Tshwane consumer debt rises to R10.2bn

Consumer debt in the City of Tshwane has increased by R1.6-billion to R10.2-billion in the 2016/17 financial year. Almost half of the R10.2-billion is considered irrecoverable
Consumer debt in the City of Tshwane has increased by R1.6-billion to R10.2-billion in the 2016/17 financial year. Almost half of the R10.2-billion is considered irrecoverable
Image: Freestock image

Consumer debt in the City of Tshwane has increased by R1.6-billion to R10.2-billion in the 2016/17 financial year.

The debt is one of the major concerns that the city is facing after being able to retain an unqualified audit opinion from the Auditor-General in its first year under the Democratic Alliance.

“The increase in consumer debt remains a serious concern for the city … The difficult economic climate and the rise in unemployment levels have had an impact on payment levels. Actions taken in terms of credit control policy also were not fully effective and these factors resulted in the average collection rate on current billing regressing to 90.4% compared to 93.1% in 2015/16‚” said Tshwane finance MMC Mare-Lise Fourie.

“Non-payment is across the board. It is not restricted to certain places. Don’t think that non-payment is restricted to townships. It is everywhere‚” said Fourie.

The city reduced its unauthorised expenditure from R1.7-billion in 2015/16 to R620-million in 2016/17. Irregular expenditure decreased from R950-million from the previous financial year to R838-million in 2016/17. Cash available to the city as at June 30 2017‚ totalled R2.1-billion compared to R1.2-billion in the previous financial year.

The city closed the financial year with an operating surplus of R704-million. The budgeted surplus for the year was R1.13-billion but included R750-million for the sale of smart meters to a new contractor‚ in accordance with the cancellation contract that was subsequently ruled irregular by the court.

The operating deficit was reduced from R2.1-billion in 2015/16 to R1.3-billion in 2016/17. Another area of concern for Fourie was the material loss of R1.6-billion on electricity‚ which is an increase from the previous R1.3-billion.

Technical losses incurred during the distribution of electricity amounted to R526.7-million. Non-technical losses due to administrative and technical errors‚ faulty meters‚ negligence‚ theft of electricity‚ tampering with meters and unmetered consumption amounted to R1-billion‚ up from R858.2-million in the previous financial year.

Tshwane mayor Solly Msimanga said the city was working hard to deal with all the financial issues identified by the Auditor-General.

“The focus of the 2016/17 financial year was to ensure that the city becomes financially viable and sustainable. This required reviewing the current spending levels within prudent financial limits‚ necessitating re-alignment and addressing basic service delivery. The IDP (integrated development plan) remains the implementation framework for service delivery intervention‚ good governance and a mobilisation platform for partnership with the private sector‚ social partners and communities‚” said Msimanga.

“The City of Tshwane is currently in the process of disentangling itself from wholly unaffordable broadband and fleet management contracts and we are optimistic that the close of the next financial year will see us free from these contracts‚” he said.

The AG report will be tabled in the council meeting on Thursday.

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