Poor revenue and debt management hurt city, says adviser

2010-03-15 00:00

THE Msunduzi Municipality’s debt collection, credit control and indigent policies are very weak, and not implemented effectively.

This shocking revelation was made by Municipal Finance Management Act adviser Kumaran Nair at a recent meeting of the executive committee (Exco).

Deployed by National Treasury alongside the provincial task team to oversee the turnaround of the municipality, Nair also said officials in the revenue and debt management division have “yet to win a case against a defaulter whose municipal services have been suspended due to non-payment”.

He said it is of utmost importance to stimulate revenue and debt management for the next financial year to achieve stability.

He said it will be imperative for the council to review if municipal debt collectors are still essential, when the work on revenue and debt management is undertaken internally by the municipality. The municipality should not contract municipal debt collectors when it has chief financial officer, Roy Bridgmohan, to manage this task, he added.

The municipality’s legal advisers came in for a drubbing for failing to support the revenue and debt management division. Nair said that while the latter were busy with senior counsel, in an attempt to fight battles against defaulters, the legal team was absent.

To show defaulters they mean serious business, Nair urged the municipality to abandon soft disconnections as the expenditure incurred is wasteful and fruitless because defaulters can easily get illegally reconnected. “The municipality must replace the soft disconnections [with] hard disconnections,” he said.

The supply chain management division also came in for severe criticism for not ensuring that the service level agreement for the contract regarding disconnections and reconnections had been signed.

It has been outstanding since September last year.

To reverse the “negative trends in revenue and debt management”, Nair said the municipality must support the revenue and debt management division by raising “R200 million from the arrears municipal services debt by the end of March this year”.

In his report, task team member Naren Mahesh said the municipality needs to place more emphasis on the collection of revenue as well as outstanding debt.

He revealed an instance where a customer was “erroneously invoiced for R50 million”.

Deputy Mayor Mervyn Dirks said it is no use sitting around saying debt has to be managed, when councillors, municipal staff and government departments owe millions.

Acting municipal manager Kevin Perumal said they are having difficulty in getting government departments to pay.

Dirks said the issue will be monitored on a weekly basis and those in arrears for 30 days or more will have their electricity distribution boxes removed and their water meters clamped.

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