Durban - The eThekwini municipality’s ANC-led executive council scrapped a R7.4-million debt owed to the city by the KZN Department of Public Works (DPW) on Tuesday.
The move comes a week after the acting mayor, Fawzia Peer, announced the ANC would not do so, which resulted in a public spat within her caucus.
The write-off saw opposition parties claim it would create a precedent for other debtors to ask for similar treatment, despite it being against city policy.
The turnaround by the ANC, according to the DA’s Thabani Mthethwa, was because Peer was “strong-armed into taking a different view” by her party.
The minutes from the previous meeting reflect Peer was in favour of not approving the recommendation but that “members of the ANC subsequently submitted a contrary view”.
The minutes said that ANC considered it made “business sense” to scrap the interest on the debt, and that the department had committed to honour paying its remaining debt to the city.
“This is an insult to all ratepayers out there. It cannot be that an arm of government wants a municipality to write its debt off purely on the basis that their budget didn’t allow [for them to pay it]. It is unfair,” Mthethwa said.
“The write-off is contrary to credit control and debt collection policy but it is recommended that interest be written-off in a once-off non-precedented basis,” the report that is supported by the ANC states.
The ANC holds the majority vote in the executive council.
Last week Peer said the write-off would not happen and told the chamber the ANC caucus had agreed to this. “We are saying we are not accepting any form of write-off.
"Our credit control act clearly says we can’t write-off interest. We have taken a decision not to allow the write-off,” Peer had said.
Her comments were at odds with ANC chief whip Nelly Nyanisa and executive member Sipho Kaunda.
Nyanisa eventually stormed out of the chamber over the issue and the matter was deferred to this week.
DPW is the custodian of government properties in KZN and thus responsible for the payment of rates on those properties to the city.
According to the City Treasury report tabled before the executive committee, Public Works budgeted R273-million to be paid in city rates in 2017/18, when in fact they were billed R323-million, leaving a shortfall of R50 million.
It is on this R50-million that the R7.4 million interest had been raised, as of 30 April 2019.
Speaker William Mapena said the debt write-off must be seen in the context of the total bill paid.
“This is just the interest. The rates will still be recouped. We are saying it is a once-off provision. We will view each case on its merits,” Mapena said.
The DA caucus leader, Nicole Graham, said the city should not think the move would not set a precedent.
“Once it happens the first time it will happen again once people realise we do not keep to our own policies,” Graham said.