Amathole District Municipality (ADM) council has approved the writing-off of R1.2 billion worth of irrecoverable debt.
The approval comes after the ADM council’s ordinary meeting held at the Calgary Conference Centre on April 29.
“ADM has and continues to conduct vigorous debt collecting initiatives to encourage its consumers to service their accounts. In addition to ADM’s challenges has been the constant theft and misuse of water by its customers.”
“To curb this, a rural yard connection policy was approved by council. The recommendations from the same policy are currently being implemented to reduce the scourge of illegal connections and misuse of this scarce resource.
“They entail installation of households’ water meters to bill consumers accordingly and encourage responsible water usage,” said ADM spokesperson, Nonceba Madikizela-Vuso.
The recommendations further stipulate the unchanging role ADM will continue to play in ensuring that its registered indigents are still able to receive their free basic 6kl of water per month, hence the encouragement for consumers to come forward and register.
Domestic consumers are also reluctant to apply for indigent subsidies, even though they qualify and those who are on the indigent register exceed their threshold of 6kl a month. These contribute to the increase of debt as consumers who are destitute are billed for services they cannot afford to pay.
The hostile reception that revenue collectors in ADM encounter in some areas that have been deemed as “no-go areas”, have also dented the effort to recover the debt successfully. As a result, billing estimates have tended to be high, which also has had adverse impact on the debt book.
ADM’s credit control unit performed an analysis exercise on every debtor category before the debt write-off.
The exercise was a crucial verification process before the debt write-off could be considered and approved by council.
Through the exercise the unit made the following conclusions:
- In accordance with the National Credit Act (NCA), prescription of debt is to be written-off.
- Long-overdue property owner accounts, including tenants’ accounts, will be written-off.
- Inactive accounts will also be written-off.
- Those who have registered as indigent will also have debt written-off.
- Businesses that have been liquidated and unable recover from the winding up of the business will be written-off.
ADM has further decided that property owners be ordered to open accounts as services will no longer be billed from the tenant’s account but payment will be the responsibility of the owner. Property owners who do not comply with the order are to be disconnected.
ADM is aware that eradicating the culture of non-payment will not be easy. Hence the debt write off will be implemented in tandem with strict measures that will ensure that debt does not accumulate to excessive amounts again.
The municipality therefore resolves to:
- Enforce the credit control and debt management policy by restricting and disconnections of all properties with outstanding debts older than 60 days.
- Continue with data cleansing and to regularly update consumer information.
- Investigate and correct high estimates.
- Ensure billing is done on actual readings.
The R1,2 billion debt is divided across nine debtor categories.
The following is a breakdown of the debt:
- Domestic – R785,2 million.
- Liquidated businesses – R67 million.
- Indigent – R117 million.
- Inactive – R13,8 million.
- RDP – R57,9 million.
- Late estate – R173,3 million.
- Farms – R746 830.
- NGO/NPO – R1,8 million.
