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2.3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 MEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEMEASASASASASASASASASASASASASASASASASASASASASASASASASASASURURURURURURURURURURURURURURURURURURURURURURURURURURURABABABABABABABABABABABABABABABABABABABABABABABABABABABABLELELELELELELELELELELELELELELELE P P P P P P P P P P P P P P P P P P P P P P P P PERERERERERERERERERERERERERERERERERERERERERERERFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFOFORMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMRMANANANANANANANANANANANANANANANANANANANANANANANANANANCECECECECECECECECECECECECECECECECECECECECECECECECECECECECECECE O O O O O O O O O O O O O O O O O O O O O O O O O OBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJBJECECECECECECECECECECECECECECECECECECECECECECECECECECECECECECECECTITITITITITITITITITITITITITITITITIVEVEVEVEVEVEVEVEVEVEVEVEVEVEVEVEVEVEVES S S S S S S S S S S S S S S S S S S S S S S S S S S ANANANANANANANANANANANANANANANANANANANANAND D D D D D D D D D D D D D D D D D D D D D D D D D ININININININININININININININININININDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDIDICACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACACATOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTOTORSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRSRS
TABLE SA7 provides the main measurable performance objectives, the municipality undertakes to achieve this financial year.
2.3.1 KEY FINANCIAL RATIOS / INDICATORS
The benchmarks reflected in the table below are based on actual audited results in the 2014/15 financial year:
Financial Benchmarks Basis of Calculation 2014/2015
Debt to Asset Ratio Total Debt / Total Assets 0.42:1
Debt to Revenue Total Debt / Annual Income 0.78:1
Average Interest Paid on Debt Interest Paid / Total Interest Bearing Debt 0.09:1 Capital Charges to Operating
Expenditure
Interest and Principal Paid / Operating Expenditure
0.07:1
Interest as a % of Operating Expenditure
Interest Paid / Operating Expenditure 3.40%
Credit Rating Calculated by Global Credit Rating Company Short term: A1+
Long term: AA-
Current Ratio Current Assets / Current Liabilities 1.2:1
Creditors System Efficiency % of Creditors paid within terms 84.96%
Electricity Distribution Losses Total units purchased less total units sold /
Total units purchased 7.7%
Water Distribution Losses Total units purchased less total units sold /
Total units purchased 39.7%
The financial benchmarks reflected in the table above indicate that the municipality continues to maintain its financially healthy status.
Debt to Asset Ratio:
Total debt to total assets is a leverage ratio that defines the total amount of debt relative to assets.
Debt to Revenue:
The ratio indicates the extent of total borrowings in relation to total operating revenue. The purpose of the ratio is to provide assurance that sufficient revenue will be generated to repay liabilities.
76 Capital Charges to Operating Expenditure:
Capital charges to operating expenditure (the measure of the cost of borrowing in relation to the operating expenditure) compares favourably to the acceptable norm of around 10%.
Current Ratio:
The ratio measures the short term liquidity, that is, the extent to which the current liabilities can be paid from current assets. The higher the ratio, the healthier is the situation. Whilst the ratio of 1.2:1 is below the norm of 1.5 to 2.1 normally set for municipalities, there is sufficient cash to meet creditor obligations.
Credit Rating
Despite the current economic climate, the municipality has maintained its investment grade credit rating of AA- in the long term and A1+ in the short term with a positive outlook. The long term rating indicates that the municipality has very high credit quality, very strong protection factors. The short-term rating means that the municipality has the highest certainty of timely payment, short term liquidity and risk factors are extremely low. This is the highest rating in the municipal sector.
TABLE SA8 sets out the municipalities main performance objectives and benchmarks for the 2016/17 MTREF.
2.3.2 FREE AND SUBSIDISED BASIC SERVICES
One of the objectives of a local authority is to ensure the provision of services to communities in a sustainable manner. The constitution stipulates that a municipality must structure and manage its administration, budgeting and planning to give priority to the basic needs of the community and to promote their social and economic development. To cater for the indigent, the municipality as part of its welfare package provides a basket of free basic services in accordance with a defined level of service. The basic social package is an affirmation of the municipality’s commitment to push back the frontiers of poverty by providing a social welfare to those residents who cannot afford to pay, because of adverse social and economic realities.
Details relating to free basic services are contained in TABLE A10.
In reviewing the levels of free basic services for the 2016/17 year, the following factors were taken into consideration:
- Sustainability
- Impact of new housing
- Impact on non-indigent ratepayers/consumers
The estimated cost of the social package (i.e. income foregone) amounts to approximately R 3.4 billion for the 2016/17 budget year.
Details of the initiatives proposed to be carried out by the council in this regard are detailed below.
The assistance to the qualifying households are regulated by council’s budget related policies which are reviewed annually based on modelling the impacts of the tariffs on all residential properties. The cost of this social package is partially funded from the equitable share of R 2.3 billion provided by National Government.
2.3.3 DRINKING WATER QUALITY AND WASTE WATER MANAGEMENT
EThekwini Water Services performs the role of the water service authority whilst Umgeni Water is the water service provider for the municipal area. EThekwini Water and Sanitation Unit is committed to providing safe drinking water of the highest quality as well as treating waste water responsibility so that it does not negatively impact on human health or our environment.
SERVICE SOCIAL PACKAGE APPROX.
COST R’M
EST.NO. OF HOUSEHOLDS
Assessment Rates
Residential Properties valued up to R 185 000 will be exempt from paying rates. All other properties valued above R 185 000,
the first R 120 000 no rates charged 124 886
Pensioners, child-headed households, disability grantees and the medically boarded are exempt from paying rates on the first R 460 000 of their property value (This amount is inclusive of the R 120 000 mentioned above). Rebate increases from R 278 per month to R 302 per month.
No rates levied on the first R 30 000 value of vacant land
58 741
1 796.0 183 627
Water The first 9kl of water is free to households with property values under R 250 000.
880.3 578 553
Electricity The first 50kwh of electricity is free to residents using less than 150kwh per month in Eskom reticulated areas
The first 65kwh of electricity is free to residents using less than 150kwh per month in eThekwini reticulated areas
1.3 122.9
3 930 119 780
Refuse Removal
Residential property valued up to R 250 000 exempt from domestic refuse removal tariff. In addition, a free basic refuse removal service is also available to indigent consumer units living in rural, informal settlements and non-kerbside residents.
402.0 598 486
Sewerage/
Sanitation
The first 9kl of effluent disposal is exempt for all properties with values under R 250 000. In addition, a free basic service is also available to indigent consumer units with VIP’s, urine diversion toilets and in informal settlements serviced by means of a toilet/ablution block within 200m.
290.8 381 778
Total 3 493.3
78 BLUE DROP CERTIFICATION
The Blue drop programme provides a holistic approach to drinking water quality management and a systematic, transparent approach to the consistent provision of safe water with a clear focus on public health. EThekwini Metro and Umgeni Water worked well to maintain the illustrious Blue Drop status for the eThekwini main system. At the last round of Blue Drop awards, eThekwini Municipality was awarded a Blue Drop for the fourth consecutive year and was placed fourth in the country and first in KwaZulu-Natal. The municipality continues to manage drinking water within its area of jurisdiction with distinction.
GREEN DROP RATINGS
The Green Drop Regulation Programme aims to certify the wastewater systems of all municipalities and water service providers in South Africa. The green drop rewards excellence in the management of wastewater during its journey from source, conveyance in sewer networks, its treatment at wastewater works and its final discharge to the receiving environment. Waste water treatment works operated by the City are authorised to discharge treatment effluent to rivers and the marine environment. The municipality is a leading Green Drop Metropolitan Municipality. The Green Drop regulation programme was established by the Department of Water Affairs to certify the waste water systems of all municipalities and water service providers. Budgetary provision for the upgrades and maintenance of water reticulation and sewerage treatment works is made in the MTREF to ensure that systems are capacitated to deliver at acceptable standards.