Barry Streek
The Democratic Alliance unveiled its plans recently to “corporatise” Cape Town’s water and sanitation, electricity and solid waste disposal services in three separate units but stopped short of involving the private sector, as African National Congress-controlled Johannesburg has done with its water services.
At a press conference DA councillor David Erleigh refused to be drawn on whether the private sector would eventually be brought into the new business units, saying he could not comment on something that the unicity council had not yet discussed. Both Erleigh, who is Cape Town’s executive member responsible for city trading services, and Mike Marsden, the city’s interim manager for services, emphasised that the three business units would be “wholly owned” by the council.
The DA said it rejects a Thatcherite sale of municipal services. Instead, it would follow “best international practice”. The “corporatisation” of municipal services, such as water, electricity and waste disposal, was the best way of ensuring a high level of service to the “customers”. “It is important to create an operating environment where service delivery is focused on the customer and where management is both empowered and accountable. We want to give a better service,” Erleigh said. He added that it was widely accepted that government’s role was to focus on strategy, policy formulation, monitoring and regulating, while commercial enterprises within the right business framework were more effective and efficient in service delivery. In this way the city council would become the regulator of the services. The South African Municipal Workers’ Union (Samwu), which claims 18?000 members in Cape Town, said it would fight the establishment of the proposed utilities for water, electricity and solid waste.? “It is clear that the DA-controlled city has no clear motivation for the establishment of utilities other than an ideological belief that business is more efficient than the public sector. Samwu views this ideological belief as a myth and views the failure by the DA to explore the municipality as the preferred deliverer of services as gross mismanagement of the resources of the city,” the union said in a statement. A Samwu official who attended Erleigh’s press conference said: “They are now even talking about customers, not ratepayers, to whom they should be answerable.”?The union also said that ambulances, cleansing and amenities such as community halls, swimming pools and recreation were services that “the council is attempting to privatise by stealth”. Senior council sources told the Mail & Guardian that they had opted for the corporatisation route because this would be more palatable to the unions than privatisation in its pure form, but once the new business units had been established it was obvious that the involvement of the private sector in delivery would be considered, as had been the case with Erwat (the East Rand Water utility). Cape Town intends to “ring fence” the three business units by July 1 this year, thereby separating their operations from the rest of the council. This would be followed by an R8-million six-month study to investigate how each of the three services could be turned into independent business entities that would function “outside the confines of bureaucratic financial, legal administrative constraints”. By July 1 nearly 50% of the city’s income and expenditure electricity is expected to have a turnover of R2,3-billion in the next financial year, water and sanitation about R970-million and waste disposal R50-million will have been hived off into these units.?
The council wants the three units to be functioning as separate council-controlled companies by July 1 next year. Meanwhile, an estimated 160?000 households in Cape Town, including some in the poorest parts of the city, are going to miss out on an offer by the Cape Town council to supply the first 20kWh of electricity free of charge every month.
Khayelitsha, like many other townships, gets its electricity supply directly from Eskom, and not from the municipal council. About 500?000 households, 75% of the total number of consumers in the Cape metropolitan area, will benefit from the council offer at an estimated cost of R34-million a year, which is to be paid by a 6% surcharge on the accounts of all consumers as from July 1. The council says it is negotiating with Eskom to extend the supply of free basic electricity to Eskom customers but to date the public corporation has refused to grant the free 20kWh. “We will address this as a priority. Eskom provides Zimbabwe with a 25% discount and oil refineries like Caltex with big discounts, rather than Cape Town’s poor. It is in Eskom’s interests to change tack and accept this as a pilot project for the rest of the country,” Erleigh said.