By Lehlohonolo Lehana.
The City of Tshwane has devised a five-point plan to claw back R1 billion a month from its budget in an attempt to turn its finances around.
Executive Mayor Cilliers Brink says if the plan to collect R1 billion more a month works, the City should stabilise its debt in next six months.
Brink briefed the media on Monday on the city’s financial outlook.
He said defective meters and illegal connections are leaving the city out of pocket, with municipal debts ballooning to R23.3 billion.
Last week, 70 residents were disconnected from the City of Tshwane’s electricity grid and water supply for defaulting on the payment of their municipal bills.
The disconnections formed part of the ongoing Ya Tima revenue collection campaign, which targets customers who fail to pay their municipal bills.
“What we have to our advantage is an R23.3 billion debtors’ book that we aim to turn into cash. If a quarter of this debtor’s book is collectable, it is collectable in the next six months. If we succeed, we will improve our cash flow, our Eskom account, as well as our credibility and creditworthiness.
“This also buys us the time to fix problems with tariffs and to achieve better value for money in supply chain management. If we do not succeed, we will have to make a number of fundamental changes to the way we deliver services by the end of June 2024 when a new budget must be adopted.”
Brink said too few households and businesses are being metered due to defective meters and illegal connections.
“Of those whose consumption is being metered, too few receive accurate bills or have their disputes resolved in time. Of the total number who are being billed, too few actually pay their bills because our credit control and debt collection system is ineffective. So, you can see the further you go down this spiral, the less money that is due to the city is actually received in our bank account.
“By fixing each one of these aspects (circles) of our revenue value chain, we will be able to achieve financial recovery. Some of the repairs can be done sooner and others later. Bulk purchases and tariffs will take a little longer, while metering, billing, credit control and debt collection are in our immediate focus.”
Brink said, the amount it owes Eskom has ballooned from R1.1 billion in September to almost R3.9 billion at the end of January and owes Rand Water R860 million.
The last payment it made to Eskom was a partial payment of R400 million in September.
The city’s purse has since been so empty that it has failed to pay Eskom a single cent, according to information provided by the CFO.
The City of Tshwane submitted its annual financial statements for the year ended 30 June to the AG at the end of November – three months after the deadline.
Last year the AG shocked the city’s governing multi-party coalition with an adverse opinion of its financial statements, which played a key role in the departure of the previous mayor, Randall Williams of the DA. He was replaced by Brink.
The situation is so dire that even if the city was to sell all its current assets, totalling R8.1 billion, it would not have enough money to pay even half of its current liabilities of R19.3 billion.
Current assets are those that can be liquidated within a 12-month period and current liabilities are those payable within the same period. Current assets should exceed current liabilities.