Erongo RED a burden to Swakop

THE Erongo Regional Electricity Distributor (Erongo RED) is considered a burden on Swakopmund’s municipality, according to the chair of the town’s Management Committee.

In his budget speech at last week’s council meeting, Johnny Ngolombe said although more revenue was generated from additional electricity consumers due to the continued expansion of the town, this revenue did not sufficiently cover additional service rendering costs. The main reason for this, he said, was the negative effect of Erongo RED, as well as the decrease in subsidies for maintenance of streets and traffic services.’The negative effect of the establishment of Erongo RED on Council’s budgets has been referred to the Minister of Regional and Local Government and Housing and Rural Development and their response is still being awaited,’ he said.Ngolombe said the only revenue made from electricity was the surcharge paid to the local authority by Erongo RED.Even the increase in the salary ratio was blamed on the electricity distributor.Salaries for senior municipal managers will increase by 20 per cent over the next two years.In the past, a ratio of 32 per cent between the town’s wage bill and total expenses was maintained. However, with the establishment of Erongo RED, the ration increased to 44,4 per cent for 2009/10, Ngolombe said.He further said the economic pressure caused by rising exchange rates and commodity prices had an effect on the local economy due to the continuing price increases of fuel, food and other consumables. These price increases negatively affected service rendering costs and quality at the town, ‘which is still growing at quite a rapid pace’.He said the preliminary budget showed a deficit of more than N$17,6 million, decreased to about N$1,3 million after tariff increases – by up to 11,7 per cent – and contributions from various funds. New tariffs were implemented to recover the costs of new services and assets.’These adjustments, however, contain the risk factor that the decreased funds will not be sufficient to finance the expenses in order to maintain quality service levels,’ Ngolombe said.One such service that will be detrimentally affected is electricity supply to low-income housing projects.A total of 780 erven must be provided with electricity before they can be sold to low-income people. An amount of N$13,4 million was made available for 2008/2009, but was only sufficient to service 350 erven. An amount of N$10 million, or more, has to be sourced for the remaining 430 erven.’The budget clearly reflects a challenge in that the predicted deficit of N$1,3 million must be converted into a surplus. We have done it before and it is trusted that the same predictions will have a positive effect on the final results for 2009/2010,’ said Ngolombe.Council approved a capital budget of N$71,8 million for new projects and N$53,4 million for continuing projects.