COUNCIL APPROVES R100 MILLION LOAN FOR DESALINATION PLANT
COUNCIL APPROVES R100 MILLION LOAN FOR DESALINATION PLANT
The Town Council of Mossel Bay at its monthly meeting on 21 June 2010 approved the taking up of a loan of R100 million to partially finance the R210-million seawater desalination plant at Voorbaai in Mossel Bay.
The plant, which will on completion be able to produce 15 million litres of potable water daily, will be the biggest seawater desalination plant in South Africa to date. PetroSA, which will be entitled to a third of the plant’s production will contribute R80 million to the cost of the plant. The balance of R30 million will be financed from the Municipality’s Capital Replacement Reserve Fund.
The operating costs of the plant are estimated to be in the region of R30 million per annum and will also impact on the Municipality’s operational budget.
Site preparation work has already commenced. The plant is scheduled to be commissioned in November 2010.
“This is a very expensive plant that will also have a major impact on the cost of water to the Municipality. Increases in water tariffs in excess of 40 per cent may have to be considered.
“The plant has been necessitated by the continued severe drought and the depletion of the municipality’s main source of water, the Wolwedans Dam. The dam is still expected to run empty in October 2010 if it does not rain enough before then. The 61,5 mm of rain that fell in the dam’s catchment area recently was unfortunately too little to have a significant impact on the level of the dam.
“According to scientific projections the drought conditions in the area could continue for several more years and as Mossel Bay is dependent mainly on surface water at present it has become crucial that alternative water sources such as this plant are developed, “said the Municipal Manager, Dr Michele Gratz.
She said the Municipality has also applied for financial support for the project from the National Government, but it is too early to say what the chances of success are and how much can be expected if it is successful.
Because of its sound financial management practices the Mossel Bay Municipality has not had the need to borrow money to finance infrastructural development, maintenance or service delivery for many years now. To date these could all be financed from its own funds. It has unfortunately become a matter of survival now and there is no other way out than to take up a loan.
“The extraordinary pressure which the drought placed on the municipality’s financial resources to develop the desalination plant, the Reverse Osmosis effluent purification plant and the drilling of boreholes will unfortunately also result in other intended projects being postponed or even cancelled. It might include the indefinite postponement of part of the successful road resealing programme which the Municipality carried out over the past three financial years.
“Water sales have always been an important source of income for the Municipality to finance its projects and operations. Following the imposition of water restrictions and responsible water use by the majority of Mossel Bay’s residents, the Municipality managed to achieve water savings of between 48% and 50% in average daily consumption compared to last year. However, this also meant a substantial decrease in water revenue and the Municipality having to look at costs savings over a broad spectrum.
“Measures that are being considered include the freezing of posts, delaying the filling of vacancies and reducing overtime. The latter may have an impact on certain non-critical types of afterhours service delivery to which people may have become accustomed. Council has of course decided earlier this year not too continue with alterations to the main municipal building to address the serious shortage of office space being experienced by the Municipality at present and to use the budget to finance some of the above-mentioned water projects, “ said Dr Gratz.
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