The City of Ekurhuleni (CoE) has provided an update on its R2.1b revenue loss, attributed to electricity billing failures and tampering with accounts.

In the first quarter of the previous financial year, the city recorded the substantial revenue shortfall because of a billing system failure, which resulted in some municipal customers underpaying for electricity.

Updating the media on the city’s recovery, state of governance, and political stability, Ekurhuleni Executive Mayor Dr Xhakaza said the shortfall was caused by mismanagement. He explained that inaccuracies and gaps in meter reading and billing followed the abrupt takeover of the function by the ICT Department.

He said when the current administration took office, it inherited a substantial and complex challenge within its energy meter management – a historical revenue shortfall amounting to approximately R2.1 billion.

“We confronted the problem head-on and immediately implemented a comprehensive, three-pronged turnaround strategy focusing on integrity, accountability, and recovery. This strategy is yielding significant results,” said Xhakaza.

Solutions
The mayor pointed out that the city tackled the root cause by focusing on the integrity of its billing system. Through significant investment in the systems and returning the function to its parent department, the city’s automated meter reading accuracy now stands at 97%, compared to 84% when the function was taken over by ICT.

“It means residents can have confidence that their meters are being read correctly, billed accurately, and fairly for the services they use.”

Secondly, the city instituted decisive consequence management, which resulted in the suspension of the chief information officer (CIO), and there is currently an ongoing disciplinary hearing taking place.

The city also launched a robust back-billing programme to ensure accountability and to recover the funds owed to the city.
Thirdly, Xhakaza said the city is focused on recovery.

“We are turning these bills into collected revenue that can be ploughed back into service delivery. So far, we have collected over R365m from these historical accounts. Out of a total identified value of approximately R2.1b, we have to date successfully billed nearly R1.4b.

“There is a further R761m that is in the process of being billed, following the necessary dispute and agreement period afforded to our customers,” explained Xhakaza.

He said their momentum was growing, and they will now aggressively drive a citywide collection campaign aimed at collecting the outstanding R1b, which has already been billed.

“To ensure this problem never recurs, the council approved a detailed performance improvement action plan for our energy services this past June.

“This is a forward-looking plan that includes developing a new service delivery agreement, reviewing the organisational structure for greater efficiency, and working with National Treasury to implement a new financial model for city trading business units.

“We are fixing the problems of the past while building a stronger system for the future.”

Financial stability
According to Xhakaza, the city’s cash on hand has almost doubled, growing from 11 days in the previous year to 21 days for the 2024/25 financial year.

He said the city’s bank balance has increased to over R1.2b, a healthy improvement from R615m in the previous financial year.

“Furthermore, our investment balances have seen a remarkable increase, now standing at R672m, up from R245m.

“The markets have affirmed this turnaround, culminating in a recent improvement in our city’s credit rating, which signals renewed investor confidence in Ekurhuleni.

“This prudent management ensures that every rand collected is maximised to fund the essential services our communities depend on.

“We are also planning long-term, with a tender process underway for a revenue enhancement contract that will bring innovation and further secure our financial future.”