Makana tack­les black­out

Grocott's Mail - - NEWS - By SUE MACLEN­NAN

While Eskom has re­jected Makana’s ini­tial re­pay­ment plan for its re­main­ing debt of R53 mil­lion to the power util­ity, act­ing mu­nic­i­pal man­ager Riana Meir­ing is con­fi­dent that fur­ther ne­go­ti­a­tions will stave off the threat of elec­tric­ity cuts to the mu­nic­i­pal­ity, and that strong mea­sures to re­cover and pro­tect rev­enue will build a buf­fer against its fur­ther sink­ing into debt.

Res­i­dents and busi­nesses were alarmed when on 7 De­cem­ber, Eskom pub­lished a no­tice in a re­gional news­pa­per say­ing that Makana Mu­nic­i­pal­ity was in breach of its pay­ment obli­ga­tion to it and that Eskom was con­tem­plat­ing a reg­u­lated in­ter­rup­tion of elec­tric­ity supply, Mon­day to Fri­day 6am to 8am and 5pm to 7.30pm; Satur­day and Sun­day 8.30am to 11am and 3pm to 5.30pm. This was “in or­der to pro­tect the na­tional in­ter­est in the sustainability of elec­tric­ity supply”. The debt at that time was R58.05 mil­lion.

At a meet­ing on 21 De­cem­ber, Eskom re­jected a pro­posed pay­ment plan that would see Makana pay­ing off the debt in tranches with the last in­stal­ment in 2020.

“Eskom wanted the Mu­nic­i­pal­ity to pay R23 mil­lion by the end of March 2017 along with a re­vised pay­ment plan,” Meir­ing told Gro­cott’s Mail ear­lier this week.

“The Mu­nic­i­pal­ity agreed to this. The new pay­ment plan must be sub­mit­ted by 10/01/17 for con­sid­er­a­tion.”

An­tic­i­pated sources for the R23m in­clude the R15m eq­ui­table share due to Makana in March; an an­tic­i­pated elec­tric­ity rev­enue in­crease from R700 000 to R1m with the new time-of-use billing sys­tem; the re­cov­ery of a wheel­ing charge (for us­ing trans­form­ers in Makana as a con­duit) from the Waainek wind­farm; and call­ing in pay­ments of more than R6m from par­tic­u­lar bulk users.

Meir­ing is con­fi­dent the new plan will meet with Eskom’s ap­proval. This is be­cause it is backed by clear mea­sures to re­cover and se­cure the mu­nic­i­pal­ity’s elec­tric­ity rev­enue.

At the core of these is new soft­ware that en­ables de­tailed anal­y­sis of data. This in turn pro­vides tools for strate­gic de­ci­sion-mak­ing when it comes to tar­get­ing prob­lems.

Some of the prob­lems be­ing ad­dressed, Meir­ing said, are:

•Cor­rupt data: Of the mu­nic­i­pal­ity’s sev­eral billing ar­eas in­clud­ing rates, wa­ter, sew­er­age, refuse and elec­tric­ity, only the last was a prob­lem, due ei­ther to im­proper me­ter read­ings, or me­ters not be­ing read at all. Where there were dis­par­i­ties in read­ings over 50%, the soft­ware re­jects the bill and the read­ing first has to be phys­i­cally ver­i­fied and then pro­cessed man­u­ally.

•Lack of ca­pac­ity: The ca- pac­ity of the mu­nic­i­pal­ity’s fi­nance de­part­ment to man­u­ally re­cal­cu­late debt was lim­ited, and it would there­fore take up to six months to re­pro­cess “wrong” ac­counts.

•Lack of a link be­tween tech­ni­cal ser­vices and the fi­nance de­part­ment: Stan­dard in mu­nic­i­pal­i­ties was a rev­enue pro­tec­tion unit, which en­sured in­for­ma­tion shar­ing be­tween the tech­ni­cal de­part­ment (e.g. about the lo­ca­tion of wa­ter me­ters, and how to read them prop­erly etc); and the fi­nance di­vi­sion, which has the data to mon­i­tor trends and dis­par­i­ties. Such a unit would be es­tab­lished in Makana once the re­sources to fund it were avail­able, Meir­ing said.

Asked about the high in­ter­est on the [then] R58m debt – an amount of R17m, Meir­ing said Makana had raised the prime plus 5% be­ing charged as an item for ne­go­ti­a­tion.

Of the R14m ad­just­ment added by Eskom to Makana’s bill, Meir­ing said they had re­quested de­tails.

How­ever, on the ba­sis of strong mea­sures taken to ad­dress rev­enue loss as well as Makana’s clear in­ten­tion to re­pay its debt, Meir­ing said she be­lieved com­ing ne­go­ti­a­tions with Eskom would re­solve the sit­u­a­tion and avoid power in­ter­rup­tions.

“I am strongly con­fi­dent,” Meir­ing told Gro­cott’s Mail yes­ter­day.

An­tic­i­pat­ing the suc­cess of the Makana/Eskom nego- tia­tions, the Gra­ham­stown Busi­ness Fo­rum said, “The Busi­ness Fo­rum would like to ac­knowl­edge the work of the act­ing Mu­nic­i­pal Man­ager lead­ing to this agree­ment and wishes to com­mit it­self to sup­port­ing our Mu­nic­i­pal­ity in all ar­eas aimed at im­prov­ing the qual­ity of life of all busi­nesses and res­i­dents.”

The Gra­ham­stown Res­i­dents As­so­ci­a­tion, how­ever, en­cour­aged res­i­dents to use the op­por­tu­nity to en­gage with Eskom as per their no­tice, on the ba­sis that ne­go­ti­a­tions were still on­go­ing. “The GRA will be mak­ing a sub­mis­sion and peo­ple are wel­come to con­tact us if they would like to con­trib­ute to it,” sec­re­tary Tim Bull said.

In re­sponse to ques­tions from Gro­cott’s Mail about the progress of ne­go­ti­a­tions with Makana Mu­nic­i­pal­ity re­gard­ing its debt and the threat­ened power in­ter­rup­tions, Eskom’s me­dia desk wrote in an email: “Eskom can con­firm that the com­pany has is­sued a dis­con­nec­tion no­tice for non­pay­ment and is cur­rently in dis­cus­sions with Makana Mu­nic­i­pal­ity re­lat­ing to the out­stand­ing debt owed.

“Any out­comes of these dis­cus­sions will be made avail­able in a for­mal pub­li­ca­tion upon the con­clu­sion of the process as de­fined in the Pro­mo­tion of Ad­min­is­tra­tive Jus­tice Act.” Lo­cal gov­ern­ment and prov­inces are en­ti­tled to the eq­ui­table share to pro­vide ba­sic ser­vices and per­form pre­scribed func­tions. Bud­getary con­di­tions are set as well other re­quire­ments to en­sure the money is used as al­lo­cated. Sec­tion 214 re­quires that a Di­vi­sion of Rev­enue Act (DORA) be passed each year where na­tional in­come is di­vided among na­tional, provin­cial and lo­cal gov­ern­ment spheres and ac­count was taken of provin­cial and lo­cal gov­ern­ment’s own in­come gen­er­a­tion so that monies are eq­ui­tably di­vided. The eq­ui­table share tar­gets the fund­ing of ba­sic and free ser­vices

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