Municipality wants to claw back arrears through electricity purchases

Saddled with a staggering R4.84bn in unpaid bills, the Nelson Mandela Bay municipality wants to recover the money from account defaulters with each of their prepaid electricity purchases.

The city has proposed reintroducing the set-off policy by taking a percentage each time a ratepayer whose account is in arrears buys electricity.

This, it said in a report to the council — which was meant to meet on Friday — would help the municipality to improve its revenue collection, which dropped by 9% during

April and last month due to the nationwide lockdown imposed as a result of the Covid-19 pandemic.

The move, which still needs to be debated and approved by the council, has been welcomed by some parties, but the ratepayers association is vehemently opposed to the proposal.

The council meeting was adjourned when opposition councillors boycotted Friday’s first virtual sitting, saying they had not been consulted when the 2020/2021 budget was drafted, while the DA questioned the legitimacy of tabling a budget by an acting mayor.

The lockdown imposed by President Cyril Ramaphosa in March left many households in the metro either without jobs or having to take salary cuts.

As a result, some ratepayers are not able to pay their municipal bills, which has resulted in a collection rate of 83% during March and April against a target of 94%.

In his report yet to be tabled in council, Bay acting mayor Thsonono Buyeye wrote that for a number of years, as part of its credit control measures, the municipality had applied prepaid electricity set-offs on accounts that were in arrears.

“This [proposed] approach enables ratepayers to purchase electricity while in arrears, as against the current system where accounts are completely blocked and disconnected after 45 days,” he said.

During a December 1 council meeting in 2016, councillors resolved to scrap the electricity set-off approach and to rather disconnect accounts immediately after 45 days.

The city was under the administration of the DA-led coalition at the time.

“The budget and treasury department contends that when the decision was taken by the institution to abolish the prepaid electricity set-off and introduce the blocking of electricity immediately after 45 days, that has had unintended consequences.

“It is further argued by the directorate that this decision has to some extent actually led to an increase in electricity tampering,” Buyeye said in his report.

How the set-off policy would work for household accounts is as follows:

● 20% would be deducted from an account overdue by R100-R300;

● 40% would be deducted from an account overdue by R301-R500; and

● 60% would be deducted on R501 and over.

Business accounts would be deducted at a higher percentage. Households that are beneficiaries of the city’s Assistance to the Poor programme will not be affected.

Buyeye said the municipality was grappling with both social and economic pressures presented by the Covid-19 pandemic.

“Be that as it may, while the municipality intends to offer a form of payment relief to account holders experiencing financial hardships, it is equally imperative for the city to maintain a healthy income collection regime as well as maintaining the financial sustainability of the institution,” Buyeye said.

The city’s budget and treasury political head, Mkhuseli Mtsila, said he would support the set-off policy.

“This policy was there before but when DA came into power, they killed it and introduced the R350 reconnection fee.

“We’ve decided to reintroduce set-off because in the current climate where the collection rate is slow, the credit policy was suspended and we didn’t have revenue,” he said.

Mtsila said this way, the municipality would not suffer and people would not have their electricity cut.

Bay ratepayers association chair Kobus Gerber said they would oppose any rates increases and the reintroduction of the set-off policy.

Gerber said he was in contact with Willie Spies, who often represents AfriForum, to look into their issues against the leaders of the metro.

“We’re in contact with the legal team and going to court over the budget.

“We want the budget declared illegal.

“All the processes taking place now are irregular.

“They can’t do this without a mayor.

“We’re bringing a team down here as ratepayers.

“I’m aiming to have this metro under administration,” Gerber said.