eThekwini owed R1.7bn in debt arrears

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Durban - Departments, parastatals, city councillors and employees, businesses and consumers owe the eThekwini Municipality R1.7 billion in outstanding debt.

This emerged during a Municipal Public Accounts Committee meeting on Thursday when the city’s head of expenditure Chris Nagooroo and head of revenue Pierre du Plessis reported on the state of the city’s finances to the committee on behalf of head of finance Krish Kumar.

They said that according to the city’s financial records as of November 30, the city was owed a total of R1.7bn in debt that had been outstanding for more than 90 days, but which was considered recoverable.

The outstanding debt comprised R634.9 million owed by businesses, which has been handed over to the city’s attorneys, about R991.8m in residential debt and R127m in government debt, Nagooroo said.

Residential debt included properties that were valued below R250 000, that qualified in terms of the city’s debt relief programme, as well as individual properties in the Ingonyama Trust area amounting to R74m.

Nagooroo reported that “active credit control and debt collection activities were undertaken all the time”.

Chris Nagooroo_ Head Expenditure (2)

Chris Nagooroo

According to the departmental report, 26 305 customers were disconnected for non-payment of water and electricity accounts; 2 118 final demands were issued; 765 customers were red-lined with a credit bureau and 53 matters had been handed over to the city’s attorneys.

“Government debt of approximately R127m is mostly made up of Ingonyama Trust properties. The Co-operative Governance and Traditional Affairs (Cogta) Department is involved in trying to collect this outstanding amount from Ingonyama Trust,” Nagooroo said. “The amount of R29.6m owed over 90 days for Section 21 schools will be recovered from the Department of Education.”

According to the report, the Department of Housing owed R22.2m and the Department of Water Affairs and Forestry owed R8.9m. City councillors owed a total of R97 093, while 1 130 municipal employees had accounts totalling R7.4m that were in arrears.

“Monthly deductions are made to their salaries, but limited to 25 percent of their take-home pay,” Nagooroo said.

Parastatals, including Transnet and Portnet, the Passenger Rail Agency of SA (Prasa), Ithala and the Airports Company of South Africa collectively owed R334 794 in arrears.

“The main issue with the parastatals lies with Prasa not paying outstanding amounts as per their agreement.

“The municipality has invoked Section 44 of the Municipal Finance Management Act and has requested the National Treasury to mediate in resolving the dispute,” Nagooroo said.

National Freedom Party councillor Shaik Emam and DA councillor Andre Mitchell expressed concern as to whether some municipal customers were receiving preferential treatment.

Emam asked whether government departments were being charged the same interest as residential consumers and Mitchell wanted to know why municipal employees were receiving “preferential treatment” compared with other consumers in arrears.

“There is a double standard that is applicable to some and not to others,” Mitchell said.

“Government departments and schools being in arrears for over 90 days – I’m saying we cannot allow it and this time it mustn’t be mediation, the law must take its course.”

However, Du Plessis said “nobody gets special treatment” and government departments were charged the same interest rate for outstanding debt as residential consumers.

“Last year we tried to attach staff bonuses, but we couldn’t because we were told we can only take 25 percent of their take-home pay,” he said.

City manager Sibusiso Sithole said government departments should be given credit for structuring their finances to pay back their debts.

“There are also disputes as to how much they are paying us and how much they owe us. Prasa made a payment arrangement and for some reason was not meeting some of its arrangements.

“If we are to put off the electricity for the Metro (rail) what are the implications?

“We have to be sensitive to certain nuances,” he said.

Nagooroo said provision had been made for bad debt of R2.6bn, but it would not be totally written off and every effort would be made to collect it.

According to the finance report the municipality had collected R10bn in revenue of a forecasted R24.8bn for the 2013/14 budget, which runs until June 30, while operating expenditure was R9.8bn.

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