Council to decide whether to write off interest on bills
The Nelson Mandela Bay council will have the final say on whether or not the municipality should write off interest accrued and reconnection fees accumulated over the last three months as a result of bills not being sent out.
Members of the budget and treasury committee agreed in principle to support the move proposed by the DA.
The news comes as the municipality is battling an all-time low revenue collection rate of 78% in September, against a target of 94%, due to ratepayers not paying their accounts.
The motion was initially tabled at Friday’s special council meeting but was dismissed by speaker Buyelwa Mafaya, who ruled it was not urgent and would be dealt with at a later stage.
Budget and treasury committee members were divided on the matter and resolved to make recommendations to the council once it has had sight of a full report detailing the implications of the write-off.
Introducing his motion, DA councillor Retief Odendaal said it was immoral and illegal that the city charged penalty fees and interest which had been incurred as a result of its own shortcomings.
“Thousands of residents have been unable to pay their outstanding accounts by the due date and this municipality has elected to continue charging interest and/or penalty fees for the late settlement of accounts during this period,” Odendaal said.
He understood that ward councillors had been inundated with inquiries by residents who had no other way of getting their accounts but through the post.
“A lot of our residents can pick up the phone or check their e-mails, but many don’t have access to that.
“Is it fair to have them pay interest, especially if they might miss the payment by a day?” Odendaal said.
“The DA believes that it is immoral and illegal for this institution to charge penalty interest where these accounts have not been rendered by the municipality.”
Odendaal asked that the matter be debated as an urgent matter, with the aim of rescinding the accumulated interest charges and penalty fees.
In a report to the committee, acting chief financial officer Jackson Ngcelwane explained the city had not been sending out municipal accounts as a result of the contract with service provider CAB Holdings first ending in December 2016.
The contract was subsequently extended to December 2017 to allow for the implementation of the city’s new Enterprise Management System.
However, the system did not go live on July 1 as planned.
The contract was extended further to June 2018 and then a decision was taken to put it out to tender.
Ngcelwane said in the report that after the tender process had been started, CAB Holdings did not receive payment from the city as the service level agreement had not been drawn up.
“The implications of the above-mentioned delays meant that CAB Holdings had to fund the mailing of the July municipal statements upfront out of its own financial resources,” he said.
“Regrettably, the service provider was subsequently compelled to stop mailing further municipal statements until they were refunded by the municipality.
“By this time, a backlog of two months had already been accumulated,” he wrote.
On Tuesday, Ngcelwane warned that writing off interest accrued would have to be regulated to avoid a case of unaffected residents jumping on the bandwagon.
“We need to do an analysis of the debt and its movements over the two months to pinpoint exactly where these households are.
“Council must consider the bylaws when making a decision,” Ngcelwane said.
ANC councillor Rory Riordan said the council owed residents a Christmas present and should write off the interest.
“The tender process should
have been started in January or December of the previous year.
“We know that it is impossible to complete a tender process in three months.
“I agree that residents should not be penalised but we must take a decision and act quickly before the next council meeting,” Riordan said.
But ANC councillor Luyolo Nombola said residents had a responsibility to follow up on their accounts.
“Consumers should check their accounts and even if they don’t get a statement, pay extra,” Nombola said.
“Communities know that they should pay.”
Budget and treasury portfolio chair Mkhuseli Mtsila said a decision would be taken after a full report of the implications was tabled by Ngcelwane for the committee and the council.
Meanwhile, the new coalition government has raised concerns over the interest the city would have to pay on a R750m loan it wants to acquire to fund new water and electricity infrastructure.
Riordan said the interest rate of 10% offered by one of the major banks that tendered was a cause for concern.
“There is no way that an AAA municipality that has a perfect credit record can accept this interest rate,” Riordan said.
EFF councillor Zilindile Vena said he was worried the city would be plunged into debt.
“We are talking about a serious commitment here. You must zoom into this thing and check if we can’t perhaps get a loan of R250m,” Vena said.
But former portfolio head Odendaal said the 10% interest rate was the best deal the municipality could get at the time.