1. A municipal council must adopt and implement a tariff policy on the levying of fees for municipal services provided by the municipality itself or by way of service delivery agreements, and which complies with the provisions of this Act and with any other applicable legislation.
2. A tariff policy must reflect at [east the following principles, namely that-
   
   1. users of municipal services should be treated equitably in the application of tariffs;
   2. the amount individual users pay for services should generally be in proportion to their use of that service;
   3. poor households must have access to at least basic services through-
      
      1. tariffs that cover only operating and maintenance costs;
      2. special tariffs or life line tariffs for low levels of use or consumption of services or for basic levels of service; or
      3. any other direct or indirect method of subsidisation of tariffs for poor households;
   4. tariffs must reflect the costs reasonably associated with rendering the service, including capital, operating, maintenance, administration and replacement costs, and interest charges;
   5. tariffs must be set at levels that facilitate the financial sustainability of the service, taking into account subsidisation from sources other than the service concerned;
   6. provision may be made in appropriate circumstances for a surcharge on the tariff for a service;
   7. provision may be made for the promotion of local economic development through special tariffs for categories of commercial and industrial users;
   8. the economical, efficient and effective use of resources, the recycling of waste, and other appropriate environmental objectives must be encouraged;
   9. the extent of subsidisation of tariffs for poor households and other categories of users should be fully disclosed.
3. A tariff policy may differentiate between different categories of users, debtors, service providers, services, service standards, geographical areas and other matters as long as the differentiation does not amount to unfair discrimination.

1. A municipal council must adopt by-laws to give effect to the implementation and enforcement of its tariff policy.
2. By-laws in terms of subsection (1) may differentiate between different categories of users, debtors, service providers, services, service standards and geographical areas as long as such differentiation does not amount to unfair discrimination.

A municipality may provide a municipal service in its area or a part of its area through-

1. an internal mechanism, which may be-
   
   1. a department or other administrative unit within its administration;
   2. any business unit devised by the municipality. provided it operates within the municipality's administration and under the control of the council in accordance with operational and performance criteria determined by the council; or
   3. any other component of its administration; or
2. an external mechanism by entering into a service delivery agreement with-
   
   1. a municipal entity;
   2. another municipality;
   3. an organ of state, including:
      

      aa)	a water committee established in terms of the Water Services Act, 1997 (Act No. 108 of 1997);
      bb)	a licensed service provider registered or recognised in terms of national legislation; and
      cc)	a traditional authority;

   4. a community based organisation or other non-governmental organisation legally competent to enter into such an agreement; or
   5. any other institution, entity or person legally competent to operate a business activity.

A municipality must review and decide on the appropriate mechanism to provide a municipal service when-

1. preparing or reviewing its integrated development plan;
2. a new municipal service is to be provided;
3. an existing municipal service is to be significantly upgraded, extended or improved;
4. a performance evaluation in terms of Chapter 6 requires a review of the delivery mechanism;
5. the municipality is restructured or reorganised in terms of the Municipal Structures Act;
6. requested by the local community through mechanisms, processes and procedures established in terms of Chapter 4; or
7. instructed to do so by the provincial executive acting in terms of section 139(1)(a) of the Constitution.

1. When a municipality has in terms of section 77 to decide on a mechanism to provide a municipal service in the municipality or a part of the municipality, or to review any existing mechanism-
   
   1. it must first assess-
      
      1. the direct and indirect costs and benefits associated with the project if the service is provided by the municipality through an internal mechanism, including the expected effect on the environment and on human health, well-being and safety;
      2. the municipality's capacity and potential future capacity to furnish the skills. expertise and resources necessary for the provision of the service through an internal mechanism mentioned in section 76(a);
      3. the extent to which the re-organisation of its administration and the development of the human resource capacity within that administration, as provided for in sections 51 and 68, respectively, could be utilised to provide a service through an internal mechanism mentioned in section 76(a);
      4. the likely impact on development, job creation and employment patterns in the municipality; and
      5. the views of organised labour; and
   2. it may lake into account any developing trends in the sustainable provision of municipal services generally.
2. After having applied subsection (1), a municipality may-
   
   1. decide on an appropriate internal mechanism to provide the service; or
   2. before it takes a decision on an appropriate mechanism, explore the possibility of providing the service through an external mechanism mentioned in section 76(b).
3. If a municipality decides in terms of subsection (2)(b) to explore the possibility of providing the service through an external mechanism it must-
   
   1. give notice to the local community of its intention to explore the provision of the service through an external mechanism; and
   2. assess the different service delivery options in terms of section 76(b), taking into account-
      
      1. the direct and indirect costs and benefits associated with the project, including the expected effect of any service delivery mechanism on the environment and on human health, well-being and safety;
      2. the capacity and potential future capacity of prospective service providers to furnish the skills, expertise and resources necessary for the provision of the service;
      3. the views of the local community;
      4. the likely impact on development and employment patterns in the municipality; and
      5. the views of organised labour.
4. After having applied subsection (3), a municipality must decide on an appropriate internal or external mechanism, taking into account the requirements of section 73(2) in achieving the best outcome.
5. When applying this section a municipality must comply with-
   
   1. any applicable legislation relating to the appointment of a service provider other than the municipality; and
   2. any additional requirements that may be prescribed by regulation.

If a municipality decides to provide a municipal service through an internal mechanism mentioned in section 76(a), it must-

1. allocate sufficient human, financial and other resources necessary for the proper provision of the service; and
2. transform the provision of that service in accordance with the requirements of this Act.

1. If a municipality decides to provide a service through a service delivery agreement in terms of section 76(b) with-
   
   1. a municipal entity, another municipality or a national or provincial organ of state, it may negotiate and enter into such an agreement with the relevant municipal entity, municipality or organ of state without applying Part 3 of this Chapter; or
   2. any institution or entity. or any person, juristic or natural, not mentioned in paragraph (a), it must apply Part 3 of this Chapter before entering into such an agreement with any such institution, entity or person.
2. Before a municipality enters into a service delivery agreement for a basic municipal service it must establish a mechanism and programme for community consultation and information dissemination regarding the service delivery agreement. The contents of a service delivery agreement must be communicated to the local community through the media.

1. If a municipal service is provided through a service delivery agreement in terms of section 76(b), the municipality remains responsible for ensuring that that service is provided to the local community in terms of the provisions of this Act, and accordingly must-
   
   1. regulate the provision of the service, in accordance with section 41;
   2. monitor and assess the implementation of the agreement, including the performance of the service provider in accordance with section 41;
   3. perform its functions and exercise its powers in terms of Chapters 5 and 6 if the municipal service in question falls within a development priority or objective in terms of the municipality's integrated development plan;
   4. within a tariff policy determined by the municipal council in terms of section 74, control the setting and adjustment of tariffs by the service provider for the municipal service in question; and
   5. generally exercise its service authority so as to ensure uninterrupted delivery of the service in the best interest of the local community.
2. A municipality, through a service delivery agreement-
   
   1. may assign to a service provider responsibility for-
      
      1. developing and implementing detailed service delivery plans within the framework of the municipality's intergrated development plan;
      2. the operational planning, management and provision of the municipal service;
      3. undertaking social and economic development that is directly related to the provision of the service;
      4. customer management;
      5. managing its own accounting, financial management, budgeting. Investment and borrowing activities within a framework of transparency, accountability, reporting and financial control determined by the municipality, subject to applicable municipal finance management legislation;
      6. the collection of service fees for its own account from users of services in accordance with the municipal council’s tariff policy in accordance with the credit control measures established in terms of Chapter 9;
   2. may pass onto the service provider, through a transparent system that must be subject to performance monitoring and audit. funds for the subsidisation of services to the poor;
   3. may in accordance with applicable Iabour legislation. transferor second any of its staff members to the service provider, with the concurrence of the staff member concerned;
   4. must ensure continuity of the service if the service provider is placed under judicial management, becomes insolvent, is liquidated or is for any reason unable to continue performing its functions in terms of the service delivery agreement; and
   5. must, where applicable, take over the municipal service, including all assets, when the service delivery agreement expires or is terminated.
3. The municipal council has the right to set, review or adjust the tariffs within its tariff policy. The service delivery agreement may provide for the adjustment of tariffs by the service provider within the Iimitations set by the municipal council.
4. A service delivery agreement may be amended by agreement between the parties, except where an agreement has been concluded following a competitive bidding process, in which case an amendment can only be made after the local community has been given-
   
   1. reasonable notice of the intention to amend the agreement and the reasons for the proposed amendment; and
   2. sufficient opportunity to make representations to the municipality,
5. No councillor or staff member of a municipality may share in tiny profits or improperly receive any benefits from a service provider providing a municipal service in terms of a service delivery agreement.

1. If a municipality intends to provide a municipal service in the municipality through a service delivery agreement with a municipal entity, it may-
   
   1. alone or together with another municipality, establish in terms of applicable national or provincial legislation a company. co-operative, trust, fund or other corporate entity to provide that municipal service as a municipal entity under the ownership control of that municipality or those municipalities;
   2. alone or together with another municipality, acquire ownership control in any existing company, co-operative, trust, fund or other corporate entity which as its main business intends to provide that municipal service in terms of a service delivery agreement with the municipality; or
   3. establish in terms of subsection (2) a service utility to provide that municipal service.
2. 1. A municipality establishes a service utility in terms of subsection (1)(c) by passing a by-law establishing and regulating the functioning and control of the service utility;
   2. A service utility is a separate juristic person;
   3. The municipality which established the service utility must exercise ownership control over it in terms of its by-laws.

1. If a municipality decides to provide a municipal service through a service delivery agreement with a person referred to in section 80(1)(b), it must select the service provider through selection processes which-
   
   1. are competitive, fair, transparent, equitable and cost-effective;
   2. allow all prospective service providers to have equal and simultaneous access to information relevant to the bidding process;
   3. minimise the possibility of fraud and corruption;
   4. make the municipality accountable to the local community about progress with selecting a service provider, and the reasons for any decision in this regard; and
   5. takes into account the need to promote the empowerment of small and emerging enterprises.
2. Subject to the provisions of the Preferential Procurement Policy Framework Act, (Act No. 5 of 2000), a municipality may determine a preference for categories of service providers in order to advance the interest of persons disadvantaged by unfair discrimination, as long as the manner in which such preference is exercised does not compromise or limit the quality, coverage, cost and developmental impact of the services.
3. The selection process referred to in subsection (1), must be fair, equitable transparent, cost-effective and competitive, and as may be provided for in other applicable national legislation.
4. In selecting a service provider a municipality must apply the criteria listed in section 78 as well as any preference for categories of service providers referred to in subsection (2) of this section.

1. After a prospective service provider has been selected, the municipality must on the basis of the bidding documents, and any addenda amendments or variations thereto that were provided to all the bidders, negotiate the final terms and conditions of the service delivery agreement with the preferred service provider and. if successful, enter into such an agreement with the selected service provider on the terms and conditions specified in the bidding documents, as modified or supplemented in the negotiations, if such modifications do not materially affect the bid in a manner which compromises the integrity of the bidding process.
2. If the municipality and the selected service provider fail to reach agreement within a reasonable time allowed by the municipality for negotiations, the municipality may negotiate with the next-ranked prospective service provider.
3. When a municipality has entered into a service delivery agreement it must-
   
   1. make copies of the agreement available at its offices for public inspection during office hours; and
   2. give notice in the media of-
      
      1. particulars of the service that will be provided under the agreement;
      2. the name of the selected service provider; and
      3. the place where and the period for which copies of the agreement are available for public inspection.

1. A municipality may, in accordance with the policy framework referred to in section 86, establish a part of the municipality as an internal municipal service district to facilitate the provision of a municipal service in that part of the municipality.
2. Before establishing an internal municipal service district, the municipality must-
   
   1. consult the local community on the following matters;
      
      1. The proposed boundaries of the service district;
      2. the proposed nature of the municipal service that is to be provided;
      3. the proposed method of financing the municipal service; and
      4. the proposed mechanism for the provision of the municipal service; and
   2. obtain the consent of the majority of the members of the local community in the proposed service district that will be required to contribute to the provision of the municipal service.
3. When a municipality establishes an internal municipal service district, the municipality-
   
   1. must determine the boundaries of the district;
   2. must determine the mechanism that will provide the service in the district;
   3. in order to finance the service in the district, may-
      
      1. set a tariff or levy for the service in the district;
      2. impose a special surcharge in the district on the tariff for the service; or
      3. increase the tariff in the district for that service;
   4. must establish separate accounting and other record-keeping systems with respect to the provision of the service in the district; and
   5. may establish a committee composed of persons representing the community in the district to act as a consultative and advisory forum for the municipality regarding the management of and other matters relating to the service in the district, provided that gender representivity is taken into account when such a committee is established.

1. A municipality must develop and adopt a policy framework for the establishment, regulation and management of an internal municipal service district.
2. Such a policy framework must reflect at least the following:
   
   1. The development needs and priorities of designated parts of the municipality that must be balanced against that of the municipality as a whole;
   2. the extent to which the establishment of one or more internal municipal service districts-
      
      1. will promote the total economic development of the municipality as a whole;
      2. will contribute to enhancing the social, economic and spatial integration of the municipality; and
      3. may not entrench or contribute to further disparities in service provision.

Two or more municipalities, by written agreement, may establish their respective municipal areas or designated parts of their respective municipal areas as a multi-jurisdictional municipal service district to facilitate the provision of a municipal service in those municipal areas or those designated parts.

1. The Minister may, in the national interest and in consultation with the national Minister responsible for the functional area in question, request two or more municipalities to establish designated multi-jurisdictional municipal service districts to conform to the requirements of national legislation applicable to the provision of a specific municipal service.
2. The municipalities that receive a request in terms of subsection (1), must within two months of receiving such request decide whether to accede to the request, and convey their decision to the Minister.

1. An agreement establishing a multi-jurisdictional municipal service district must describe the rights, obligations and responsibilities of the participating municipalities and must-
   
   1. determine the boundaries of the district;
   2. identify the municipal service to be provided in terms of the agreement;
   3. determine the mechanism that will provide the service in the district;
   4. determine budgetary, funding and scheduling arrangements for implementation of the agreement;
   5. provide for-
      
      1. the establishment of a governing body for the multi-jurisdictional municipal service district;
      2. the appointment of representatives of the participating municipalities to the governing body, the filling of vacancies and the replacement and recall of representatives;
      3. the number of representatives appointed for each participating municipality, subject to subsection (2);
      4. the terms and conditions of appointment of those representatives;
      5. the appointment of a chairperson;
      6. the operating procedures of the governing body;
      7. the delegation of powers and duties to the governing body consistent with section 92; and
      8. any other matter relating to the proper functioning of the governing body;
   6. provide for-
      
      1. the acquisition of infrastructure, goods. services, supplies or equipment by the governing body, or the transfer of infrastructure. goods, services, supplies or equipment to the governing body;
      2. the appointment of staff by the governing body, or the transfer or secondment of staff to the governing body in accordance with applicable labour legislation;
      3. the terms and conditions on which any acquisition. transfer. appointment or secondment is made; and
   7. determine the conditions for, and consequences of, the withdrawal from the agreement of a participating municipality:
   8. determine the conditions for, and consequences of, the termination of the agreement, including-
      
      1. the method and schedule for winding-up the operations of the district;
      2. the distribution of the proceeds; and
      3. the allocation among the participating municipalities of any assets and liabilities.
2. A governing body must consist of between three and fifteen representatives.

The governing body of a multi-jurisdictional municipal service district is a juristic person.

1. The governing body of a multi-jurisdictional municipal service district, in relation to the provision of the municipal service for which the district is established-
   
   1. may in terms of the delegation in the agreement establishing the governing body exercise any of the powers, a municipality may exercise for the proper provision of a service of the kind in question, subject to section 160(2) of the Constitution and any limitations. qualifications and directives set out in the agreement; and
   2. must in terms of the delegation perform all the duties a municipality must perform in terms of this Act or any other applicable legislation when providing a service of the kind in question. subject to any limitations, qualifications and directives set out in the agreement.
2. In addition a governing body has the following powers, subject to any limitations, qualifications and directives set out in the agreement establishing the governing body:
   
   1. To determine its own staff establishment and appoint persons to posts on its staff establishment;
   2. to obtain the services of any person or entity to perform any specific act or function;
   3. to open a bank account;
   4. to acquire or dispose of any right in or to property;
   5. to insure itself against any loss, damage, risk or liability;
   6. to perform legal acts, or institute or defend any legal action in its own name;
   7. to do anything that is incidental to the exercise of any of its powers or duties; and
   8. to set, review and adjust tariffs within the policy framework approved by the participating municipalities.

1. The governing body of a multi-jurisdictional municipal service district-
   
   1. is accountable to the participating municipalities; and
   2. must comply with any legislation applicable to the financial management of municipalities and municipal entities.
2. A participating municipality-
   
   1. is entitled to receive such regular written reports from the governing body of a district with respect to its activities and performance, as may be set out in the agreement establishing the governing body;
   2. may request the governing body to furnish it with such information regarding its activities as the participation municipality may reasonably require; and
   3. may appoint a nominee to inspect. at any time during normal business hours, the books, records, operations and facilities of the governing body, and of those of its contractors relating to the provision of the municipality service for which the district is established.

A multi-jurisdictional municipal service district terminates-

1. automatically, when there is only one remaining participating municipality;
2. by written agreement among all of the participating municipalities; or
3. upon the termination date or the fulfillment of any condition for termination contained in the agreement establishing the district.

1. The Minister may for the purposes of this Chapter make regulations or issue guidelines in accordance with section 120 to provide for or regulate the following matters:
   
   1. The preparation, adoption and implementation of a municipal tariff policy;
   2. the subsidisation of tariffs for poor households through-
      
      1. cross-subsidisation within and between services;
      2. equitable share allocations to municipalities; and
      3. national and provincial grants to municipalities;
   3. limits on tariff increases;
   4. criteria to be taken into account by municipalities when imposing surcharges on tariffs for services and determining the duration thereof;
   5. incentives and penalties to encourage-
      
      1. the economical, efficient and effective use of resources when providing services;
      2. the recycling of waste; and
      3. other environmental objectives;
   6. criteria to be taken into account by municipalities when assessing options for the provision of a municipal service;
   7. measures against malpractice in selecting and appointing service providers, including measures against the stripping of municipal assets;
   8. mechanisms and procedures for the co-ordination and integration of sectoral requirements in terms of legislation with the provisions of this Chapter, and the manner in which municipalities must comply with these;
   9. standard draft service delivery agreements;
   10. performance guarantees by service providers; and
   11. any other matter that may facilitate-
       
       1. the effective and efficient provision of municipal services;
       2. the application of this Chapter.
2. The Minister may make regulations and issue guidelines contemplated in paragraphs (a), (b), (c), (d) and (e) of subsection (1) only after consultation with the Minister of Finance.
3. When making regulations or issuing guidelines in terms of section 120 to provide for or to regulate the matters mentioned in subsection (1) of this section, the Minister must-
   
   1. take into account the capacity of municipalities to comply with those matters; and
   2. differentiate between different kinds of municipalities according to their respective capacities.
4. The Minister, by notice in the Gazette, may phase in the application of the provisions of this Chapter which place a financial or administrative burden on municipalities.
5. A notice in terms of subsection (4) may-
   
   1. determine different dates on which different provisions of this Chapter becomes applicable to municipalities;
   2. apply to all municipalities generally;
   3. differentiate between different kinds of municipalities which may, for the purpose of the phasing in of the relevant provisions, be defined in the notice 55 in relation to categories or types of municipalities or in any other way; or
   4. apply to specific kind of municipality only, as defined in the notice.