This according to a press release issued by Councillor Bruce Reid, member of the DA Finance Oversight Committee

By waiting for accounts to reach such high amounts before cutting it off, the Metro is putting severe pressure on residents as they will never be able to pay off their debt. The maximum debt repayment period is 36 months (3 years), which would make the installment without interest at R5 555.55 per month if a resident has debt of R200 000. What the Metro fails to take into account, is that the accounts go unpaid and become overdue mainly because many residents in Ekurhuleni struggle financially. Unpaid accounts are handed over to debt collectors to collect on behalf of the metro and arrear amounts are transferred to a separate account when handed over to debt collectors where repayment plans are negotiated.

Debt collectors charge a fee for collections and this is deducted from the installments paid by the resident. The installments are, in most cases, not adequate to cover the combined debt repayments and debt collectors fees resulting in the outstanding amounts no being repaid over the agreed upon term. The debt collectors have 3 year contracts with the Metro and when this contract expires – as it did in June 2015 – the debts are written back from the debt collectors to the Metro. This occurs without notification to the residents, but with hugely inconvenient consequences.

The amounts that were with the debt collectors are now written back to the residents account in July. This means that the bill – which has been with the metro for anything between one and three years, will now be invoiced for payment during the month of July. When residents then fail to make these payments, their accounts goes into arrears in August. The metro now cuts off the resident’s electricity supply, without informing them about what has transpired between the metro and the debt collector and the many account transactions thereafter. The residents will therefore also continue to pay the agreed installments as they are not aware of the developments.

The travesty of it all is that the metro knows that the debt collector’s contract expires in June, however time and again it fails to appoint the new debt collectors in time to ensure continuity. The harsh punitive measures applied to the resident’s accounts when trying to secure reconnection – i.e. 30% down payments on outstanding accounts before reconnection – is unjust, unfair and not achievable.

At the end of June 2015, the Ekurhuleni Metro was being owed R12.076 billion in outstanding debts, of which R8.957 billion was the results of overdue an unpaid accounts.

The Metro has provided for this debt as bad debt. Surely almost R9 billion could be better used to improve the lives of residents if only it had been collected.

This proves that the Metro does not have an effective debt collection policy despite this problem being around for years.

It is unacceptable that the Ekurhuleni Metro does not have an effective debt collection policy and that the Metro allowed this problem to amplify on an annual basis to its current unmanageable state.