Joburg’s ‘unreasonable’ tariff hike will hit pockets hard, warn experts

Experts believe the City of Joburg’s proposed tariff increases for 2021/22 are unreasonable given the economic climate.

On March 24, draft tariffs were tabled during a council meeting. They are now open for comment till May 3 and will come into effect in July, when the city’s new financial year kicks in.

Among the proposed increases is 14.59% across the board for electricity while residential prepaid customers will be charged a R200 surcharge monthly and businesses will be charged R400 monthly.

The city is saying the introduction of the surcharge is to cover for the operational costs of electricity infrastructure, but that is not true because the operational costs are included in the electricity tariffs already.

For waste management, Pikitup charges will increase by about 4.3% across the board, and there will be a new recycling charge of R50 per household in affluent areas, which will exclude townships or informal areas. Pikitup will be rolling out separation at source throughout Johannesburg.

Leon Louw, executive director at the Free Market Foundation, says the increases will have a massive impact on everyone in the city, but the most hit will be the poor.

“With the proposed increase for electricity, those who use fewer kilowatts of electricity will be paying more. So essentially, users will be punished for using less electricity,” Louw pointed out, going as far as questioning if city council members understood the financial implications of what they proposed. 

Outa executive manager for public governance Julius Kleynhans shared these sentiments and said the impact would be across the board but with more impact on poor households. He said the introduction of the surcharge for prepaid customers was unacceptable because it would mean residents would have to pay it even if they didn’t use electricity.

“The city is saying the introduction of the surcharge is to cover for the operational costs of electricity infrastructure, but that is not true because the operational costs are included in the electricity tariffs already. So they will be essentially double-taxing prepaid customers, which is unfair,” he said.

Kleynhans said they would be making submissions as civil society to oppose the exorbitant increases given the current economic climate.

He said their researchers were also investigating the constitutionality of the surcharge that the city planned to introduce. He also added the disappointing thing about the tariff increases was that the city increased tariffs but the level of service kept going down. 

In a statement released this week, the city encouraged residents to participate in the budget process, which among other things includes the tariffs.

“Despite the current economic challenges, the city is determined to continue to improve the daily lived experience of its residents. To make this a reality residents are urged to give inputs on the draft budget and IDP. The inputs from the public will assist to shape what ultimately ends with the final budget to be approved by council before the conclusion of the current financial year,” the city said in a statement.