procured through an official procurement process or legislative provisions.
The council also approved the exploring and executing of the long-term debt refinancing up to R5bn for the 2024/25 financial year to lower the city’s weighted cost of borrowing in line with the MFMA.
”Council approves the utilisation of the alternative sources of funding and off-balance sheet mechanisms such as infrastructure funds, land value capture; public-private partnerships, project finance, assets backed finance, export credit agencies, climate finance, and other potential funding structures to ensure funding of approved unfunded economic capital projects in the 2024/25 financial year,” it was decided.
The approval of the adjustments budget was not smooth sailing for the ANC-led Government of Local Unity (GLU) as ActionSA councillors demanded that the municipality decrease or rescind the R230 a month surcharge on prepaid City Power customers.
ActionSA councillor Delano Coverdale called on the city to reverse the R230 surcharge as Mayor Dada Morero promised he would do so this year, a month before he assumed office in August 2024.
At the time, Morero said: “Calls by residents and all affected parties for the city to review the R200 charge due to tough and impactful economic challenges in the country has not fallen on deaf ears, the GLU commits to reviewing this charge while noting the importance of infrastructure maintenance and upgrades including the cost of supply studies done by City Power.”
Coverdale said the surcharge must be reversed as it places a burden on residents and that the municipality should be a trendsetter and remove it.
ANC councillor Thapelo Radebe said the R230 surcharge went through public participation and accused ActionSA of raising the matter out of pure populism.
”Under the current circumstances, it’s (the adjustments budget) the best we can do,” he said, adding that the party supported the adjustments budget and would vote for council to approve it.
The EFF also supported the adjustments budget provided the city strengthens its financial controls to prevent further leakages.
Lubabalo Magwentshu, African Transformation Movement councillor, called for a debate on the R230 surcharge, but his party supported the adjustments budget.
Member of the Mayoral Committee and African Independent Congress councillor Margaret Arnolds said the municipality was not able to fund all the requests for funding that were submitted.
In the end, the adjustments budget was approved by 138 votes to 105, with key investments to enhance the capabilities of City Power and Johannesburg Water, and address persistent infrastructure challenges related to electricity and water supply.
loyiso.sidimba@inl.co.za
