Pretoria - The City of Tshwane’s recent cancellation of a cool R2.8 billion in debts for defaulting ratepayers has been hailed as a huge relief for the poor.
This matter was detailed in a report passed during last week’s council sitting at Tshwane House Council Chamber.
The approval of the report effectively threw a lifeline to residents whose accounts were in arrears for properties valued at R150 000 and below.
The tabling of the report came after EFF leader in Tshwane Moafrika Mabogwana previously requested the City to identify a number of residents unable to pay their utilities.
He had also requested that the astronomical debts of struggling households be written off.
Mabogwana said: “The EFF supported the writing off of R2.8bn of debt owed by poor households and raised concerns regarding some of the provisions of the new supply chain policy which will slow down service delivery even more.”
Part of the report revealed that at least 17000 owners of households categorised as highly indebted were dead. Sadly, those who inherited properties saddled with huge debts were unable to pay for municipal services.
It was also found that almost 80000 of the customers linked to these properties were unemployed.
The report said: “As at the end of May 2019 the city’s valuation roll had 677858 properties levied for assessment rates. Included in the valuation roll were 106620 residential properties with property market value of R150000 and below.”
The total outstanding debt related to identified properties as at May 31 was R2.8bn, including the current amount of R102million, and the arrears amount of R2.76bn.
Ratepayers in Region 1 had the highest debt at R927m, followed by Region 6 at R903m and Region 7 at R537m.
The lowest was Region 4 with outstanding debt of R16m.
Only 1556 customers with properties valued at below R150000 entered into payment arrangements with outstanding debt of R7.1m.
Most customers, the report said, were on prepaid electricity, which was not necessarily a contributing factor to arrears. It said: “The affordability level on these customers impacts negatively on the debtors’ book and this is also seen in the number of payment arrangements recorded as well as the payment trends.”
It suggested that there was a need to consider “changing the indigent policy, because the number of indigents in the system do not correlate with the actual unregistered indigents on the ground.
“At present, the city’s debt continues to increase as a result of non-payment from these customers and this also results in the increase in interest on accounts in arrears, which contributes significantly to the outstanding debt in arrears,” the report said.
Chief financial officer Umar Banda said the proposed debt write-off should be linked to the installation of prepaid meters to avoid any accumulation of arrears.
“The report proposes that upon approval of the debt write-off and review of the city’s indigent policy, prepaid water and electricity meters be installed at the affected properties,” he said.