EMBATTLED MUNICIPALITY
Tshwane cuts defaulting customers’ electricity in bid to stabilise finances, improve service delivery
The City of Tshwane, which doesn’t have the funds to pay for its R46bn budget, is cutting off the electricity of non-paying customers in an attempt to boost revenue.
The embattled City of Tshwane is clamping down on clients who fail to pay their bills, including households and businesses, to try to claw back some of the more than R6-billion owed to the municipality.
This week, the city’s debt recovery officials descended on residential, private and government buildings and issued more than 188 disconnection job cards, with a total estimated debt of R50-million.
The officials also disconnected the services of more than 70 accounts with immediate effect and imposed steep fines for meter tampering and illegal connections.
The cut-off campaign, named #TshwaneYaTima (Tshwane Switches Off), was introduced in 2022 and in May 2023 it was announced as a standard operating procedure by Executive Mayor Cilliers Brink.
The top 1,500 defaulting clients with high service bills are being targeted. Among the biggest debtors is a business whose electricity meter and circuit breaker were found to have been tampered with.
“The owner has been issued with a R27,000 fine. He will also have to pay a reconnection fee plus 30% of the debt, which is standing at R230,000,” the city said.
In another instance, officials disconnected a popular student accommodation which owed R1,800,000.
The Congress of South African Trade Unions (Cosatu) in Gauteng slammed the city’s escalating debt, standing at more than R3-billion owed to Eskom, saying it “raises serious concerns about its ability to meet its financial obligations and deliver essential services to the residents”.
“The mounting debt not only poses a significant risk to the municipality’s ability to conduct business but also jeopardises the timely payment to service providers. This situation could have severe repercussions, as service providers may find themselves waiting for payments that may not materialise, potentially leading to disruptions in the delivery of basic and essential services to the community,” Cosatu said.
Financial rescue mission
The city’s MMC for finance, Jacqui Uys, said, “Our number one priority as a city is financial rescue. We’ve been making the hard decisions, like forgoing salary increases, exactly because we are in financial difficulty.
“Measures such as aggressively cutting off non-paying consumers, going after illegal connections, leasing non-performing assets, unlocking private energy generation and devising partnerships with the private sector are all aimed at (1) getting the books to balance and (2) delivering value for ratepayers’ money. We are fighting for the future of the city,” she said.
Tshwane’s financial woes are well documented. It received an adverse audit opinion from the Auditor-General for the 2021/22 financial year, during which it racked up R1.2-billion in wasteful expenditure.
In 2020, it was placed under provincial administration by the then MEC for cooperative governance and traditional affairs, Lebogang Maile, after he contended that it could no longer carry out its mandate of delivering services to residents. The Constitutional Court, however, found the provincial government had misconstrued its powers.
The financial woes were recently exacerbated by a protracted illegal strike for wage increases that began in July and ended in November 2023.
Read more in Daily Maverick: Cash-strapped Tshwane targets service delivery backlog after municipal strike ends
Thousands of municipal workers downed tools, demanding a 5.4% increase, the last phase of a three-year wage agreement signed at the South African Local Government Bargaining Council in 2021.
To honour the agreement, the city needs R600-million, which it has repeatedly said it cannot afford, as it is battling to pay its creditors, including Eskom and Rand Water.
The strike led to the collapse of services including waste collection, attending to electricity and water outages, and fixing leaks, potholes and streetlights. It turned violent and 255 vehicles belonging to the city were torched, according to the city’s spokesperson, Selby Bokaba.
Although the strike came to an end, four months later the matter remains with the Commission for Conciliation, Mediation and Arbitration.
In addition to being unable to pay wage increases, the city staggered the payment of a 13th cheque to all workers over three months. This was necessitated by its failure to meet the revenue collection target.
‘A daunting task’
It appears that the City of Tshwane as well as the City of Ekurhuleni’s financial problems are far from over, as neither has provided their annual financial statements to the JSE within the required seven months. They have until the month-end to do so or their debt-raising instruments could be suspended, Business Day reported.
In December, the City of Tshwane’s finance MMC Peter Sutton resigned and reportedly took up a senior position in the private sector. During his tenure, Sutton spoke openly about the breakdown of internal systems and controls and the collapse of revenue collection in the metro.
Uys took up the position last month and said: “We have a large budget of [R46-billion] which is unfunded, and the city’s financial woes are no news to anybody. It’s a daunting task, but I believe that my time in the finance committee has fully equipped me to grab the bull by the horns and to continue the financial rescue mission of the city.”
She believes that, in the months to come, there will be a strong need to fix the city’s checks and balances to ensure taxpayers’ money is spent wisely and that law and order is restored, and to get more people into the taxpayers’ net. DM
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This article should be titled “Tshwane cuts defaulting customers’ electricity because it is the right thing to do”
These thieves are crippling our entire country and must be stopped – now.
Unfortunately the CoT continues to focus on the wrong aspects. Since 2016 the service delivery has continued to decline as they continue to ignore the finding of the AG and Treasury. The main issue is not on the income side but on expenses. The last audited statements (2021/22) show that 95% of bills issued were collected between 30 and 60 days. And yet, the CoT is unable to pay Eskom, Rand Water and suppliers? The amount budgeted for maintenance and repaired has not been near the Treasury guidelines of 8%, resulting in a backlog of more than R16bn since 2016. The amount budgeted and spent on capital has also not complied with the Treasury guidelines of 10-20% resulting in a further backlog of close to R30bn. Surely, it is clear that the focus should be on expenses? But let us consider the following:
– Since 2016, the AG has repeatedly pointed out that the amount of electricity lost (either lost or stolen) is substantially above the norm, resulting in annual losses of R2-3bn per year! The CoT has done nothing to stop this.
– Similarly, the percentage of water not billed (either lost or stolen) is also far above the treasury guidelines resulting in another R2-3bn loss per year! The CoT has done noting to stop this either.
– In 2021, the CoT council voted to increase all salaries of all personnel by 30%. This added increased the salary bill by R6bn for that year and of course for every subsequent year with annual increases. As a result, Moody’s downgraded the CoT do junk.
Surely you can acknowledge that while it may not be optimal, it is certainly better than nothing – and hopefully just the start.
O Shucks, you have fallen for the Mayor’s campaign coming from the more that R100m of taxpayers money! They are publishing an article to say they are “planning” to do the jobs they are already paid for! And people actually fall for it. Remember it is election year.
But lets look are reality. More that 25% of the 214 councillors in CoT owe millions to CoT in unpaid rates and taxes. Just look at the financial statements as it shows the name and amount of each councillor’s debt. The CoT has paid billions for prepaid meters. But these make no difference as they are installed in areas like Waterkloof and Cornwall Hill where residents have been paying their bills regularly. These meters are not installed at the homes of councillors or the areas having the most problems with payments. The contractors want to make easy money.