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IOLProperty - South African Property For Sale
Friday Oct 12, 2012

Nearly a million Ekurhuleni residents in arrears

Nearly a million Ekurhuleni account holders are more than three months in arrears with their municipal bills.

And while Ekurhuleni's annual collection rate has reached its target of 93 percent for the first time, the outstanding debtors increase by R93 million every month.

An Ekurhuleni department of finance report detailing the metro's plan to write off R2.787 billion in debt outlines the arrears problems and was discussed by the council recently.

The write-off was approved by the council. The DA has criticised the write-off, calling it discriminatory.

The R2.787bn being written off is debt that has been owed to the metro for more than three years by residential households. It excludes rates arrears, as this is a tax that doesn't expire for 30 years.

Customers who benefit will get credits on their accounts next month.

"This debt is uncollectable and can't be collected legally as all available collection avenues have been exhausted. The write-off must include arrangement and handover debt older than three years (excluding assessment rates)," said the document.

The report notes that there are 952 937 debtors who are in arrears of more than 90 days on their municipal bills, in a metro that has 631 765 properties.

Ekurhuleni metro spokesman Sam Modiba explained that this was possible as "a substantial number of 'tenant' accounts are linked to individual properties", with services accounts going to tenants and rates to property owners. "In addition, in the event that owner or tenant enters into debt repayment arrangement or is handed over to a panel of debt collectors, separate linked accounts representing debt transferred will be created," said Modiba.

On the positive side, the report notes that the metro's annual collection rate increased from 86 percent a decade ago to 93 percent in 2011/12.

"This is the first time since establishment that the budgeted target of 93 percent has been reached," said the report. However, it said the accumulation of the uncollectable debt continued.

"At the current collection rate, the outstanding debtors increase at approximately R93m per month. This is the uncollected portion which is budgeted for as 'provision for bad debt'," said the report.

In 2008, the outstanding debt dropped because of an "approved write-off programme".

By June 30, Ekurhuleni was owed R10bn in outstanding debt. Of this, R3.6bn is more than three years old and includes the amount being written off.

Of the debt owed for more than three years, nearly 90 percent is owed by households and most of the rest is owed by businesses.

Some is owed by the government and municipalities, but the report noted that this included residential housing schemes where properties were still in the name of the government or municipality but services were used by residential debtors.

Germiston residents account for nearly a third of the amount being written off, followed by residents in Benoni, Boksburg, Brakpan and Springs.

Much of the debt that couldn't be collected is in areas where Eskom supplies electricity directly to consumers, rather than the metro.

The report to the council said the metro was investigating taking over the Eskom supply areas because of this problem. It called electricity disconnection "the most effective and cost-effective credit control tool available" but said this was hampered by illegal connections and failed disconnections.

It said disconnection management had improved "significantly" with the appointment of disconnection management since July.

The DA criticised Ekurhuleni for tardy credit control and pointed to the Eskom issue. "This metro gives residents a reason to protest," said spokesman Eddie Taylor.

"Ekurhuleni only enforces credit control in areas where it's the supplier of electricity and allows residents to avoid similar action in areas where Eskom is the supplier of power." Taylor called this blatant discrimination. "The metro is treating individuals differently according to the areas where they live. The metro could be taken to court for this unfair practice, which is at odds with the rights laid out in the constitution."

The Star

 
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