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Sol owes Eskom R67m

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“Certain departments were not sure whether they indeed were responsible for certain debt, which led to the escalation of amounts owed.”

File Image: IOL

SOL PLAATJE Municipality has suffered losses of 12 percent on the sale of electricity and 13 percent water losses according to the monthly budget statement that was presented to Treasury last month.

According to the budget statement that appears on the Sol Plaatje website, the municipality owes Eskom an outstanding amount of
R67 million and it owes R19.3 million to the Department of Water and Sanitation on its bulk water account, both of which were payable at the beginning of October.

It was reported that the increase in the Eskom bill for high-demand months as well as the long-term loan taken up by the municipality, along with the non-approval of electricity tariffs for large consumers, had contributed to the sharp decline in its investments by
R107.9 million from 2017 to 2018.

“The non-charging of the basic charge for domestic consumers is also having a negative impact on the income from the sale of electricity and thus negatively affecting the municipality’s cash flow.”

It stated that it had a debt of R2.2 billion in outstanding rates and taxes owed by government departments, constituting 41%, businesses (15%), households (43%) and other entities (1%).

The report explained that the municipality was struggling with the determination and writing off of irrecoverable debt owed by deceased estates and untraceable account holders, while its indigent register did not accurately reflect the actual number of beneficiaries.

“This coupled with the need to have stricter controls in water consumption has caused the escalation of debt beyond an indigent account holder’s means to pay. Sol Plaatje Municipality does not suspend water supply used for domestic purposes.”

It added that pursuing government debt involved a long process of identifying which department was responsible for various debt.

“Certain departments were not sure whether they indeed were responsible for certain debt, which led to the escalation of amounts owed.”

It was explained that while this process had been largely completed, various departments, including national and provincial Treasury, had to be given time to make provision for “sometimes large outstanding amounts in their budgets”.

Dispute

“Some accounts still remain in dispute and these will be presented to national Treasury for mediation in due course. We anticipate a reduction in government debt over the current financial year.”

The municipality added that it had appointed New Integrated Credit Solutions as a specialist debt collector since July 2017, had since verified its indigent register and was sending out regular letters of demand.

The report indicated that metering issues had been resolved for bulk water purchases.

Licences and permits indicated a negative variance of 146%, which was attributed to outstanding payments that were made to the Department of Safety and Liaison.

Interests on external investments showed a negative variance of 68% while the overall property rates and services charges are performing satisfactorily.

The market value of Sol Plaatje Municipality’s investment portfolio amounts to R126 million.

The main source of revenue as listed on August 31 was property rates (R246.3 million), service charges (R167.7 million), grants and subsidies (R71.8 million), other revenue (R26.3 million) and investment revenue (R125 000).

Employee-related costs show an under-expenditure of R.7 million as salary negotiations are still under way and annual salary increases could not be implemented timeously.

The major cost driver at Sol Plaatje Municipality is employee costs at R98.8 million, while the remuneration of councillors amounts to R2.3 million and contracted services R2.8 million.

The municipality pointed out that it was in the process of reviewing the Expanded Public Works Programme (EPWP), where it was experiencing huge challenges in funding that was placing strain on the municipality’s cash flow.

“The total year-to-date expenditure is standing at R4.4 million. The current status quo clearly indicates that the programme is not affordable or sustainable. The current year’s allocation for EPWP is
R3.1 million.”

A spokesperson for Sol Plaatje Municipality, Thoko Riet, stated that the report has not been released yet.