Part 8 of simplifying the Mogale City Local Municipality’s (MCLM) recent Medium-Term Revenue and Expenditure Framework (MTREF), or the draft budget, highlights numerous tariff increases which could have major financial implications for residents.
• Also read: Draft Budget Part 7: Mogale predicts strong surplus over next five years
Understanding this complex section of the budget can be challenging, so Krugersdorp News has broken it down for easier comprehension:
1. Property Rates and Rebates
The property rate increase is driven by updated property values reflected in the new General Valuation Roll (GVR). This new roll, based on current market values, replaces the previous 2018 roll, which had been extended until June.
• Increase: 29.9% due to the new GVR for 2025–2030
• Tariff freeze: 0% increase for 2025/2026 to mitigate financial impact
• Rebate: Additional R285 000, totalling R300 000
2. Electricity Revenue and Tariffs
The municipality is working with the National Energy Regulator of South Africa (Nersa) to enhance public awareness around electricity pricing. This includes helping consumers plan their budgets, explaining the rationale behind tariff changes, reducing misinformation, and maintaining transparency and trust.
• Projected growth: 11.3% in 2025/ 26, subject to Nersa approval
• Tariff Regulation: Nersa and a new Cost of Supply (COS) model are in development
• Challenges: Rising bulk electricity costs from Eskom, reviewed under the Multi-Year Price Determination (MYPD) methodology
3. Water Tariffs and Conservation
The National Treasury mandates that water tariffs must cover all associated costs like infrastructure maintenance, fuel, staff salaries, and service delivery to informal settlements while still generating a surplus.
• Increase: 15.3% in line with Rand Water’s recommendation
• New Tariff: R1.534 per kilolitre (up from R1.331)
• Low-Income protection: Six kilolitres of free water for registered indigent users
• Conservation Strategy: Higher charges for increased usage
4. Sanitation, Refuse, and Facility Fees
This increase is mainly due to rising costs for staff, chemicals, and maintaining pump stations to meet compliance standards.
• Sanitation: 15.3% increase to cover rising operational costs
• Indigent support: Free sanitation for registered indigent residents
The budget indicates that refuse and landfill site fees will go up by 4.4%, matching the expected inflation rate of 3% to 6%. This increase is needed to cover rising costs for waste removal contracts, disposal fees, fuel, equipment rentals, and staff wages. It also explains that fees for renting municipal facilities are set to increase by 4.4%.
5. Other Tariff Adjustments
• Fines and penalties: 4.4% increase (traffic fines, water and electricity disconnections)
• Agency revenue: 4.4% increase from the Department of Transport
6. Expenditure Highlights
• Total operating expenditure: R5.1b, a 13.8% increase
• Salary growth: 7.9%, combining inflation and wage agreement adjustments
Regarding salary expenses, the growth is based on a zero-based budgeting approach and a collective wage agreement. A 5% increase under the Wage Gap Agreement will apply to specific staff levels, starting with 2.5% in July and another 2.5% depending on the city’s financial status. This will cost around R85m. Despite these increases, the City’s salary costs remain below the national guideline of 25 – 40% of total expenditure, sitting at 23%. Councillor pay is regulated nationally and will increase by 4.4% to prevent under-budgeting.
6.1.Bulk Purchases:
• Water: 15.3% increase, reflecting Rand Water’s costs
• Electricity: 12.72% increase, approved by Nersa
• Debt impairment: Up by 37.9% (R155.5m) to address non-payment
• Finance costs: Decrease by 21.8% as loan repayments reduce
The City reports 35.4% water losses, amounting to R75m, due to leaks, old infrastructure, and illegal use. It states depreciation and impairment costs for 2025/ 26 are budgeted at R288m or 6% of operating expenditure. These costs must be included in service tariffs to ensure full recovery; otherwise, they will not be backed by actual cash. With many residents struggling to pay due to the weak economy and water losses, Mogale City will ramp up its collection efforts, particularly targeting overdue accounts from businesses and households, and will continue disconnections under the ‘Mogale Ya Tima’ campaign.
7. Contracted Services and Infrastructure
• Cost Increase: 16.4%, mainly for maintenance and security services, totalling R77m
7.1. Key Expenditures:
• Grass cutting, maintenance of municipal buildings, water infrastructure, and traffic lights: R41m
• Security services to protect critical infrastructure such as wastewater plants, substations and reservoirs: R23.7m
• Chemical toilets: R68m (no increase)
• Capital Budget: R424m, R25.1m less than the previous year
• Priority Projects: Road rehabilitation, substation upgrades, ICT monitoring
Finance costs are expected to drop by 21.8% as MCLM nears the end of its loan term. Earlier high repayments have reduced the outstanding balance, resulting in lower interest payments going forward. There are also budget increases for upgrading the financial system, which is now Standard Chart of Accounts compliant.
It continues that the proposed capital budget for the upcoming period is R424m, which is R25.1m less than the approved budget for 2024/ 25. This budget will be funded through grants from the National and Provincial governments, amounting to R288.5m and R252m, respectively, along with R135m in own revenue.
It concludes that the list of approved projects for capital projects funded by own revenue has increased, with funding allocated to several initiatives. These include:
• R16m for developers’ bulk and small connections
• R20m for refurbishing the Chamdor substation
• R10m for purchasing a Jetvack combination truck
• R10m for road rehabilitation and resurfacing.
• R10m is set aside for an ICT network monitoring system and lightning protection
• R3.5m for fencing in Nooitgedacht
• R11m for purchasing six trucks for Integrated Environmental Management
• R1.5m for the fencing of old age homes
• R1.8m for a by-law enforcement truck
The draft budget outlines significant changes in tariffs, revenue, and expenditure, directly impacting residents and businesses. While necessary for maintaining and improving services, these increases reflect the rising costs of utilities, infrastructure, and operations.
