Senior journalist
3 minute read

Msunduzi enters into a payment arrangement with Eskom, Umgeni Water

By Chris Ndaliso

Msunduzi owes Umgeni Water over R400 million in unpaid bills as of December 2021, the proposed payment plan has revealed.

Msunduzi city hall. photo: supplied
Msunduzi city hall. photo: supplied

Msunduzi Municipality has entered into a payment arrangement with Eskom and Umgeni Water to pay about a billion rands it owes to both entities.

Msunduzi, however, is silent on the conditions of the arrangement and how much the monthly repayments are.

The city would also not disclose the outcomes of its application for a bailout on the Eskom debt from National Treasury.

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City spokesperson Ntobeko Mkhize said the accounts were being serviced on a monthly basis.

It must be remembered as well that the municipality receives bulk electricity from Eskom and bulk water from uMngeni-uThukela Water, which is then supplied to the consumers.

“The municipality relies on what is collected in order to be able to pay both the accounts. The issue of non-payment by consumers is a serious challenge for the municipality,” said Mkhize.

The Witness reported last year that Msunduzi owed Umgeni Water over R400 million in unpaid bills as of December 2021, a proposed payment plan revealed.

At the time, the plan was supposed to have been tabled in a full council meeting, but the item was withdrawn from the agenda on the day.

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When the opposition called for an explanation for the decision to withdraw the item, the city’s chief financial officer, Nelisiwe Ngcobo, said her decision was based on the fact that it was a delegation of the accounting officer, and not of council, to handle the transaction.

The overdue amount of the bulk water account as of December 13, 2021 was R432 794 002,42, including interest charges on the overdue account.

A 2022 council report revealed that the city had different options to pay off the debt.

The first scenario, according to the report, was based on 25 instalments, and since the payment period was 25 months, Umgeni cannot waive the interest charge.

Scenario two was based on an interest waiver since the payment period is over 12 months.

This option requires that the municipality outlay upfront R80 million by January 20, 2022.

On option three there will be some interest waiver while option four is based on full interest waiver since the payment period will be over 18 months.

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According to the report, Umgeni has proposed that the agreed instalment plan amount be paid on the 20th of each month and the current invoice be paid by the last day of each month.

Msunduzi management is of the view that option four — payment over a period of 18 months with full interest waiver — would be more favourable to the current municipality cash flow situation. This means that the monthly instalments for the period will be R17 506 029,31 with four equal payments of R25 million which will be paid during the month when the municipality receives its equitable share.

Speaking to The Witness on Monday, Mkhize said: “The municipality has resuscitated Operation Qoqimali, which is an operation approved by the council to vigorously collect revenue from non-paying customers. Our teams are on the ground daily making disconnections for electricity and restrictions for water for customers who are in arrears.

“To date this drive has resulted in increased collections from consumers. Like other municipalities in the country, Msunduzi is experiencing a challenge with regards to electricity and water losses.

Strategies have been put in place to address these challenges. There is a five-year non-revenue water master plan with projects aimed at addressing water losses in the city.