THE Nelson Mandela Bay Municipality is negotiating with four potential investors to bring their businesses to the city and possibly create about 4000 new jobs.
However, the city's steep electricity tariffs are making the metro an unattractive business destination and could jeopardise the deals.
While the municipality's acting economic development head, Anele Qaba, is adamant the municipality's treasury and electricity departments should urgently reduce electricity tariffs for businesses, his electricity and energy counterpart, Peter Neilson, said reducing electricity costs meant rates would have to be increased by about 30%.
Qaba, in a report to the economic development, tourism and agriculture portfolio committee – which meets tomorrow – said he, along with other Bay business leaders, were negotiating with the four companies to bring an investment of at least R600-million to the metro.
The potential investments are in:
- The renewable energy components manufacturing sector, which could create more than 500 jobs. The value of the investment still needs to be confirmed;
- The electronics sector, which could create more than 3000 jobs. The investment value is still unknown;
- The pharmaceuticals sector, with a capital investment of R571-million. It would create 184 jobs; and
- The services sector with an investment value of R12-million, which would create 300 jobs.
Qaba said it was becoming increasingly difficult to convince businesses to bring their investments to the Bay.
"There is an argument that the region's tariffs are even higher than other metros in the country and if this is proved to be true, serious decisions will have to be taken to address the matter as it will mean Nelson Mandela Bay is basically killing itself in terms of investment promotion and economic development.
"It is critical that both budget and treasury and [electricity and energy] be sensitive on this matter and address it as a matter of urgency, failing which the city will be in a state of paralysis economically, and will head straight to disaster," he said.
"I've spoken to the acting city manager [Mpilo Mbambisa] and he agreed we need to work on recommendations to council to deal with this."
Six existing Bay businesses have approached the Port Elizabeth High Court challenging the municipality's electricity charges, saying they are buckling under the high tariffs.
Neilson said the only way the municipality could consider reducing the price of electricity for businesses was if it found an additional revenue stream.
"There is a certain financial requirement the municipality needs in order to function. At the moment, the money comes from the fuel levy [national Treasury's contribution] and electricity sales.
"When drawing up the budget, the municipality looks at how much it's getting from the other two streams and it looks at how much money it needs, and then it decides what it needs from electricity and that determines the tariffs."