BBR Presentation Bulk Water Tariff

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BBR Presentation Bulk Water Tariff Powered By Docstoc
					                  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

RAW WATER CHARGES COST OF RAW WATER SUPPLIED FROM DWAF


DIRECT STAFF &      ALL DIRECT COST OF STAFF WHO ARE
LABOUR COST         RESPONSIBLE FOR O&M OF SCHEMES & PLANT

DIRECT ELECTRICITY & ESKOM CHARGES FOR BOTH CAPACITY & USAGE
ENERGY COST          FOR PUMPING, PURIFICATION & PLANT LIGHTING


CHEMICALS           FULL COST OF CHEMICALS USED FOR DOZING OF
                    WATER

MAINTENANCE         COST OF ROUTINE MAINTENANCE OF PLANT &
                    EQUIPMENT
              INPUT COST OF BULK WATER

  REFURBISHMENT          COST OF SUBSTANTIAL REPAIR OR REPLACEMENT
                         OF PLANT & EQUIPMENT WHICH DOES NOT
                         FORM PART OF ROUTINE MAINTENANCE
  OVERHEAD               PORTION OF HEAD OFFICE AND OTHER INDIRECT
  ALLOCATION             COSTS ALLOCATED TO EACH SCHEME


 The following financial assumptions were considered:
                    Actual   Estimated   Budget            Projected
ASSUMPTION
                    08/09      09/10      10/11    11/12 12/13 13/14    14/15
CPIX               10.3%     6.9%        6.0%     5.7% 5.2% 5.0%       5.0%
Salaries and wages 12.5%     10.9%       10.0%    9.5% 9.5% 9.0%       9.0%
Interest rate      13.4%     10.3%       10.0%    10.5% 10.5% 11.0%    11.5%
Energy cost        27.5%     31.3%       24.8%    25.1% 25.9% 33.1%    33.1%
                     TARRIF STRUCTURE
          Cost structure
          Keys = VC: Variable cost
                = FC: Fixed cost
           30 100 000m3/year         Amount     %     Amount p/m
Raw Water (vc)                   4 435 269    4.68    369 606
Electricity (vc)                 6 790 804    7.16    565 900
Maintenance (vc)                 9 902 114    10.45   825 176
Chemicals (vc)                   8 850 000    9.34    737 500
Refurbishment (vc)               5 556 875    5.86    463 073
Capex (vc)                       10 950 000   11.55   912 500
Salaries (fc)                    32 950 228   34.30   2 709 102
Administration cost (fc)         15 795 599   16.66   1 316 300
                        TOTAL 94 789 889      100     7 899 157
           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
   Average for year    Actual   Budget               Projected
    ending 30 June     09/10     10/11   11/12    12/13     13/14   14/15
Bulk Water
                DWA    1.34      1.48     1.55     1.48     1.63     1.63
Tariff
Bulk Potable
                 BWB   3.07      3.45    * 3.87   * 4.06   * 4.27   * 4.54
Water Tariff
   NB * = Proposed tariff review, due to upgrading of
      certain water works
                    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
                                M3/year      M3/day
    Total Water Consumption     27 456 429   75 223
                     PROJECTED TARIFF

                               2008/09 2009/10        2010/11         2011/12

% increase                     5.9%       4.3%        12.46%          6.5%
Raw Water (R/kl)               1.01       1.34        1.50            1.60
Bulk Potable Water (R/kl)      2.94       3.07        3.45            3.87

      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.
          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.
                             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
             CONCLUSION
Recommendation

- BW recommends the tariff increase by 12.46 %
THANK YOU

				
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posted:12/10/2011
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