Municipalities' income and costs swing with Eskom

Municipalities' income and costs swing with Eskom.
Municipalities' income and costs swing with Eskom.
Image: FILE PHOTO

Statistics South Africa has quantified how much electricity impacts on the finances of the country's 257 municipalities.

Analysing figures for the quarter ending December 2017‚ StatsSA said municipalities spent a total of R83.9 billion in the quarter (the months of October‚ November and December). This is 12% higher than the R75.1 billion recorded in the quarter ending September 2017.

One of the major contributors to municipal spending is electricity. Acting as intermediaries‚ many municipalities buy electricity from Eskom in bulk and then re-sell it to residents‚ businesses and government.

For every R100 spent by municipalities in the quarter ending December 2017‚ Stats SA said R19‚60 was spent on purchasing electricity‚ making it the second largest expenditure item after employment costs.

Spending on electricity tends to rise in the quarter ending in June and peak in the quarter ending in September. Spending then eases off in the quarters ending in December and March. The reason for this is the change in seasons‚ says Stats SA. During the coldest months‚ municipalities buy more electricity to meet rising demand.

In the colder months‚ purchases of electricity took up R27‚50 for every R100 of municipalities total expenditure.

In terms of revenue‚ municipalities generated less in the quarter ending December 2017 compared with the quarter ending September 2017. Total revenue fell by R7.6 billion (-7‚6%) from R100.1 billion to R92.5 billion.

"A decline in the amount of grants and subsidies from National Treasury was one of the contributors to this fall‚ but the more significant contributor was again electricity. Electricity sales fell with the onset of summer‚" said Stats SA.

The largest contributor to total municipal revenue in the quarter ending December 2017 was grants and subsidies received (30.7%)‚ followed by sales of electricity (26.2%).




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