My Observation of the
Electricity Problem
*this comes after the Msunduzi Municipality hiked services tariffs for the local B&B s, forcing a lot of them out of business. I was recently asked to conduct research on the subject as part of our 'course assessments'.*
“The Municipality seems
to fail in tracking and dealing with unpaid prepaid electricity bills by some
unscrupulous members of society.
Though it must be noted
that not all of them do so on purpose – some are sincerely overwhelmed by
poverty, such that they resort to stealing electricity and saving themselves a
lot of money, and there are just those who simply cannot afford it. There are
also those who steal electricity merely because it is now an incredibly simple
and common thing to do, and so paying towards their bill will insinuate that
they have a lot to spend, and also not forgetting the ‘sheep factor’ theory –
they feel obliged to do what everyone else is doing.
Walking along the
Edendale road – along the ‘Greater Edendale Mall’ and ‘Edendale Crossing Mall’,
past the hospital, I noted a sight that shocked me – almost every street lamp
was dangling on it, wires that were carelessly connected and then channelled
underground towards the growing number of shacks across the street. I saw all
this in-passing, how come the electricity personnel have not picked this up?
Made me wonder how many other illegal connections were out there – not Edendale
alone but across the board.
The sad eventuality,
(as noted by Andrew Layman, former PCB CEO) is that those who pay for these
services now have to take all this burden and get slapped with hefty tariff
hikes to try and make up for the lost revenue!”
I had also spoken to
the ‘Msunduzi Pietermaritzburg Tourism Association’s’ Accommodation consultant,
Nhlakanipho Mdunge.
He broke into the
conversation by shedding light at to what he believes is the source of the
problem, and this is what he said – in isiZulu.
“You will remember that
here (gesturing towards the side of the municipality), there was rampant
corruption recently (which indeed was public information), so since the new
council took office, they have been trying very hard to recover the lost funds
and are putting in measures to also milk this money from the public.”
He also alluded to the
fact that the Bed & Breakfasts were now required to forge out a huge tariff
to the council. He explained this, “In the past, B&Bs were taxed on the
owner’s personal capacity – a Sole proprietorship, but now what they (council)
say is they want to start taxing B&Bs like all business – a business tax.
This means that if the
B&B had paid about R 2000 to obtain its work permit, they will start
calculating these monthly R2 000 charges, from inception up until now –
and the B&B is expected to pay that balance!”
He also concluded by
saying that this is fast killing all B&Bs in the city and leaving the rest
bankrupt. He also explained that, recently, with the spate of events coming
down into the city all simultaneously, he – as the ‘consultant’ who receives
all queries and bookings from the visitors, was forced to plead with the local
public to open their doors to the visitors – as the accommodation was
extraordinarily scarce and demand rocket-high.
I then wrote numerous
e-mails to a pool of possible stakeholders and the affected B&Bs, and
received the following responses:
Hi Sanele
Thank you for your
email. I am one of the B&Bs which is
part of the PMB B&B Network. I am
also the Chairperson of the Midlands B&B Association [MIDBABA].
From the Network's
perspective, we have 13 B&Bs who are part of this Network. Two of our Network members have resigned and
closed their B&Bs directly as a result of the increase of municipal tariff
& rate increases. The tariffs made
them unprofitable to run as the increases added as much as R2000.00 per month
to expenses and profit margins are small.
This means the 2 owners are now effectively unemployed and cleaning and
gardening staff have had to be retrenched,
In terms of MIDBABA,
other B&Bs have also closed, thus resulting in loss of jobs. Those who have remained open have had to
increase rates but what created a bigger problem is that the Municipality gave
no notice of the increases or made any suggestion that they would do so and
then backdated the increases, which resulted in huge bills being received. In addition, not all B&Bs were initially
charged the increases and there are still B&Bs not being charged. The registered B&Bs have increased but
the majority of B&Bs in the City are not registered and therefore are not
paying the increased tariffs and therefore are able to offer cheaper
rates. There are a number of other
charges that B&Bs who wish to be legal need to pay and one is doubtful
whether the unregistered B&Bs are paying these as they probably believe
they are above the law.
Although the tariffs
are supposed to be for all home-based businesses, one is left wondering whether
all such businesses are paying.
Regards
DES
The Msunduzi
Municipality has not only raised the
electricity tariffs but has imposed huge increases of service charges across the board, including the
rates. Comparing the average of the
first 3 months of last year (R2000) and the same for this year (R3800), our total service bill has
increased by 90% (3800/2000).
We estimate that 50% of our property is
residential and the other 50% is used
for business purposes. If 50% of the property attracts a charge of R1000, then the other 50% being
used for business purposes has gone
from R1000 to R2800 = 280%.
For smaller B&B's which only have 1 or
2 rooms which only make up 10-20% of
the total property, the increase caused by the business portion amounts to about 800%. The average
increases for 20 B&B's comes to 80%. You then divide this figure by
the percentage used for business
purposes (10% for a 1 bedroomed
B&B) = 80%/10% = 800%.
So, what do the smaller B&B's do? Of
course they all close down. We expect
all the 1 & 2 bedroomed B&B's to close and many of those also with 3 bedrooms will close if
they are not doing a lot of business.
Our estimate is that eventually 50% of all B&B's will close.
The Jays Guest Hose.
Good day Sanele,,
Thank you for asking, As I am in despair!. I
was one of the few B&B who were targeted in 2010. I was land with an
enormous bill and back paid to July 2010. The Municipality have made empty
promises of going to correct this in justice – BUT TO DATE NOTHING. If I refuse
to pay (which I should –I get cut off . I provide jobs for 10 ten women – that
means that I look after ten families. The profits from this business are so
small that it cannot sustain me on its own . I am not alone . The municipality
is killing this industry , If I did not
have another form of income I would have had to reconsider the viability of
this business( and I am one of the older well established B&B).
Yours,
Penny Hatting
Heritage Guest House
This is sadly impinging
on the city’s potential to successfully hosting a number of iconic sites and
events that the city so proudly boasts with. There is also huge potential for
more of these sites and events based on the ‘interpretive’ aspect of tourism –
despite the Voortrekker Museum, Pietermaritzburg Botanical Gardens, Gandhi
Statue, Butterflies for Africa, Tatham Art Gallery, and many other.