Mossel Bay, ranked South Africa’s most financially sustainable municipality by Ratings Afrika, has unveiled its 2025/2026 budget – noting that as much as 75% of its operational spend goes to electricity. 

The budget was delivered by mayor Dirk Kotzé and accepted during a special council meeting on 30 May 2025.  

The mayor highlighted growing economic challenges, where global politics, strained international relations, and the continued threat of load shedding impact every South African citizen.  

He praised residents for their financial compliance. “Our residents’ loyalty and ongoing responsibility toward the municipality have resulted in a remarkable 94% payment rate, for  

“We can proudly state that this year we have a fully funded budget,” said Kotzé. 

He said the municipal budget for the upcoming year amounts to R1.94 billion for operational expenses and R425 million for capital projects.  

The mayor noted that the bulk purchase of electricity accounts for 75% of our operational budget, alongside costs for purified drinking water, debt losses, personnel expenses, interest payments, and council operations – leaving little room for flexible adjustments.  

Municipalities generate most of their revenue from electricity sales. Those involved in providing services buy electricity from producers (Eskom) and then resell the power to households, businesses and other institutions.  

Data from StatsSA showed that municipalities spent R50.2 billion on electricity purchases in the first six months of 2023. In turn, they generated R60 billion from electricity sales.  

Electricity sales take up a significant slice of the revenue pie. In fact, it’s usually the biggest revenue stream, the stats body said. In the first six months of the year, sales of electricity accounted for just over a quarter of total municipal revenue. 

The mayor said that while drafting the budget, it faced several factors beyond the municipality’s control, including: 

• Eskom’s bulk tariff increase of 12.7%  

• Rising diesel costs for municipal vehicles and generators due to load shedding  

• Continually increasing fuel prices  

He proposed the following tariff adjustments:  

• Electricity consumption: 10.81% (basic fee increased by 10%)  

• Property rates: 13%  

• Waste removal: 7%  

• Sewerage services: 9%  

• Water supply: 3% (basic fee increased by 10%)  

These tariff increases, he said, result in an average rise of 10.1%, or approximately R323 per month for a household with a property value of R1.1 million, consuming 500 kWh of electricity and 15 kl of water per month.  

For a household with a property value of R2.5 million, consuming 1,000 kWh of electricity and 30 kl of water per month, the increase would be 10.3% or R540 per month.  

The municipality has proposed discount structures based on income thresholds. 

The mayor said that hosting an event like the IRONMAN 70.3 competition, at a cost of R2 million, delivers a strong return on investment – contributing R50 million to the local economy.   

The negative effects of load shedding on our capital budget were anticipated. Despite growing resistance from some residents, we had to continue supplying electricity from certain substations during load shedding to reduce the economic impact of outages across greater Mossel Bay.  

Over the past year, Eskom electricity purchases increased by R65.8 million, while electricity sales rose by only R32.3 million.  

“This R33.5 million gap highlights the financial strain posed by declining electricity sales, a challenge many municipalities in South Africa are currently facing.,” said Kotzé. 

“We must strategically plan to reduce our reliance on traditional electricity income and implement sustainable alternatives to ensure financial stability,” he said.  

The mayor pointed out that the municipality’s energy losses have increased by 3% year-on-year, and estimated electricity loss from July 2024 to January 2025 stands at 17.5% – 3.5% higher than the previous financial year.  

Kotzé  said that despite the costs associated with alternative energy projects, investment in solar energy has already yielded positive impacts on key infrastructure.  

“Over time, this investment will provide significant returns for taxpayers, ensuring the sustainable delivery of critical services whenever Eskom implements load shedding.”