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R2 billion on municipality’s debtors book

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Government in particular and businesses/households that opt to get billed annually have until the end of September/October to settle their outstanding accounts

File Image: IOL

THE SOL Plaatje Municipality’s debtors book has, for the first time ever, exceeded the R2 billion mark.

According to a report on the outstanding debt as at July 31 this year, the total balance is now sitting at R2.19 billion.

This is the first time the debt has reached R2 billion – in June it was R1.96 billion.

Organs of state owe 41% of the outstanding money, namely R898 million, while households owe 43% at R933.87 million. Commercial businesses owe R328.86 million, which is 15% of the outstanding debts.

From June to July, the municipality’s outstanding debts increased by 10.4% or R228 million. According to the report, the increase is mainly attributable to the annual billing on property rates.

The annual billing on property rates amounts to R188 million. Government in particular and businesses/households that opt to get billed annually have until the end of September/October to settle their outstanding accounts.

The bulk of the outstanding debt is aged over 90 days (R1.75 billion).

It was pointed out in the report that the Sol Plaatje Municipality has been struggling with the determination of, and writing off of, irrecoverable debt (for example deceased estates, untraceable account holders, etc).

“This distorts the debtors book. This amount, while owed to the municipality, is partly not realisable and is primarily made up of private persons.”

It further stated that the municipality’s indigent register was not completely reflective of the number of indigent households in the city that need relief.

“This coupled with the need to have stricter control in water consumption has caused the escalation of debt beyond an indigent account holder’s means to pay.”

The municipality does not suspend water supply used for domestic purposes.

Dormant accounts and irrecoverable debt also continue to accumulate interest. It was also pointed out that it is difficult to enforce acknowledgements of debt.

In terms of government debt, it was stressed that this requires its own processes as legislated.

“There has been a long programme of consultation and identifying which government departments are responsible for various debt. Previously certain departments were not sure whether they were indeed responsible for certain debt which led to the escalation of amounts owed.”

The process has, reportedly, been largely concluded.

“What mostly remains at this time is to provide the various departments, along with National and Provincial Treasury, time to make provision for the sometimes large outstanding amounts in their budgets. Some accounts still remain in dispute and these will be presented to National Treasury for mediation.”

The municipality has embarked on several initiatives to improve the situation. This includes improved internal processes and control.

“A call centre and regular cycle of demand letters have been in place since June 2017.”

There is also a programme of replacement of all conventional electricity meters with split type prepayment meters.

A specialist collections service provider, New Integrated Credit Solutions, has been appointed and this project has been active since June 2017. Numerous accounts will be submitted to council for consideration and writing off of irrecoverable debt.

The indigent register is also being verified and there is a concerted focus on reaching more indigent households.

Regarding money owed by businesses, it was pointed out that the economy has place a major role in pressuring businesses and their viability.

“The municipality also has to increase its efforts in determining irrecoverable debt in this sector where many businesses have already been liquidated and wound up.”

It was further pointed out that the municipality, at this time, lacked the capacity to terminate electricity supply to large power users due to the specialisation of the meters.

“Therefore account holders in default only have their supply suspended after a substantial delay as this depends on the availability of a technical person to perform the service.”

The municipality has, however, embarked on an initiative where automated meter reading and monitoring software has been implemented. More than 250 meters have been linked to the system and it is anticipated that all large power users will be linked soon.