Metro writes off R2.7bn in arrears
2012-10-07 22:07
Johannesburg - The Ekurhuleni Metropolitan Municipality has resolved to write off R2.7bn on the debtor's book, the metro said on Sunday.
The reason for the decision was twofold - the municipality had reached its target in the collection rate and other debts were now uncollectable, spokesperson Sam Modiba said.
"This comes as the municipality experiences an increase in the collection rate, recorded at 93% for the 2011/2012 financial year," Modiba said.
Based on the financial results of 30 June 2012, council approved that R2.7bn be written off for residential account holders only.
"This represents uncollectable debt older than three years in respect of services, excluding assessment rates."
As per approved credit control and debt collection policy, credit control actions had been applied, including pre-paid electricity blocking.
The municipality was experiencing collection challenges particularly in areas supplied by Eskom. A large portion of accumulated debt standing at 36.93% lay in the Eskom supply area, said Modiba.
"The challenges are even more evident with regards to debt older than three years, where Eskom supply areas represent 46.7% of arrears," he said.
He said these conditions were negatively affecting financial results, and the decision was taken with the municipality knowing it would create a negative perception on the part of rating agencies, and thus an impact on the costs of capital required for infrastructure developments.
The municipality had exhausted all avenues to collect debts, hence the decision to write them off.
"We do emphasise that this debt is uncollectable and cannot be collected legally as all available collections avenues have been exhausted," Modiba said.
Affected account holders would be credited with write-off value by the end of November.
- SAPA
