Durban - The eThekwini municipality has suffered a severe financial loss due to the decline in revenue collection after it had offered Covid-19 relief to the ratepayers.
According to the recent budget statement, the city's cash on hand to render basic services has dramatically declined over the past months and could only last for 27 days excluding cash on reserves.
This was confirmed by Krish Kumar, the city’s chief financial officer who said the situation was dire not only within the eThekwini metro but across all sectors.
The statement revealed that the city had lost billions in revenue collection as the municipality could not issue billing statements from March to June, while it offered incentives for Covid-19.
A source within the city’s finance department said the situation was expected to get worse and revenue collection has been instructed to come up with revenue collection strategies.
“The city’s revenue has been on a downfall even before the Covid-19 which worsened things. The management has therefore instructed the revenue department to embark on a collected drive to stabilise the situation. The city has started to send out billing statements after the instruction to embark on mass collection. Even some of the management have already complained that they have received exorbitant bills,” said the source.
Last week the municipality urged residents to pay for services or make payment arrangements to avoid being disconnected.
In the notice, the city said it understood the plight of those that have been financially affected by the Covid-19 pandemic, but it will not hesitate to implement the credit control policy and disconnect services of those customers who do not pay.
Asked about the risk of sending exorbitant bills which have been an issue for a long time in the municipality, Kumar assured that the billing system was accurate.
“The recovery will take some time as the world is facing an economic meltdown. Our billing system is working perfectly and is audited,” said Kumar.
Msawakhe Mayisela, city spokesperson said the main reason for the drop in cash on hand is due to the drop in collection rates the city had from March to June, where it saw collections drop to an all-time low.
"The city has also not fully activated disconnections but are rather only taking action against those consumers that have run up huge arrears and are not willing to make efforts to make payments. We will also ensure that vulnerable groups are not impacted.
"The city had several incentives to address this, we also have the on-going Covid-19 debt relief programme which concludes on June 30. The incentives included the writing off all interest on the debt and allowing customers to pay over 24 months with no interest, we also did not raise any interest on the debt for the 20/21 financial year.
Opposition parties blamed poor management which had put residents and workers at the risk of not being paid.
Yogis Govender, DA exco member said whilst it was worrying that cash on hand was very low and fluctuating.
"Any recovery plan must be juxtaposed against the backdrop of a potential third wave and fourth wave of Covid and its financial implications on city coffers.
The irrecoverable losses in the electricity and water departments, the parastatal debtors owing the city billions, erroneous billing, unread meters, uncollectable revenue is indicative of the downward spiral in service delivery in multiple units within the municipality.
Mdu Nkosi, IFP Exco said it was a disgrace that the city has only a month’s cash on hand.
"I do not think we suppose to be where we are if we were doing things correctly. Millions are not accounted for, the city has been borrowing money for no good reasons. I do not think Covid-19 led us to this situation in such a short period," said Nkosi.