Debt to council at R283 mln

2011-09-01 00:00

MONIES owed to the Msunduzi Municipality for services by ratepayers continue to rise and the council’s administrator, Sibusiso Sithole, revealed this week that the debt to the municipality has escalated to R283 million as at the end of June.

The bulk of the debt is attributed to electricity. As at July residents who owe the council make up 69,99% of the debt, businesses 13,64% and government 14,27%.

The debt increased from 28% in the previous financial year to 43%, said Sithole.

However, Sithole said that it is not all doom and gloom as there are tangible reasons why the debt has increased although the municipality is under administration.

He added that currently the municipality is doing well in terms of tracking its debtors compared to years before.

A probe by the Democratic Alliance (DA) through a parliamentary question in the KwaZulu-Natal Legislature about the state of the Msunduzi debt revealed that a staggering figure is owed to the municipality.

DA KZN co-operative Governance spokesperson George Mari said that his party’s question has found that service charge arrears for electricity, water and rates within the municipality are on a downward spiral, with a total of R661 million outstanding.

“This figure is up on the outstanding amount for February 2010 of R646 million. It appears that, despite the drastic step of installing a task team [the municipality] is actually going backwards.

“While there may be efforts to deal with the fraud and corruption … there is clearly little focus on reducing debt and ensuring that the municipality is once again financially viable,” said Mari.

The reply, Mari said, signed by KZN co-operative Governance MEC, Nomusa Dube, and dated August 2, 2011, includes a debtor age analysis as at May 31 which reveals total amounts owing for the following; rates R255 million, electricity R254 million, water R247 million and other — interest, penalties on rates, sewer, refuse, housing and sundry debt — R208 million.

Mari said the debt collection rate also declined.

He said the DA would call for immediate intervention from national government.

Sithole said that there are a lot of factors to be looked at to understand the escalation in debt.

Sithole said that when the contributing factors to the increasing debt — such as defective meters, unread meters, an easily manipulated infrastructure, interests charged on outstanding accounts, unemployed ratepayers, massive Eskom tariffs, removal of those ratepayers and businesses who have made payment arrangements, incorrect billing and irrecoverable debt — are disaggregated a true reflection would show that the debt has drastically reduced.

Sithole said that more than 50% of this debt was irrecoverable.

Part of the reasons they cannot recover the debt is that some of the ratepayers have long vacated the properties the council send bills to and some have even died.

He said the debt collection rate has significantly improved and at the start of the intervention the collection rate was at 53% now the rate is at 79%.

He said in July the council collected R37,9 million, adding that the municipality has exceeded expectations in its collections when equating with the number of bills sent to residents compared to previous years.

Sithole said that the council has also cut down to save on general expenses, such as catering, mayoral special projects and overtime, adding that the council no longer pays suppliers who inflate their tender prices.

“From our side we can say that the council is on the right track in reaching stability,” he said.

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