The cuts come in the wake of a severe cash-flow crisis at the municipality. The total outstanding debt owed by residents has now ballooned to more than R2.5 billion.
AS THE Sol Plaatje Municipality clamps down on its outstanding debtors, residents, who were given a stay of grace from having their meters blocked due to the week-long municipal strike, have been warned that the pending cuts will now be implemented.
Municipal spokesperson Thoko Riet said yesterday that all prepaid meters that were originally unblocked as a result of the week-long municipal strike, would be blocked again.
“Residents are encouraged to come in to make arrangements as was requested prior to the labour strike,” she said.
Riet confirmed that currently there were 1 985 prepaid meters in the city that have been blocked by the municipality.
The cuts come in the wake of a severe cash-flow crisis at the municipality after the collection rate, which is usually around 74% (R100 million) a month was hard hit by the Covid-19 crisis in the last few months, resulting in collections dropping to around 49% in April and May this year.
“The current collection in September is 67%, which is still less than the ideal collection rate of 82 to 87% that is required in order for the municipality to remain liquid and settle its short-term creditors,” Riet said.
The local authority’s current outstanding debt to power utility Eskom is R154 million, while it owes the Department of Water Affairs R76 million.
Residents who are unemployed or cannot afford to pay their municipal accounts are encouraged to register as indigents.
“We encourage people to register for the indigents policy as a means of relief, especially those with a household income of less than R3 750 per month, child-headed households and those with compelling circumstances, like looking after the sick hence medical expenses, disability and similar care.”
She added that applications could be done at the Matlalo and Civic Centre buildings.
“Residents who have been indigents for longer than two years are encouraged to also visit the municipality to avoid the cancellation of their indigent status and discontinuation of the subsidy,” Riet added.
According to the municipality’s August statement, the total outstanding debt owed by residents has now ballooned to more than R2.5 billion.
“In the light of current cash flow and very low cashier collection at points, the municipality started with the disconnection and blocking of institutions, businesses and government departments without valid arrangements or not in discussions with, effective immediately,” it stated in its September monthly budget statement.
The municipality also liaised with its IT department and Ontec, the municipality’s prepaid electricity vendor, to activate partial blocking (withholding 30% for non-indigents and 10% for indigent accounts) from prepaid vending purchases in lieu to credit against/settle their debt against outstanding debt.
From July to August, the debt owed by organs of state increased by 1% and commercial debtors by 7.9%, while debt owed by households decreased by 0.2%.
The total amount owed at the end of August by organs of state was R958.7 million, while commercial users owed R435.9 million, households R1.1 billion and other R41 million. The total debt was R2.537 billion.
“When taking into consideration what was billed in July 2020 and received in August 2020, the monthly collection rate is 36%. The lower average collection rate is truly concerning, considering the financial crisis that the municipality is facing,” the report stated further.