Newcastle Municipality claims debt from residents and businesses

Municipal Manager, Bhekani Mswana, discusses the problematic non-payment of accounts by residents.

NEWCASTLE CBD – A lot has lately been said about the financial status of the municipality. Aside from loans taken by the municipality and infrastructure costs, outstanding debt to the municipality by residents has a substantial impact on the economic status of the town.

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Newcastle Municipal Manager, Bhekani Errol Mswane held a media briefing on Tuesday, January 31 regarding debt owed to the Newcastle Municipality, and debt collection procedures.

Outstanding amounts on December 31, 2016 were as follows: businesses R67 408 290, government R23 780 745, and residents R782 000 000.

Regarding debt owed by individual residents, he had the following to say:

“This figure does not necessarily include those who are indigent. Accounts of indigent persons are not a matter of concern, because council has made a provision ensuring they are taken care of. We are mainly targeting members of the community who are able to afford paying their debt, earning beyond the threshold of R3500 per month,” he said.

He continued by saying the collection of debt from Madadeni and oSiszweni was the main priority of the municipality, because outstanding amounts in these areas were the most prevalent.

“It is a fact we have done very little to make sure people from these areas are paying for their services. Only 12 per cent of the accounts being billed from Madadeni and oSiszweni get honoured. The areas in town are easier to control in terms of collecting debt as we are able to shut of services when payments are in arrears, whereas Madadeni and oSiszweni are not licensed areas of the Newcastle Municipality.”

He said some factors that made debt collection a challenge in the past were ineffective systems and internal controls. To overcome these problems, the municipality was working on improving internal mechanisms to ensure payments were done on time.

Part of the project in place includes the installation of water restrictors in areas where the municipality does not supply electricity, such as Madadeni and oSizweni, which is said to begin on Monday, February 6, and businesses of Madadeni would be dealt with first.

Each restrictor costs R1.50 and the total budget calculated for the purpose of resources needed for entire project is R150 000, excluding additional costs regarding human resources.

In order for a restrictor to be removed, businesses and individual consumers must pay the whole amount due from July 2016 to December 2016, and 50 per cent of the amount owed from January 2016 to June 2016.

This amount may be altered to suit individual incomes, but no discounts lower than 20 per cent may be applied to the account. The current account must be up to date at all times. Consumers must then make arrangements to settle debt prior to January 2016.

“I will confidently say the municipality has done everything in its power to ensure people are coming forward to honour payments, but the fact that we are sitting on 12 per cent tells you we have failed. Now we are going to impose the restrictors, and we are issuing 11 000 letters of notices to the community, because we want people to come forward and make arrangements with us to settle their debt,” said Mr Mswane.

The municipality will be submitting reports to council to keep them and the community updated regarding progress made. The municipality also plans to do an audit verifying the legitimacy of those classified as indigent.

The community should be aware that if the municipality does not get a response after notices have been issued, the amounts owed and the names of residents will be published in the media.

“This will be our last extreme measure which will only be taken if residents do not cooperate, because even though we are here to serve the town, it is not fair for some to pay their accounts, and others not to pay, as those paying are subsidising those who are not.

Residents can call 034 940 0440 for any queries regarding accounts.

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