R25m debt write-off

JON HOUZET

NDLAMBE'S executive committee has approved the writing off of nearly R25-million in "unrecoverable indigent debt", the largest write-off of account arrears in its history.

The R24,5-million written off last Thursday represents a quarter of the R100-million in arrears owed to the municipality in unpaid services and mounting interest.

The write-off accounted for only half of Ndlambe's 10 wards, Wards 1 to 5. Last week's exco agenda included long lists of indigents whose debt was being written off.

Asked by councillor Ross Purdon why only five wards were reflected, finance director Howard Dredge said they were constrained by the amount of unallocated equitable share in a financial year, and could not do all the wards at once.

Dredge revealed last year that council would use its credit control policy to write off a large portion of its mounting bad debt. As the remaining five wards include Ndlambe's most populous areas, Port Alfred and Nemato, the next write-off is expected to be even larger.

In his report to exco he said the write-off request was due to indigent account holders' inability to settle outstanding balances.

"These balances have accumulated as a result of account holders not reporting a change in their economic status and applying for indigent assistance as well as consumers who exceed their monthly allocation for capped services, ie, water and electricity," Dredge said.

"Indigent support covers a current financial year," he explained. "Prior financial years' debt cannot be recovered as indigent households are not handed over for legal collection hence council authorisation is requested to write off the arrears."

In addition to the R24,5-million write-off of indigent debt, exco also approved the write-off of R2,7-million owed by deceased account holders across all wards.

Dredge said the problem arose as none of the deceased had registered estates and service charges continued to accumulate in the deceased's account. Tenants who lived on the properties were charged only for consumed services while the bulk of the costs (rates and service charges) accumulated.

Surviving beneficiaries are required to open new accounts as tenants of the property, Dredge said.

He said proposed amendments to the credit control policy would allow for other costs to be debited to the tenant's account to enable collection of these service charges.

Meanwhile Purdon expressed concern over the mounting debt of councillors.

"It has gone up from R18 302 last July to R67 538 in April this year," he said.

Over the same period the debt of municipal staff increased from R550 050 to R636 347.

"As far as councillors' debt goes, we must lead. Staff as well," said finance director Howard Dredge. "We must make sure our house is in order."

Mayor Sipho Tandani said some councillors were living with their parents, "but they cannot hide behind their parents being indigent".

"When they're councillors their parents they're living with are no longer indigent," he said. "We give them one month to sort out their problems."

Councillor Siphiwo Funde also weighed in. "I may be grandstanding (but) it's not the first time this has been brought up," he said. "We keep on talking but we're not doing anything. The municipal manager must act in terms of staff but you Mr Mayor must act in terms of councillors."

Tandani agreed.