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PROPOSED BULK WATER TARIFFS for 2010/11 BUSHBUCKRIDGE WATER

PROPOSED BULK WATER TARIFFS for 2010/11 BUSHBUCKRIDGE WATER. Presented By: Mr. P Ngomana- Chairperson Mr. Mapholoba A Letswalo- Acting Chief Executive. INPUT COST OF BULK WATER. INPUT COST OF BULK WATER. The following financial assumptions were considered:. TARRIF STRUCTURE.

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PROPOSED BULK WATER TARIFFS for 2010/11 BUSHBUCKRIDGE WATER

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  1. PROPOSED BULK WATER TARIFFS for 2010/11 BUSHBUCKRIDGE WATER Presented By: Mr. P Ngomana- Chairperson Mr. Mapholoba A Letswalo- Acting Chief Executive

  2. INPUT COST OF BULK WATER

  3. INPUT COST OF BULK WATER The following financial assumptions were considered:

  4. TARRIF STRUCTURE Cost structure Keys = VC: Variable cost = FC: Fixed cost

  5. TARRIF APPORTIONMENT • Variable Cost Component R1.69 (Raw water, Electricity, Chemicals, Maintenance) • Fixed Cost Component R1.76 (Salaries and Admin Cost) Proposed tariff for 2010/2011 R3.45 NB * = Proposed tariff review, due to upgrading of certain water works

  6. TARRIF STRUCTURE • Total water consumption is based on an average water loss of 9% • Total water consumption represent the total bulk potable water to be supplied to the municipality

  7. PROJECTED TARIFF • For the period July 2010 to June 2011 an increase of 12.46% is proposed. • This increase is above the current inflation rate. • The view of Bushbuckridge Water was to have a below inflation rate increase due to current cost recovery and the poor service area of our customer. But upon receiving comments from stakeholder the above inflation rate increase was considered.

  8. COMMENTS FROM STAKEHOLDERS • SALGA • The capital expenditure is significant in amount; • The tariff is lower than the sector average increase; • NATIONAL TREASURY • Proposed tariff increase will lead to a better cost recovery. • The proposed tariff will result in the organisation being financial viability • BUSHBUCKRIDGE LOCAL MUNICIPALITY • We have not received any comments from Bushbuckridge Local Municipality. They did not comment on the initial tariff submitted and no comments have been received on the revised tariff.

  9. CHALLENGES • Poor cost recovery by municipality which impacts on the water board’s cash flow. • Lack of bulk infrastructure: • Inyaka Water Works has a design capacity of 50 m/l ( to be commissioned to 75 M/L) per day but only 30 m/l is produced. • Operation of small schemes: • Provision of bulk infrastructure will result in the small schemes being shut down. • Operational cost will be centralised in one big scheme which will result in the review of the current tariff i.e. lower tariff. • Impact to the municipality: Poor recovery of cost from the consumers

  10. CONCLUSION Recommendation - BW recommends the tariff increase by 12.46 %

  11. THANK YOU

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