eThekwini municipality on brink of collapse, revokes Covid-19 lockdown relief scheme
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Durban – eThekwini Municipality has revoked its Covid-19 lockdown relief scheme amid fears of a financial collapse.
A report presented to the city’s executive committee yesterday revealed the municipality has R13 billion in arrears owing to it and if debt-collection processes did not resume, it would “be in serious financial trouble by year-end”.
It further stated that those in arrears with utility bills would face disconnections from July.
For April, the municipality had
only achieved a 56% collection rate -
the worst in this financial year, the report stated.
“Although it was estimated that the collection rate for the months under lockdown was going to decrease, the collection rate of 56% for the month of April 2020 was never foreseen.
“April was the first full month under lockdown, where there was no business activity, and although customers were advised to pay at alternative places,
due to the limited movement they
(customers) were not able to pay,” read the report.
The report was compiled by the city’s revenue department on May 20.
According to the city’s credit control and debt collection policy, the arrears would have resulted in the disconnection of services.
However, the municipality said it considered the fact that some customers were going to struggle with the payment of rates and services, and decided to assist them with the Covid-19 lockdown relief scheme.
It decided not to implement the disconnections and said that no
interest would be charged on accounts that went into arrears during the lockdown period.
This decision was taken pre-lockdown, in March, when the different levels were unknown and it was thought that the lockdown would only last the initial 21 days, the report said.
“It is still uncertain when the full lockdown period will be lifted. Accordingly, the council cannot wait until all levels of the lockdown have been lifted,” the report stated.
“It has been proven that implementing credit control measures by disconnection services increases the collection rate. Some people that can afford to pay do pay.
“The municipality is currently in a precarious state and cannot continue to operate, and provide much-needed services to the communities, without implementing credit control measures,” the report further read.
To support some customers, the municipality yesterday said it had approved support and relief schemes, such as a rates rebate for B&Bs and guest houses. The rates will be on the same level as residential.
The city has also offered an incentive of a once-off interest write-off for customers who paid off 50% of their debt and allowed the balance to be payable over 24 months.
It also offered all rebate renewals for senior citizens, disability grantees, child-headed households and medically bordered people to be done automatically.
However, caucus leader for the DA, Nicole Graham, said that beyond these categories, the city had not offered substantial relief for ratepayers who did not own guest houses or those listed on the indigent register.
Graham said that it was extremely worrying to know that ordinary cash-strapped citizens faced a disconnection of services during this trying time.
“From the beginning of lockdown, we said there needed to be a plan in place for those who lost income in this time. We suggested a rates holiday, if residents could show through a means test that they were in need of such.
“Yes, the municipality needs revenue to operate, but you cannot put up tariffs, continue to pay staff as you were doing, give managers an increase, but say to the man on the street that he needs to pay up to keep the coffers full or face disconnection,” Graham said.
Chairperson for the Bluff Ratepayers’ Association, Ivor Aylward, said the municipality was “threatening” ratepayers with disconnection, knowing that most people would not recover financially by July.
He added that the disconnections would also start in the middle of
winter, and threatening people to pay
up or face disconnection when the Covid-19 infections were expected to peak was “terrible”.
“What about those who were retrenched during this time and still won’t have an income by then?
“People should just continue to
pay what they can afford and the municipality should do a means test on individual households before disconnecting them.
“Instead of punishing everyone,
they need to assess each case individually to see if that household can pay for services, and if their reasons are legitimate, before disconnecting them,” Aylward said.
Chairperson for the Chatsworth and District Federation, Teddy Govender, said the municipality’s latest decision was “unfair”, especially for those who may only return to work under level 1 of the lockdown.
Govender said that July was “too soon” for many people to recover
financially from the impact of the Covid-19 pandemic.
“The municipality should rather offer citizens the same relief scheme they are offering indigent people, and use the government Covid-19 relief
fund to cover its shortfall in this time,” Govender said.
eThekwini mayor Mxolisi
Kaunda said: “We need to run a
municipality that can sustain services. We do this by collecting revenue in
order to provide service delivery in eThekwini. We will not allow the city to collapse.”
Deputy city manager of finance, Krish Kumar, said these measures were being carried out throughout the country.
“The city requires income to meet its obligations, including providing Covid-19 relief such as food parcels and assisting the homeless. Other metros will also have to undertake these measures if they want to recover.”
Kumar said meter readings would be expedited, with water readings having already started. Electricity readings would begin next week. He urged customers to send their meter readings into the city as an alternative.
Peet du Plessis, head of revenue management, said if someone was unable to pay, there was a policy that made provision for them to have a six-month deferral, in order for them to stabilise financially.