Cape Town - Cape Town's residents owe the City more than R9.887billion in unpaid rates and services bills, which is severely affecting the municipality’s ability to deliver services.
The City’s finance directorate sent a report to the finance portfolio committee that it was owed R7.846bn by households and a further R1.513bn by businesses, with other outstanding debt totalling nearly R500million.
“The water crisis had a huge impact on the collection ratio and the City’s debt, which increased significantly since the punitive tariffs were implemented,” the report read.
The department reported that it could not yet write off the R1.466bn owed the City by indigent households (with household incomes of below R4000 per month) because the department of water and sanitation had not yet repaired water leaks, nor installed water management devices or prepaid electricity meters.
There was an amount of R7.145bn in arrears owed to the City as at the end of January this year, which was more than R295m higher than in December 2018, due to an increase in debt owed over 120 days or more.
There was also an amount of R330m in irrecoverable debt owed by indigent properties, which had also not yet been written off for the July 2018-January 2019 review period.
The City said that a total of 11 313 properties had been identified as having refused to install water management devices.
Despite the debt, the City still managed to recover a large percentage of its rates, with a 92.57% payment rate. That rate would increase to 95.88% should indigent household water and sewerage usage above the prescribed targets be excluded from the 12-month average calculation, the report revealed.
Mayoral committee member for finance Ian Neilson said the amount of money owed had a dire impact on the services it could deliver.
“Due to this debt, the City has to make a provision for bad debt in its budget, which means that fewer services are delivered.
“If those who have the means to pay, refuse to pay for services that they use, it has a large impact on the sustainability of the City and it impacts our absolute desire to make this great city even greater for all who live in it.”
Neilson said Mayco planned on enforcing payment of outstanding debts through effective debt management actions.
“Debt management actions are being intensified especially against those, who can pay, but choose not to pay and the frequent defaulters. Final demands letters will be sent out on a monthly basis to those debtors whose accounts fall into arrears. During the month of January, 14 203 letters of demand were sent out and 607 debtors were listed for adverse credit listing.”
Sandra Dickson of civic activist group Stop Coct said this was a clear indication that residents could no longer keep up with the City’s steep tariffs.
“When a new blue meter was installed, unsuspecting home owners were slapped with a R4 500 bill for the meter. This once-off charge dropped many into debt. In addition, people are forced to pay up before the City would investigate any abnormal high water account.
“This is disputed by the City, but many members on Stop Coct reported that they had to pay before their high accounts were investigated.
“The net result here is that after the City had increased tariffs beyond being affordable, the City is now losing money because of unpaid bills.”