Chris Hani District Municipality (CHDM) council has approved the write-off of R451 million in irrecoverable water and sanitation, dating back to 2014, after the district authority took back the water services function from local municipalities.
CHDM is a water services authority and had signed a contract with local municipalities to perform the water services function.
However, in 2014, the district rea-lised the local municipalities were not reinvesting the rates money back into water infrastructure and took back the function.
Municipal spokesperson, Bulelwa Ganyaza, said, “When taking back this function, customers’ outstanding balances were also transferred by local municipalities to the district.
“However, there was no breakdown of the consumer debt provided in this regard, making it extremely difficult for the district municipality to enforce account payments, as customers rejected their accuracy.
“This resulted in consumer discontent, disputes and reluctance to pay the historic debt.”
Ganyaza said the district municipality engaged stakeholders to find a common ground and it was resolved that the accounts in question be taken to a separate account and no interest be charged on the debt as at the end of June 2017. “This was intended to give CHDM an opportunity to consult further and prove the correctness of historic balances and credibility of existing data.
“Council has approved R451 million debt write-off for irrecoverable water and sanitation account balances, which were previously put on abeyance in 2017. Council resolved to write off the outstanding historic debts, following its decision not to overburden customers with interest on balances that were difficult to collect, as these required verification after numerous queries were raised by consumers,” she said.
CHDM had also been under the radar of the auditor general, as no interest had been charged on the outstanding balances since July 2017.
The abeyance amounts, Ganyaza said, were now prescribed as per the Prescription Act 68 of 1969, as they were more than three years old.
Writing-off the prescribed debt will also assist towards the effective implementation of the CHDM Credit Control, Debt Collection and Write-Off Policy as customers will not make historical claims against the municipality by disputing the long-outstanding debt.
All consumers will now be compelled to service their current account and any outstanding debt that is generated outside the abeyance accounts,” she said.
The district authority has put in place different mechanisms to enforce its revenue collection.
Ganyaza said these mechanisms included disconnections to non-paying businesses and government departments, notices to general consumers and cleaning of water meters. The municipality will also improve and implement its debt rehabilitation programme.
“The (debt rehabilitation programme) was first introduced by the district municipality on August 1, 2020 and was intended for specific categories of consumers to encourage payment of outstanding debt, while reducing the burden of debt.
“The rehabilitation programme is the municipality’s intervention to assist financially distressed ratepayers and defaulting customers to bring their arrears on municipal accounts up to date. These initiatives have not yielded positive results in recovering outstanding amounts.” Ganyaza said the high uncollected debt, which is used to determine the collection rate as a budget tool assessment by Provincial Treasury, has negatively impacted on the budget credibility of the municipality.