Tee­ter­ing on the edge

Grocott's Mail - - MAKANA VOICES -

End of Year Re­port

Yes­ter­day at the Spe­cial Coun­cil meet­ing the main item was the An­nual Fi­nan­cial State­ment for 2016/17. The con­tents were hardly dis­cussed, rather the fact that it was only just ready for the man­dated 31 Au­gust dead­line. The Chief Fi­nance Of­fi­cer is on leave, so Colleen Mani has had the oner­ous job of pulling the re­port to­gether, with the huge ad­di­tional bur­den of hav­ing to com­ply with new reg­u­la­tions, mu­nic­i­pal Stan­dard Chart of Ac­counts (mSCOA). This is also part of the ex­pla­na­tion for mu­nic­i­pal rates and util­ity bills ar­riv­ing so late this month.

To add to her in­tense pres­sure that has meant her work­ing into the small hours, the re­turns from Makana De­part­ments have rolled in ex­tremely late, the last be­ing re­ceived at mid­night the day be­fore the fi­nal dead­line.

We heard that a num­ber of as­pects of Makana’s ac­count­ing have been tight­ened up this year, though that doesn’t nec­es­sar­ily mean a bet­ter fi­nan­cial po­si­tion. The top­ics also cov­ered gov­er­nance since the Mu­nic­i­pal Man­ager is the Ac­count­ing Of­fi­cer. The prob­lems are caused by the in­con­sis­ten­cies from hav­ing end­less chop­ping and change be­tween act­ing Mu­nic­i­pal Man­agers. All the can­di­dates are Di­rec­tors, tak­ing it in turns to oc­cupy the hot seat, so who con­ducts per­for­mance mon­i­tor­ing on whom? The Ex­ec­u­tive Mayor stated that it was wel­come news that the le­gal con­tes­ta­tion for the MM po­si­tion by Paul Notyawa has fi­nally been dis­missed, mean­ing that Makana can im­me­di­ately ad­ver­tise for se­lec­tion of a new MM.

It was also cel­e­brated that since 1 Au­gust there is now a new Di­rec­tor of Cor­po­rate Ser­vices, to deal with staff man­age­ment is­sues. There will be a va­cancy for Di­rec­tor of Com­mu­nity Ser­vices as Mr Man­disi Planga re­tires from that po­si­tion next month.

Task Team on Makana Fi­nan­cial Re­cov­ery

The set­ting up of a cross-party task team was agreed at Coun­cil on 27 June, with 60 days to re­port back to Coun­cil, so it was un­for­tu­nate that their re­port has been de­ferred un­til the next Coun­cil meet­ing. This was done at the be­hest of the Mayor who was dis­sat­is­fied with the qual­ity of the re­port that ap­peared in the agenda yes­ter­day.

The rec­om­men­da­tions of the Task Team en­dorsed many of the points made in a REVCO Re­port de­liv­ered to Coun­cil on 15 Au­gust. Rev­enue Con­sult­ing (Pty) Ltd (REVCO) are hired by Makana on a three­year con­tract which ends in Fe­bru­ary 2018 to as­sist with debt col­lec­tion and train­ing staff.

Revco Re­port

We know Makana is tee­ter­ing on the edge, un­able to pay sup­pli­ers, run­ning out of ba­sic ma­te­ri­als, and teams not com­mu­ni­cat­ing or co­op­er­at­ing with each other. And now there’s a re­port that spells out just how great the chal­lenges are for Makana’s fi­nan­cial cri­sis.

For ex­am­ple, they can­not give Makana ad­vice about pre-paid con­sumers be­cause no links ex­ist be­tween the pre-paid me­ter and the erf/ ac­count num­ber. A sig­nif­i­cant part of rev­enue loss is due to ‘distri­bu­tion loss,’ which could not be quan­ti­fied for 2016/17 fi­nan­cial year due to non­avail­abil­ity of key data. The Au­di­tor Gen­eral Re­port for 2015/16 es­ti­mates elec­tric­ity losses at R38.6 Mil­lion. Other ex­treme prob­lems in­clude me­ter read­ers who can­not reli­ably read me­ters, thou­sands of in­di­gents who are not reg­is­tered, ser­vices sup­plied to ad­dresses where the ac­count holder is de­ceased and no con­tract ex­ists, prop­er­ties that haven’t been trans­ferred, not to men­tion sup­ply of ser­vices to in­for­mal res­i­dences.

In the 29 Au­gust FAME Port­fo­lio agenda it shows the col­lec­tion rate for wa­ter billing as 39% for the month of June, that’s over R3.5 mil­lion lost rev­enue in one month.

The debt moun­tain

Debt owed to Makana is given as R358.6 mil­lion. The re­al­ity is that the ma­jor­ity of this debt is un­col­lectable for prac­ti­cal and le­gal rea­sons. The re­port shows that al­most half the debt is un­col­lectable and it would ac­tu­ally be il­le­gal to try. It then de­tails more ac­counts where col­lec­tion is un­likely to be vi­able, say, be­cause it is not worth­while or de­sir­able to at­tach an RDP house to a court or­der. The re­port states: "coun­cil has 8 791 ac­counts cur­rently on the debt book val­ued in ex­cess of R145 mil­lion that are deemed im­paired".

It is il­le­gal for Makana to es­ti­mate me­tered con­sump­tion for pe­ri­ods in ex­cess of four months. In the anal­y­sis pre­sented, not only are there nu­mer­ous breaches of the law, there were also 1 925 wa­ter ac­counts show­ing zero con­sump­tion and cases of bulk users who haven’t had a me­ter read­ing in ex­cess of 12 months.

Where REVCO have found op­por­tu­ni­ties to en­force debt col­lec­tion they have is­sued 281 cut-off requests in April 2017, but only 33 have been ac­tioned by Makana.

The full REVCO re­port is avail­able by vis­it­ing the GRA web­site http://gra­ham­stown­res­i­dentsas­so­ci­a­tion. co. za/ wp-con­tent/up­loads/2016/04/ REVCO-Re­port-15Aug17.pdf

To­wards a brighter fu­ture?

De­spite the chaotic pic­ture pre­sented, the REVCO re­port man­ages to end on an op­ti­mistic note, stat­ing that the chal­lenges are not in­sur­mount­able as long as there is sus­tained com­mit­ment by Makana to ad­dress skills and re­sources, com­bined with ap­pro­pri­ate tech­nolo­gies, sys­tems and pro­ce­dures. The key words are "sus­tained com­mit­ment", as it will take six to nine months to ap­point a per­ma­nent Mu­nic­i­pal Man­ager and we can’t wait that long.

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