Cape Town cash drain as system springs leaks

Capetonians are paying more than they should for water and electricity, according to the city's mid-year budget and financial performance assessment conducted by the national Treasury.

The mid-year budget highlighted that Cape Town ratepayers were forced to shoulder the losses of more than R1-billion for water and electricity.

In its report Treasury asks the city to "adopt strategic means of redressing the situation".

Between 2011 and 2013 the city lost R1.1-billion during the distribution of electricity due to vandalism and theft. These losses are above the international norm.

"Internationally, the acceptable margin of electricity losses in distribution systems is 3.5%.

"The City of Cape Town is currently at 9.3%, meaning it was the worst of the country's three biggest metros.

"The City of Joburg lost 9% and eThekwini lost 6%.

"These losses represent significant revenue which needs to be recovered from the consumers, thus unfairly raising the cost of electricity to them," the report said.

The report also reflected that ageing infrastructure, which occasionally led to incorrect meter readings, was also to blame for water loss to the value of R143-million between 2011 and last year.

Losses are factored into tariffs, meaning ratepayers have to pay more for their water as well.

Cape Town, however, defended the losses, saying a majority of the electricity losses were technical and unavoidable.

Ernest Sonnenberg, a member of Cape Town's mayoral committee for utility services, said 6.5% of the losses were budgeted for and were caused by random faults and the age of the network.

"We are in the process of appointing additional revenue protection teams to identify and pursue those who steal electricity and to recover these charges," he said.

Sonnenberg added that "unaccounted for water is inherent to any water distribution system".

"The unaccounted for water still carries a cost and such will be included in the tariffs. The tariff must inherently allow for the unaccounted for water," he said.

However, ANC chief whip, Xolani Sotashe, said the city was failing to deal with the losses, which he said were a recurring issue first highlighted by the auditor general.

- Additional reporting by Nivashni Nair