Impasse in battle over outstanding R220m
Intense negotiations with some of Nelson Mandela Bay’s biggest employers over R220-million in unpaid electricity bills have deadlocked, with neither party willing to back down. While the companies – some of them high-energy users – are adamant that the portion they are paying the city is what they deem “reasonable”, the metro is refusing to write off any more of the money they owe.
In the municipality’s deal with the high energy users last year, it wrote off about R245-million.
The agreement between the city and the companies, approved by the council in June last year, was, however, so poorly constructed that it failed to ensure the businesses paid their future bills in full.
As a result, about 15 companies have only paid 79.23% of their electricity bills since July last year – pushing their arrears to about R220-million.
The impasse has placed significant pressure on the municipality’s budget as it means it cannot reach its revenue collection targets, placing some planned projects for the financial year in jeopardy.
The R220-million represents a 3% shortfall in the budget.
Insiders said senior municipal staff and some company representatives had held meetings in recent weeks, but there had been no progress.
Instead, the discussions were mainly about the possibility of specialised tariffs or cheaper deals for high-energy users.
“There isn’t progress. The high-energy users believe they are paying what they should,” one insider said.
“They do not believe the money they short-paid belongs to the municipality.
“They feel that the municipality has made no effort to reduce the cost of electricity for them.”
Another insider privy to the negotiations said one owner had threatened to shut down his business and leave about 400 people without jobs if the municipality was not willing to concede to the demands for cheaper electricity tariffs.
A third insider said the companies and the city were both playing hardball and there was no consensus at this stage on the R220-million owed.
The municipality is, however, considering writing off the interest on the companies’ accounts, but not the amounts owed, according to the insider.
The metro’s political head of budget and treasury, councillor Retief Odendaal – who, with a team of senior municipal staff, is negotiating with the companies – said he was very positive a solution to the impasse would be found before the end of the year.
“There is a willingness from City Hall to engage,” Odendaal said.
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