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Oudtshoorn’s IDP and Budget approved

Oudtshoorn, 21 June 2019 – The Greater Oudtshoorn Municipal Council approved the Integrated Development Plan for next financial year starting in July 2019 and the multi-year budget for the 2019/2020, 2020/2021 and 2021/2022 financial years on Thursday, 20 June 2019.

“This budget was once again drafted under challenging circumstances with the South African economy not really getting out of the blocks over the last 4 years causing a knock on effect to the Provincial, District as well as the Oudtshoorn local economy,” said Mayor Colan Sylvester when he was presenting the budget before Council. 

“This has caused the financial recovery to be slowed down as the citizenry are burdened by tough economic times resulting in a decline in municipal revenue streams. Years of neglect in infrastructure maintenance, refurbishment and renewals has now resulted in a bottleneck of infrastructure breakdown that require additional financial resources to address.” 

“The municipality has, however, made great strides in its financial recovery from a position of near bankruptcy during the administration to one where we are in a position to start focusing economic resources towards service delivery, infrastructure refurbishment and maintenance instead of using available resources to pay off overdue debt.  The following needs to be highlighted in respect of the financial results attained to date:

  • The cash position has improved over the last 3 financial years, from a cash flow deficit of approximately R110 Million in August 2015 to a positive cash flow of R 98.3 Million as at 28 February 2019
  • Trade Creditors have decreased from an amount exceeding R90 Million in November 2015 to a current amount of R 4.5 Million.
  • Debtor collection has improved from 86% in early 2016 to exceed 96% for the year to date, although vastly improved, it still represents an under collection of approximately R14 Million for the current financial year.
  • The cash flow position, although significantly improved, remains less than adequate when compared to the liquidity requirements set in the approved long term financial plan of R82.2 Million of unencumbered cash at hand.

Capital Budget

The capital budget flows from the IDP process and contains information obtained from infrastructure master plans and relevant stakeholders through public participation processes as well as ward committee processes where applicable.

Total funded capital projects for the 2019/2020 financial year amounts to R 89.47 Million with the main focus being the following:

Critical capital projects include water augmentation and securing sustainable water sources for Oudtshoorn through the connection of the Blossoms wellfield to augment the main water supply as a measure to ensure the availability of water throughout the continuing drought as well as the construction of a refuse sorting and recycling facility.

The capital budget is funded mainly by means of grants from National and Provincial Government in the amount of R57.48 Million.  The remainder will be financed from own revenue generated amounting to R14.00 Million and for the first time in more than 4 years borrowing as a funding option is proposed to fund an amount of R18.00 Million in respect of major infrastructure refurbishments and replacement. 

Operating Budget

The operating expenditure budget for the 2019/2020 financial year amounts to R 688 652 056 which represents an increase of R 14 065 631 or 2.09% over the 4th revised budget for 2018/2019.

The application of higher water tariffs for the future is unavoidable considering the limited resource and the increase in cost. In an attempt to balance service delivery with affordability and financial sustainability, the following tariff increases are necessary;

  • Electricity 13.07% in accordance with the NERSA guideline increase. 
  • Water between 7.5% and 12% depending on the scale of consumption. 
  • Sewerage 6.5% and refuse charges 10.50% as previously determined to move towards cost recovery of the service.

Assessment rates represent 14.92 % of own revenue raised.   The assessment rates raised serves to fund rates and general municipal services, including all community related services, the extent to which these services are available to the general public determines financial exposure to the municipality as the fees and associated revenue for these services are never sufficient to cover the cost of making the services available to the community.

The implementation of the general valuation roll with effect from 1 July 2017 and subsequent supplementary valuation rolls have added additional assessment rates revenue which will contribute to a moderate assessment rate increase going forward.  The increase in assessment rates will be limited to 5.8 % for the 2019/2020 financial year, remaining within inflationary predictions for 2019.

An amount of R 27.2 Million has been set aside for materials in respect of repairs and maintenance and in addition thereto 52.6 per cent the capital budget is allocated for the upgrading of existing assets representing an amount of R 47 Million.  Major refurbishment of infrastructure is prioritized to prolong the lifespan of assets and to prevent them from falling further into disrepair.  A further provision will be made in the outer years of the MTREF for expenditure in this regard.

Social and Developmental programs

In total an amount of R3.8 Million is set aside for social and developmental programs, which includes the youth, rural development, sports development, tourism and marketing as well as disabled persons and women as focus areas.  An amount of R 600 000 is also once again set aside for training opportunities for the youth of Oudtshoorn through the provision of external bursaries.

Indigent and other subsidies

The growth of approximately 20% in indigent registrations during the 2018/2019 financial year is of great concern and further illustrates the challenging economic circumstances faced by Municipal customers.

Provision is made in the operating budget for the subsidizing of indigent households as follows; the first 6Kl of water per month as well as 50 units of electricity will be free of charge, a 100% subsidy for refuse removal and sewerage charges will be given. 

Indigent households are further exempted from paying for the water basic charge as well as the demand charge per Ampere for electricity capacity.  A rebate on assessment rates will also be given for Indigent households up to a valuation of R70.000. 

The indigent subsidy package is based on the national norm and stretches the affordability threshold of the municipality due to the growing number of indigent households and the fact that the monetary value of the subsidies exceed the national allocation.  The total amount in respect of free services, inclusive of free services given in Eskom distribution areas and assessment rate rebates exceed R50 Million for the 2019/2020 financial year.  It is anticipated that in excess of 7000 households will register for indigent support, representing approximately 33% of households in the greater Oudtshoorn area.

In addition to the subsidies provided to indigent consumers, the assessment rates rebate for pensioners has been extended to include pensioner households where combined annual income is lower than R144 000 to qualify for a 35% rebate on assessment rates.  Pensioners qualifying for assessment rates rebates will also be entitled to 6kl free water per month as well as the first 50 units electricity at a zero rate.  The budget also provides for relief to be given to people with disabilities thus qualifying for the same benefits as pensioners in respect of subsidized services. Provision is also made for 100 free units of electricity for indigent households where occupants are on life support systems that require the use of electricity.

The Budget and IDP document are available on the following links on the Oudtshoorn Municipal Website: 

Annual Budget 2019/2020 to 2021/2021

Tariff list 2019/2020:

IDP review 2019/2020: