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File picture: Pexels

Parastatals, state departments owe metro over R600m, face disconnection

By KAILENE PILLAY Time of article published May 20, 2020

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Durban - Notices of disconnection have been issued to parastatals and government departments that owe eThekwini Municipality more than R600million in rates and services.

The biggest contributors to the debt include the Ingonyama Trust to the tune of R184m and Section 21 schools, which owe the city R183m. This is almost 54% of the total debt owed by government entities.

However, while the notices have been issued, the city has cited various reasons why the disconnections cannot take place at most of the entities, and that recovering the money was proving difficult.

It said that subject to credit-control procedures, these government entities would be treated like any other customer.

This was disclosed in a report brought before the city’s executive committee meeting yesterday.

The report stated that the amount owed by the Ingonyama Trust was for rates raised on land it owned, and therefore no properties within the municipality could be disconnected for the non-payment of rates.

But the Trust has disputed that it owes the municipality money, and said it was now a legal matter.

The city said a report was compiled to recommend further legal processes against the Trust, which the council would consider soon.

Prepared by the city’s revenue services, the report said the municipality was faced with ongoing challenges of slow payment or non-payment.

The city said plans were in place to curb the escalation of non-payment by installing prepaid water and electricity meters at schools.

“A pilot project has been initiated and there have been several meetings with schools already.

“A report has been sent to the committee regarding Section 21 schools, which cannot be disconnected for water because a health disaster could emanate from that action,” the report read.

While a possible solution had been found for the Section 21 schools, the city said the Ingonyama Trust remained a problem.

The report found that non-payment of services by these entities reduced the municipality’s cash flow, which affected its ability to render services to communities.

Among the other entities included in the report is the national Department of Public Works, which owes the city R80.1m.

The bulk of that debt accumulated due to rates levied on properties.

However, since the department has applied for revenue-clearance certificates, it would not be possible to disconnect any services on these properties, the report read.

It further stated that these properties were meant to be transferred “years ago”, but the transfer process was delayed by the State Attorney’s office.

“The department has forwarded a request to its head office to waive the normal process of engaging with the State Attorney.

“It has recommended appointing a private conveyancer to try to fast-track the transfer,” the report read.

The Department of Water Affairs owes R30.3m for rates for the Inanda and Hazelmere dams.

The city said disconnection of the dams would have a detrimental effect on the health of customers.

While the city has had a number of engagements with the department, it was informed that the department did not have sufficient funds in its current budget to settle the outstanding amounts.

“However, it has committed to settle the debt in the next financial year,” the city said.

Private Technical and Vocational Education and Training (TVET) colleges face disconnection as the provincial Department of Public Works has committed to pay only for colleges that are registered under its name.

In total, TVET colleges owe the city R39.8m.

A chunk of the R34.7m owed by the Department of Human Settlements would most likely be written off as the debt related to properties that had been utilised by the municipality for low-cost housing, the city said.

The report stated that other debt that did not relate to these properties would be subject to disconnection after the lockdown.

Also facing disconnection was Telkom, which owed R4.4m, and the Ithala development finance corporation, which owed R2.5m.

While the National Ports Authority owed the city R29.6m, disconnecting their substation would see all electricity to the port disconnected.

“It also becomes complicated to disconnect the ports because of the economic implications for the city, province and nationally,” the report read.

The Mercury

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