Metro owed R4.3bn in service charges

A staggering R4.3-billion. That is how much households, businesses and the government owe the Nelson Mandela Bay Municipality for services.

About R3.2-billion of that money comprises accounts older than 30 days.

The shocking figures were released by the city’s budget and treasury department this week.

It comes as the municipality battles a sharp rise in water debt, which increased from R475.6-million in June last year to R829.1-million by the end of last month.

This is as a direct result of the implementation of Part C of the water tariffs structure in June, making it difficult for residents and businesses to pay their accounts.

Adding pressure to the city’s coffers, it was revealed that:

About 50.2% of the city’s water was lost through leaks and unbilled water last month;

About R19.1-million was lost to the city last month as a result of electricity theft and technical power losses;

The metro is struggling to get the Eastern Cape Department of Human Settlements to pay back about R194.7-million owed to it for houses that were built;

The municipality’s revenue collection target fell short of the budgeted 94% last month, by coming in at 92.27%;

The metro is falling short of its revenue collection for refuse and sanitation; and

The non-payment of the full accounts by high energy users is proving detrimental to the sustainability of the municipality’s cash-flow. The municipality’s political head of budget and treasury, Retief Odendaal, said the growing debtors book was a problem, particularly as it was apparent that the punitive tariffs for water usage played a big role in the extra money that was owed.

He said some of the money owed to the municipality would have to be written off as irrecoverable as it included the accounts of the indigent in the city.

“It is a concern, but we are between a rock and a hard place. The Department of Water [and Sanitation] gives the directive that in a drought there must be an implementation of punitive tariffs,” Odendaal said.
At Thursday’s budget and treasury committee meeting, Odendaal said the hardest hit by the punitive tariffs for water usage were the middle-income households as the indigent were protected by the Assistance to the Poor Programme.

“We have a problem. We are in a serious drought. Treasury said [on Wednesday] that they don’t believe households have cut back enough.

“It feels immoral to ask residents to cut usage when our water losses are not decreasing, but we have to.

“We need to come up with a special budget and treasury meeting to come up with a solution. We don’t want to place a burden unnecessarily on our residents,” Odendaal said.

ANC councillor Rory Riordan said the growth in overdue debt by R682.5-million since June was problematic.

“We did predict that the tariffs have gone up by too much. To have R350-million stuck as debt in the water account is a real problem,” Riordan said.

He raised concerns about the electricity losses figure that were not decreasing, and that the municipality’s capital spending was below target at 51.19% last month, with only a couple of months to go before financial year-end.

Acting chief financial officer Jackson Ngcelwane wrote in his report that grant spending was “not satisfactory”.

“It must be remembered that failure of the municipality to spend conditional grants may result in the national Treasury not approving rollovers to the next financial year, which will mean that the unapproved portion will automatically be withdrawn from the equitable share, which cannot be afforded by the municipality,” Ngcelwane wrote.

United Front councillor Mkhuseli Mtsila said it was concerning that the capital spending was so low.

He said there had to be consequence management implemented for staff who were not doing their jobs.

Odendaal proposed that the spending issue be addressed at city manager Johann Mettler’s next meeting with senior managers.

“We don’t want a situation where officials are spending 40% of their budget in the last two months of the financial year.

Ngcelwane said the budget spending was low because the city’s adjustments budget was not approved by the council when it was first tabled.

That meant the city could not spend the money until it was finally approved.