By Jon Herskovitz
PRETORIA (Reuters) - South Africa's main opposition made gains Thursday in local government polls that could indicate frustration with the ANC, which has ruled Africa's largest economy for almost 20 years since apartheid ended.
The African National Congress is still expected to storm to victory given its domination of the political scene.
But analysts see the results as putting pressure on the ruling party to try to win back disenchanted voters, which could lead to more spending and further pressure on the budget.
Final audited results for the election, held Wednesday for 278 municipalities including major metropolitan areas, could be released by the weekend, an Independent Election Commission official said.
Preliminary tallies had been released for about 90 percent of the vote as of 1800 GMT Thursday.
The biggest issues in the race were the slow pace of delivery of water, electricity and basic education for the poor and the anger of taxpayers who felt too much money was being lost to government corruption.
"The election outcome will have limited policy impact, but large electoral losses would reinforce political pressure for state spending and could undermine steady fiscal consolidation," said Anne Fruhauf, an Africa analyst at Eurasia Group.
By 1800 GMT, the ANC, which took about 67.7 percent of the vote in the last municipal race in 2006, was ahead with 63.9 percent of the vote.
The major opposition Democratic Alliance (DA) was making gains from the 14 percent it had in the last race with 21.7 percent of the vote.
Any slip in support could also embarrass President Jacob Zuma and jeopardize his chance of re-election when the ruling party chooses new leaders next year.
Another worry for the ANC, which boasts enormous support for helping end white-minority rule, is that the DA picked up backing in areas controlled by the ruling party and was gaining ground in major cities, including the biggest, Johannesburg.
BLOW TO ANC
Despite ANC governments spending of billions of dollars on redressing apartheid-era inequalities, the results have been mixed and millions of people still live in grinding poverty, without access to sanitation and proper housing.
Analysts said the election would likely mark the emergence of a new non-racial voting bloc basing its poll decisions more on a party's ability to govern than its role in helping end white-minority rule.
The DA, led by former journalist Helen Zille and once associated with white privilege, has set out to use its administration of the country's premier tourist destination Cape Town to show it can govern better.
"The story of this election is that the DA is the only party that is growing," Zille told Reuters.
ANC Secretary General Gwede Mantashe said the margin of ANC victory would be huge and the party had done a good job of maintaining its commanding position in politics.
Zille and Mantashe agreed the poll will cause numerous small parties to fall by the wayside.
In a blow to the ANC, the DA retained control of the hotly contested Midvaal municipality, one of the few cities it held in the country's richest province, Gauteng, which is also considered the ANC's traditional base.
The ANC, however, won a close race for the mid-sized metropolitan area of Nelson Mandela Bay, also including the port city of Port Elizabeth, which the DA was hoping to claim as its second major urban area.
In Cape Town, the DA has gained about 24 percentage points more than its tally in 2006 when it shocked the ANC and won the city, according to early returns. The results likely indicate growing support for the DA by the people it governs.
The ANC looked poised to keep control of the other major cities of Johannesburg, Pretoria and Durban, despite DA advances that indicate its growing power outside its Cape Town base.
"The DA's advances do not reflect a conquest of the ANC's traditional support which is mostly African township residents who have been seriously loyal to the ANC," said Wits University political analyst Susan Booysen.
(Additional reporting by Peroshni Govender; Editing by Marius Bosch and Maria Golovnina)