Tshwane debt mushrooms to R27bn

According to the Tshwane metro, its debtor’s book has been inflated by R10-billion since 2021, with major defaulters increasingly being residential property owners and businesses.

In 2021, the debtor’s book stood at R17- billion and rose to just below R28-billion as of the end of October this year.

According to Tshwane, R26-billion is owed for more than 30 days.

Earlier this year, the debt was standing at R23.3-billion but within a space of months, the debt by delinquent customers and business skyrocketed to about R27 833-billion.

The metro however plans to collect about R6.2-billion through the Tshwane Ya Tima campaign, where the plan is a bid to rescue Tshwane from drowning in debt, while it already owes power utility Eskom close to R6-billion.

MMC for Finance Eugene Modise confirmed that as of October 31, the city had a total debt of about R28- billion.

“The total number of customer accounts is 825 200 and accounts with amounts in arrears total 478 871.”

Modise said the metro is mandated by the Constitution to provide services to communities in a sustainable manner, which requires, among other things, that customers settle their municipal accounts in full by the due date.

“However, non-payment for municipal services in a prompt manner compels the city to levy interest on overdue accounts.”

Modise added that the interest levied on overdue accounts is part of the credit control and debt collection measure as provided for in Section 97(1)(e) of the Local Government: Municipal Systems Act, 2000 (Act 32 of 2000) (as amended).

He said residents and businesses had a chance to take up the Tshwane Black Friday Special, which was available until the end of November.

He explained that if a customer settled their municipal accounts in full on or before November 29, they qualified for a100% interest waiver.

Modise said the metro is however on track to collect what it is owed.

“We achieved the biggest revenue collection in October, surpassing the average collection of the previous three months.”

He said the revenue collection of R3.68 billion in October surpassed the medium-term financial target by 4%.

Modise said the metro is on the right path to meeting its target of collecting at least R4-billion in revenue per month by the end of January 2025.

According to Modise, during October, the city logged 116 000 outbound collection calls, 94 000 to residential and 21 800 to business account holders.

“In addition, 48 526 final notices of demand were issued, contributing to the improved revenue flow.”

Modise acknowledged that increasing revenue collection was crucial to the city’s ability to meet its financial obligations, particularly the significant debt to Eskom, which currently stands at R6.76 billion.

Modise added that to promote a culture of payment, which is essential for the metro’s financial sustainability and provision of quality, reliable services to all residents, the city will implement several targeted measures to address non-payment.

Metro spokesperson Lindela Mashigo said the city has implemented various measures to encourage residential and business customers to settle their debt.

“For example, the city had the Black Friday campaign on November 19 wherein customers were encouraged to settle arrears on their municipal accounts and qualify for a 100% interest charges write-off.”

Mashigo said prior to the campaign, residential and business customers were encouraged to settle arrears on their municipal accounts for a 70% interest write-off.

He said the city continues to encourage delinquent businesses and residents to adopt a culture of payment to ensure quality services are delivered to residents.

“The city is open to settlement arrangements, which can range from 6-months to 12-months, depending on affordability. Furthermore, should a longer settlement period be required and subject to certain conditions, these are also considered.”

He said credit control measures are continually implemented, such as the sending of SMS and/or email reminders, as well as calls to customers with accounts that have become past due.

“Final demand notices and section 129 notices are issued to customers and if the account is not rectified, a disconnection notice is issued and implemented.”

He said delinquent customers will be dealt with through the disconnection of municipal services in all instances where a customer ignores final demands and Section 129 notices without any regard to the size of their debt or consumption.

Mashigo said the city implemented what is known as the Financial Recovery Plan (FRP) to improve its financial position over the short to medium terms.

“The plan aims to interrogate the entire value chain of the Tshwane municipal operations and its primary objective is to ensure that Tshwane bills and collects all revenues due to it, investigates new sources of revenue, manages expenditure to within allowable and available limits, and ensure that the city’s service delivery model is integrated, effective, and efficient.”

Mayor Dr Nasiphi Moya said the metro debt to Eskom alone stands at over R11-billion, R6.76-billion of which is overdue.

The metro recently announced that its financial recovery effort had achieved a significant milestone when it reached agreement with Eskom on the payment of this historical debt.

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