Category: 29 April 2022 Newsletter

The World Revolves Around Good Relations.

The World Revolves Around Good Relations

Middelburg Chamber of Commerce and Industry (MCCI) President Que Naidoo and Steve Tshwete Municipality (STLM) Executive member Gerrit van der Merwe and Anna-Marth Ott met with Mayor Masilela and members of the mayoral committee on 30 March 2022.

During the meeting, chaired by Mayor Masilela, many issues were discussed and clarified; Mayor Masilela and his committee committed to finding a constructive way forward. As we have learned over the last six months, we cannot work in isolation. And the longer we do not talk to each other, the more problems escalate. Many of these issues could have been resolved with a phone call. It is good to confirm that the channels of communication are opening up after the meeting with the mayoral committee.

MCCI would like to thank STLM for addressing the various issues we brought to the attention of the Municipality in our October 2021 letter. Working together, we can repair the damage that has been done recently and grow our town and economy again.

Members should keep an eye open for the Integrated Development Plan Technical meeting. At this meeting, you will be able to ensure that STLM’s future infrastructure plans will fit in with your business’ needs and expansion plans.

The Illegality Of The Municipal Tariff Regulations Of Nersa.

The Illegality Of The Municipal Tariff Regulations Of Nersa

The filing period for the annual municipal electricity tariff increases is currently underway. The Middelburg Chamber of Commerce and Industry participates in the Association of Chamber of Commerce (ASAC) submission and subsequent legal action against the municipal tariff provisions. Below you will find a summary of the ASAC submission.

ASAC is, in this case, concerned with representing electricity consumers behind municipal boundaries. Municipalities purchased 42% of their electricity from Eskom in the 2020/21 financial year 1. Municipal industrial users consumed about half of this, or almost 20% of Eskom’s output. Including commercial use, we estimate that the municipal industry consumes up to 26% of Eskom’s power.

For example, the municipal industry includes almost the entire automotive industry (all Original Equipment Manufacturers (OEMs) and almost the entire supply base). A significant proportion of the country’s large-scale industry and almost all of its medium-scale industry is dependent on municipal supply and tariffs. Therefore, the municipal supply function and the setting of tariffs affect a large part of South Africa’s manufacturing economy and the associated jobs in these sectors. The total membership represents almost 1 million employed people.

To reiterate the arguments from previous submissions and relevant to the key issues surrounding the 2022/2023 Consultation Paper, Nersa has not changed its approach to tariff setting. Nersa appears intent on continuing down the path of its historically flawed approaches. Despite the apparent breach of the Electricity Regulation Act (ERA), Nersa allowed the erroneous increase in municipal tariff guidelines and benchmarks to continue for the 2021/2022 financial year.

In its decision, Nersa did not make any credible prediction that this method would not be used in the future. Some ASAC members have taken Nersa’s decision on the 2021/2022 municipal tariffs to court. The businesses were frustrated by the regulator’s unwillingness or inability to make positive changes to the municipal electricity supply Industry (ESI).

Members interested in receiving a copy of the ASAC submission should contact Anna-Marth Ott at ceo@middelburginfo.com.

Review of the Electricity Regulatory Act and related Electricity Pricing Policy.

Review of the Electricity Regulatory Act and related Electricity Pricing Policy.

The Casting, Forging, and Machining Cluster (CFMC) is concerned that industrial users are burdened by municipal tariffs. The EPP promulgated in 2008 is largely ignored and is not seen as a policy directive but rather as a rough guide. The EPP has little relevance in the current process of setting municipal tariffs.

In many municipalities, these tariffs are poorly structured, not cost-reflective, and contain illegal and unrelated subsidies that lead to unjustified increases in production costs. Individual producers are unable to offset these costs through productivity increases alone. These unjustified increases in municipal and industrial tariffs and poor security of supply have led to an increasing loss of competitiveness of South African companies in the global market.

The current structures and pricing processes tax producers upfront for a small profit and serve to destroy the economy. The review document offers little, although the changes are exciting. CFMC believes that local governments need to be encouraged to follow the law and related guidelines. Enforcement of the guidelines is problematic. CFMC cautions that the ideals of a fair and equitable process will be further limited if deviation and non-compliance are allowed. Market corrections in the ESI will not necessarily benefit the industry. There is a risk that free-market outcomes will be compromised. The CFMC is concerned about the lack of controls on municipal electricity bills, which largely offset inefficiencies. And regardless, we do not have sufficient knowledge and information to have a constructive discussion on cost structures, cost drivers and unbundling.

Load curtailment is a valuable tool to encourage industrial users to reduce their load in times of need. CFMC is keen to work with municipalities to facilitate introducing such a programme in industrial areas.

In the past, Steve Tshwete Municipality has provided good support and acceptable (within the legislative framework) tariff increases to industrial areas. Security of supply remains a concern in light of the recent municipal strike and continuous vandalism of municipal infrastructure. The debate between the stakeholders must be held soon; our town needs its industries to remain economically viable.

A copy of the full submission is available to members at the MCCI secretariat; please contact us at info@middelburginfo.com.

PAYE Penalties: Application for remission, objection or appeal.

PAYE Penalties: Application for remission, objection or appeal.

In 2021, SARS introduced administrative penalties for late or non-filing EMP501 Employer Reconciliation Declarations.

To contest these administrative penalties, employers were required to use the manual ADR1 for objections and the ADR2 for appeals. The electronic dispute resolution process for the late payment and administrative penalties levied was not available on eFiling.

From 23 April 2022, taxpayers will be able to apply for remission and challenge through eFiling. PAYE administrative and late payment penalties for the existing dispute process have been added to improve SARS’ service offering. SARS will, therefore, no longer accept manually submitted PAYE disputes and remission applications.

The Annual Reconciliation Declaration (EMP501) submission period opens on 1 April and closes on 31 May.