Msunduzi writes off Hulamin’s huge debt

2010-06-02 00:00

THE Msunduzi Municipality has written off a R75 million debt owed by Hulamin.

This after the city intervention team discovered that the municipality had unfairly imposed the amount on Hulamin.

Msunduzi administrator Johann Mettler said: “There was a disparity between Msunduzi and Hulamin regarding the adjustment of tariffs. We had to negotiate.”

Intervention team member Ben Dorfling said Hulamin’s contract with the municipality came to an end during the financial year and the municipality then reset the tariff, resulting in the sum of R75 million owed.

He said the municipality previously charged Hulamin Eskom rates, but it then did an about-turn and started charging Hulamin municipal tariffs.

“The decision was a problem because it’s outside of the norm and outside of legislative processes,” he said.

Mettler said the council sets tariffs once and then enforces them, and it cannot simply reset them later because it does not have the power to do so.

Dorfling said the council had to review Hulamin’s tariff structure because had it not done so, Hulamin would have stopped operating in the city, which would have been a major loss for Pietermaritzburg.

He said the National Energy Regulator of SA stepped in during the negotiations at Hulamin’s request, and if it had not negotiated successfully, the municipality would have been forced to increase tariffs.

“On my side, this is best … [because] if a company can’t afford, they can’t afford,” he said.

Mettler said the new contract is more beneficial for the municipality as it is open-ended and allows it to make normal changes when required.

According to an agenda tabled at a recent executive committee meeting, the municipality stands “to gain a contribution of R8,6 million with no costs.

“This is an increase in revenue from Hulamin compared with the 1998 to 2008 agreement of R5,75 million,” the agenda note reads.

The new contract will be revised every five years and came into effect yesterday.

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