R88.8 million in emergency funding to mitigate impact of loadshedding

Joint media release: R88.8 million in emergency funding to mitigate impact of loadshedding in local municipalities.

At the first provincial Cabinet meeting of the year, held on Wednesday, 25 January 2023, emergency funding needed to mitigate the consequences of unprecedented levels of loadshedding on the Western Cape economy, on municipal services, and on the environment, was discussed as a key priority for the Western Cape Government for the year ahead.

Following this meeting, the Minister of Finance and Economic Opportunities, Mireille Wenger, has authorised the release of R88.81 million in terms of section 25(1) of the Public Finance Management Act (Act 6 of 2000), to be allocated to the Department of Local Government for the procurement of backup generators for the treatment and supply of water services.

Section 25(1) of the Public Finance Management Act (Act 6 of 2000) states that the Provincial Minister of Finance and Economic Opportunities in the Province may authorise the use of funds from the Provincial Revenue Fund to defray expenditure of an exceptional nature, which is currently not provided for, and which cannot, without serious prejudice to the public interest in the Province, be postponed to a future appropriation by the Provincial Legislature.

“This move represents the urgency that is desperately needed to address the knock-on effects of relentless power cuts on essential basic services. We cannot allow our citizens to suffer any further. We must act to urgently stabilise municipal services, such as water supply, wastewater treatment and sewerage infrastructure for our citizens. Our government is working very hard on a number of medium to longer-term strategies to respond to this crisis, but we recognise our responsibility to intervene now where we can. This emergency release of funding for critical infrastructure is just one such example,” explained Premier Alan Winde.

Loadshedding and the subsequent electricity disruptions is having severe consequences in particular on the continuous treatment and supply of water services.

Minister Wenger said, “The intensity of the load shedding that struck the country is unprecedented. The devastating impact on basic service delivery across many municipalities in the province, including the fundamental rights of citizens, with no reasonable prospect that it will end any time soon, could not have been foreseen.”

“Which is why we need to urgently stabilise energy requirements and ensure municipalities can provide essential and basic water and sanitation services. This funding will also help mitigate against the real risk of spillage of raw sewerage into watercourses and interruptions of potable water supply, both of which have potential adverse health implications for citizens. We face an emergency that requires an urgent response and emergency funding to protect our residents.” said Minister Wenger

Strict conditions are attached to this expenditure:

• The authorised amount must be reported to the Western Cape Provincial Parliament and Auditor-General within 14 days;
• Expenditure in this regard must be included either in the next provincial adjustments budget for the financial year in which it is authorised, or in other appropriation legislation tabled in the Provincial Parliament within 120 days of the Provincial Minister of Finance authorising the expenditure;
• The allocations to municipalities must be gazetted as per the requirements of the Division of Revenue Act, 2022.

At a municipal level, electricity is used for pumping, treatment of raw water, distribution of potable water, collection and treatment of wastewater and water discharge. But these pumps need electricity to work and to ensure that water is delivered to the taps at homes, hospitals, schools, and businesses.

Municipalities have expressed that one of their most critical emergency needs is assistance with once-off funding to acquire these generators.

Minister Bredell said, “This R88.815 million is an investment in stability for the province. The funding will enable 24 local municipalities and the five district municipalities to keep providing basic services such as potable water and hygienic and environmentally safe sewage, even when Eskom cannot keep the lights on. I do recognise that local governments in the province have been doing their utmost to deal with loadshedding, which is reflected in the R203.7million municipalities across the province have already spent this financial year from their own budgets to procure back-up generators, diesel, and other ancillaries to deal with loadshedding”.

“Reservoirs, water purification plants, and wastewater plants all need large pumps to operate. Constant loadshedding is making it impossible for these facilities to operate optimally. Although back-up generators running on diesel are expensive, at least it will provide for continuity as we develop more long-term and sustainable solutions to our current energy crisis,” Bredell said.

To ensure that the generators acquired by municipalities will be put to optimum use, avoid fruitless and wasteful expenditure, and ensure value for money, all municipal managers have signed “Certificates of Commitment.”

The commitment entails that municipalities will ensure the acquisition and installation of the generators. In addition, municipalities will make use of their own budgets to fund the operational costs for the duration of the lifespan of the generator(s). Additionally, each of the municipalities are also required to sign a Transfer Payment Agreement as an internal control mechanism to ensure compliance with the grant framework.

Minister Bredell said, “The Western Cape Government is committed to ensuring full transparency in the use of public funds and we will ensure that rigorous governance systems are put in place to ensure oversight on all expenditure.”

The emergency action taken is one of the short-term measures we are implementing as discussed at the Cabinet meeting on Wednesday 25 January and the Energy Council on Friday, 27 January. Further actions, over the short, medium, and long term will be announced.