The South African Local Government Association (SALGA) advised both R’fontein and W’aria municipalites to embark on a dedicated credit control effort considering they owe Eskom R141,5 million.
Although Eskom is yet to give feedback on the aforementioned municipalities’ payment plan, SALGA who acts on behalf of 278 municipalities countrywide said in a statement it is making considerable progress in addressing the municipal electricity debt.
The SALGA NEC took up the matter and issued a press statement on 1 April 2015 and also sent out a Circular to all member Municipalities advising them to embark on a dedicated credit control effort, to ensure that all debtors, including national and provincial government departments are given due notice to effect payment.
Two of Gauteng’s Municipalities’ were included among the 60 Municipalities identified by National Treasury and on 16 April 2015 SALGA Gauteng convened a session with the affected parties, Westonaria and Randfontein Local Municipalities, Gauteng Provincial COGTA and Provincial Treasury.
According to SALGA, Randfontein Local Municipality currently has a R81,7 million arrear status. A revised payment plan has been formed and Randfontein Local Municipality will pay off the arrears over a 27 month period with the last payment due end of July 2017.
Westonaria Local Municipality currently has a R59,8 million arrear status inclusive of VAT and accumulated interest. A revised payment plan has been formed to pay off the arrears over a 13 month period with the last payment due end of April 2016.
The objectives and expected outcomes of the meeting were to achieve the following:
- To address the impact of withholding Equitable Share to Randfontein and Westonaria Local Municipalities.
- To asses and get an update on the payment plans entered into between the two Municipalities and Eskom.
- To assess and comment on the state of readiness for the two Municipalities to engage with National Treasury.
- To consider a report on Outstanding debt owing to Municipalities by other organs of state,
The payment arrangements are based on the following fundamental areas:
- Timeous transfer of equitable share to the Municipalities.
- Both Municipalities being up to date with their Rand Water Accounts.
- Affordability based on the past collection and fixed commitment.
- Sustainability based on municipalities actual circumstances.
The Gauteng Provincial Treasury also presented the current Government Debt to Municipalities, furthermore, Treasury reported that as at the end of January 2015, both Provincial and National Government debt stood at R4.4 million and R79.5 million to Randfontein and Westonaria Municipalities’ respectively.
During the same period, Government only paid a small percentage of the amount owed. Treasury indicated that the payment level was low due to the Financial Year end of Provincial Government, however mechanisms have been put in place to ensure that there is an improvement at the beginning of the new financial year.
The meeting adopted a Current and Future Plan to address Government Debt and undertook to adopt the following steps:
- Provincial Treasury undertook to hold monthly engagements with both affected Departments and Municipalities, for reconciliations submission of Municipal claims, etc.
- Both Provincial Treasury and the affected Municipalities undertook to identifying and addressing under billing, incorrect estimates and credibility of data supplied by Municipalities.
The process highlights interventions made by SALGA Gauteng to facilitate deliberations amongst all affected stakeholders and to address the task of getting the affected Gauteng municipalities and Eskom to come to agreeable and amicable terms for repayment plans.
Resolving the ongoing Municipal debt and non payment of Services by some residents will require continued commitment among affected parties and communities in developing a sustainable solution.
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