Ethekwini owed a whopping R6.8 billion

The eThekwini Municipality is owed R6.8 billion in outstanding debt - 78% of which is more than 90 days in arrears.

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Durban - The eThekwini Municipality is owed an eye-watering R6.8 billion in outstanding debt - 78%, (R5.3bn) of which is more than 90 days in arrears.

Of this amount, R3.1bn amounts to “doubtful debt” which the city fears will be hard to recover.

The figures are contained in the eThekwini Municipality’s budget statement report for the end of March, presented to councillors at a Finance Committee meeting on Thursday.

The statement revealed that the R6.8bn was R1.3bn more than it was in March last year because of an increase in tariff for services and rates, coupled with an increase in the unemployment rate which had resulted in a number of customers defaulting on their payments.

Despite the massive debt, City Treasurer, Krish Kumar, said there was no need to panic.

“That debt is mostly consumer debt which is electricity, water and other debts. But our collection rate is still the highest in the country which is 104%. Therefore we are okay (to collect the debt).

“The second issue is that we have made a provision for bad debt which is about 50%, so there is about R3bn provided for that.

“If you look at it in context, our collection rate and our consumer debtors, it is not bad.

“In future months, however, we will just be reporting on consumer debts separate to our other debtors,” he said.

A report in the March statement said however that while a provision had been made for R3.1bn in bad debt, the debt would not be necessarily written off.

“It will still be pursued until it is not feasible to recover.

“Part of this provision is made up of Debt Relief Programme (DRP), Ingonyama Trust, bodies corporate, deregistered companies and interdicts against the municipality.

“The categories mentioned, except DRP have proven difficult to collect from. The debt collection process will continue including legal process eventually.

“These doubtful debts form part of the total debts over 90 days. The balance of about R2.2bn is recoverable,” the report said.

The report revealed that R950 million of business debt was the subject of litigation and had been handed over to the city’s attorneys.

From July 2014 to March 2016, 1 315 matters were handed over to lawyers.

Households where the property value was less than R250 000 owed R552m, the report said while R13.6m of “irrecoverable” debt was written off between July last year and March this year as all “reasonable notification and cost-effective legal avenues had been exhausted”.

Government departments, however, were among the top defaulters.

The report revealed that total government debt equated to R224m of which more than R153m was outstanding for more than 90 days.

Properties owned by Ingonyama Trust - which administers communal land on behalf of the Zulu nation - made up 7% of the R153m.

The report said the city had tried to get the Department of Co-operative Governance and Traditional Affairs (Cogta) to resolve the arrears but “no positive response has yet been received from Cogta”.

In addition to the Ingonyama Trust, the biggest defaulter was the Department of Water Affairs which was R17.8m in arrears with the city followed by the Housing Department which owed R7.6m and Public Works, R6.5m.

The report also revealed that 1 706 city employees owed the municipality R10m, while 12 councillors owed R12 392.

The report said R423 070 was deducted from employees’ salaries for bad debt while a total of 20 949 customers had had their electricity disconnected. This included staff and councillors.

lee.rondganger@inl.co.za

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