Question NW52 to the Minister of Cooperative Governance and Traditional Affairs

Reply:

(a)(b) (c) Annexure A: Attached provide details of total amount owed as at 30 September 2017, interest amount included in the total debt and age of debt for each of the 61 specified Municipalities.

Numerous requests were sent to Eskom requesting latest available information, to date we were not able to get the requested information.

With regard to the municipalities that are struggling to pay Eskom, the department is implementing the following interventions:

1. The simplified revenue plan

During the period 2016/17 financial year to 2017/18 financial year, the department has identified a total of 30 municipalities countrywide support on development and implementation of simplified revenue plans, from these 30 municipalities, three were from the North West Province i.e. Ditsobotla, Moses Kotane and Naledi local municipalities. The simplified revenue plan is aimed at achieving improved revenue management, reduction of municipal consumer debt, protection and enhancement of the municipality’s revenue collection potential.

The municipalities supported were assisted with the following initiatives that resulted on improvement of debt collection:

• Focused initiatives on the highest owing debtors per municipality
• Data authentication and purification of billing information
• Review of credit and debt collection policies and by laws;
• Development of Standard Operating Procedures (SOP’s)
• Tariff setting model for electricity and water and tariff policies
• Indigent management.

The project has been extended to four more municipalities in the North West Province for the period 2018/19 to 2019/20 financial years, these are Kgetlengrivier; Maquassi Hills, Mamosa and Tswaing.

2. Property and consumer database

The department has also initiated a project on development of spatially enabled integrated property and consumer database for municipalities. The project focus is on municipal data integrity which will provide municipalities with a platform to access up to date data from a central point hosted by the department and once fully implemented will assist on improving the revenue collection.

3. Executive Intervention on the non-payment of Eskom and water service authorities

At an Executive level; the minister of CoGTA chairs an Inter-Ministerial Committee (IMTT) which provides political direction on the non-payment of electricity and water debt. The IMTT was established to deal with Constitutional, Systemic and Structural Challenges in electricity reticulation. The scope was further extended to include bulk water related debt.

The IMTT was established based on the principles of the Intergovernmental Relations Framework Act, 2005 (Act No 13 of 2005) and the members are: the Minister for Cooperative Governance and Traditional Affairs (as Chairperson). The Minister of Finance, the Minister of Energy, the Minister of Water and Sanitation, the Minister of Public Enterprises, the President of SALGA; and the Chairperson of the Eskom Board. The IMTT has so far achieved the following in making the bulk payments more affordable:

• Reducing the interest rate charged on overdue municipal bulk accounts from prime plus 5% to prime plus 2.5%;
• Payment terms being extended from 15 days to 30 days for municipal bulk accounts;
• Payments received from municipalities being allocated to capital first then interest;
• The rationalisation of municipal tariffs from eleven to three has been approved by the ESKOM Board and will be submitted to NERSA as part of the tariff approval process.

The South African fiscal framework is built on a clear set of functional (expenditure) assignments for basic local infrastructure services delivery such as water services, electricity distribution, solid waste, and local roads and transport in addition to important regulatory authority over spatial planning and development control. These functions are financed predominately through locally controlled revenue sources, such as user fees and the property tax.

Section 96(a) of the MSA, states that municipalities must collect all monies due and payable to it, while Section 96(b) empowers a municipality to undertake this debt collection in terms of adopting a credit control and debt collection policy. Even though that legislative provision is very clear, municipalities are in general still encountering challenges on the collection of outstanding debt.

Some municipalities are failing at effectively delivering services, billing for services and collecting the revenue due. Consequently, outstanding debtors are increasing and they are not able to maintain positive cash flows to pay creditors within the thirty days timeframe as legally prescribed.

The “culture of non-payment by consumers to municipalities affects and results to inability of municipalities to service its creditors. This has been evident in the increase in municipal creditors and debtors book.

It is evident that non- payment of municipal debtors is mostly due to the weaknesses on the municipal systems in implementing relevant sections of the legislations and the implementation of their credit control and debt collection policies.

The Department (DCoG) identified a strategic intervention aimed at enhancing the municipal revenue management and debt collection system in local government. The development and implementation of municipal-specific revenue plans was identified and is currently being rolled out in selected municipalities.

The selected municipalities are identified to be part of the Simplified Revenue Plan Project through the Back to Basics (B2B) programme and by assessing the level of outstanding debt of each of the municipalities. The funding for the project has been set aside from the Municipal Systems Improvement Grant (MSIG).

Project objective

The objective of the Simplified Revenue Plan Project (SRP) is to assist municipalities through Service Providers (SPs) to review and improve the generic replicable model of the revenue plan. Once that is done, the reviewed model would be rolled-out or implemented at each of the participating municipalities. The successful implementation of the revenue plan would result in improved revenue management, reduced municipal consumer debt and protection of municipal revenue.

Support to municipalities through the SRP

The following on-going support and assistance has been provided to municipalities:

• Review and update of revenue policies and by-laws
• Billing (accurate reading/capturing of electricity and water meters).
• Monitoring of consumer/debtors accounts (debtors management)
• Data cleansing and analysis
• Indigent register management
• Customer relations management
• Administration ( Procedure manuals and implementation thereof)

The above support is informed by the initial assessment conducted by the SPs at the inception of the project; the assessment is made by testing the entire revenue management value chain of a municipality; identifying deficiencies and then developing a municipal specific plan to address them.

Impact thus far:

• Continuous increase of municipal collection rate in most of the municipalities supported on phase 1 of the project during the implementation phase.
• Data authentication and purification which translates to billing credibility going forward.
• Substantial recovery of outstanding debt from all consumer groups.
• Focused revenue collection initiative on the municipal the highest owing debtors resulted in the reduction of debtors over 90 days.
• Payment of government debt to municipalities was also recorded.

Challenges

Lack of capacity in the revenue management cycle, be it metering, billing, customer care, disconnections, credit control and debt collection, etc.

• A joint project with NT is being initiated to assess and define the revenue management minimum skills for municipalities.

The state of trading services’ infrastructure is a serious cause for concern; this infrastructure has been neglected over many years when it comes to maintenance and replacement where necessary.

• The infrastructure challenges are being referred to MISA and the municipal infrastructure plans are reviewed to reflect the revenue producing infrastructure upgrades and maintenance.

Lack of political and management buy-in in some instances to play an active role on municipal revenue collection.

• In phase 2 we have made it a requirement that the revenue function be a standing item on the council committee responsible for finance

Annexure A

Table 1: Detail of Total amount owed as at 30 September 2017; Interest amount included in the total debt and Age of debt for each of the 61 specified municipalities

	(a)	(b)	(c)
MUNICIPALITY	TOTAL DEBT 30_Sep_2017	INTEREST	CURRENT DEBT	30 DAYS	60 DAYS	90 DAYS	>90 DAYS
EASTERN CAPE DEMARCATED PROVINCE
DR BEYERS NAUDÉ LOCAL MUNICIPALITY	34 314 514	144 721	16 113 394	13 948	10 014 233	8 172 939	0
INXUBA YETHEMBA LOCAL MUNICIPALITY	44 366 135	1 708 631	8 143 502	0	8 691 147	4 476 280	23 055 206
KING SABATA DALINDYEBO MUNICIPALITY	101 074 779	2 519 227	26 047 098	23 608	36 482 726	28 979 573	9 541 775
MAKANA LOCAL MUNICIPALITY	80 692 139	1 068 315	13 518 941	23 608	57 916 854	9 232 737	0
RAYMOND MHLABA LOCAL MUNICIPALITY	86 036 077	10 664 307	8 878 971	0	9 965 114	7 555 083	59 636 909
WALTER SISULU LOCAL MUNICIPALITY	138 606 259	10 634 195	59 771 861	0	13 292 532	12 707 811	52 834 055

	(a)	(b)	(c)
MUNICIPALITY	TOTAL DEBT 30_Sep_2017	INTEREST	CURRENT DEBT	30 DAYS	60 DAYS	90 DAYS	>90 DAYS
FREE STATE DEMARCATED PROVINCE
DIHLABENG MUNICIPALITY	180 180 663	7 778 783	14 569 059	8 839	20 812 109	19 303 722	125 486 935
MANTSOPA LOCAL MUNICIPALITY	108 883 481	6 073 916	11 363 022	0	136 829	14 222 622	83 161 009
MASILONYANA MUNICIPALITY	52 211 702	1 491 006	3 257 380	0	4 982 672	8 633 701	35 337 950
MOQHAKA MUNICIPALITY	208 988 335	2 121 533	50 004 209	0	31 607 857	31 584 934	95 791 336
NALA LOCAL MUNICIPALITY	182 907 109	503 670	19 559 469	0	63 016	19 976 571	143 308 054
PHUMELELA MUNICIPALITY	91 174 674	11 407 608	3 778 192	59 839	4 481 108	4 601 654	78 253 880
TOKOLOGO LOCAL MUNICIPALITY	35 490 407	397 632	2 575 726	0	3 105 772	5 171 899	24 637 009
GAUTENG DEMARCATED PROVINCE
EMFULENI LOCAL MUNICIPALITY	887 902 806	16 073 844	361 793 520	48 399	274 406 346	208 496 392	43 158 149
MERAFONG CITY LOCAL MUNICIPALITY	190 998 296	6 661 933	48 148 792	18 957	14 313 275	90 307 680	38 209 592
MOGALE CITY LOCAL MUNICIPALITY	144 676 691	4 549 116	51 367 949	0	93 251 256	57 486	0
RANDFONTEIN LOCAL MUNICIPALITY	129 670 297	6 257 784	34 979 634	0	94 690 663	0	0
WESTONARIA LOCAL MUNICIPALITY	19 740 642	19 509	19 664 995	0	37 574	38 073	0

	(a)	(b)	(c)
MUNICIPALITY	TOTAL DEBT 30_Sep_2017	INTEREST	CURRENT DEBT	30 DAYS	60 DAYS	90 DAYS	>90 DAYS
KWAZULU NATAL DEMARCATED PROVINCE
EDUMBE LOCAL MUNICIPALITY	10 010 826	155 547	4 589 779	0	5 218 004	42 456	160 588
MPOFANA LOCAL MUNICIPALITY	54 310 218	394 313	7 062 182	0	47 248 035	0	0
ULUNDI LOCAL MUNICIPALITY	80 148 282	1 895 049	9 790 153	0	13 606 716	12 057 302	44 694 112
ZULULAND DISTRICT MUNICIPALITY	1 227 575	2 403	539 316	688 259	0	0	0
LIMPOPO DEMARCATED PROVINCE
MODIMOLLE LOCAL MUNICIPALITY	125 112 498	7 928 502	11 079 943	0	13 757 075	13 478 997	86 796 483
MOOKGOPHONG LOCAL MUNICIPALITY	116 524 854	9 243 943	6 142 486	0	7 012 013	7 011 834	96 358 520
MUSINA LOCAL MUNICIPALITY	108 486 434	5 712 634	12 913 565	0	10 890 200	12 683 955	71 998 715
THABAZIMBI LOCAL MUNICIPALITY	234 082 664	18 052 760	12 678 566	613 799	0	8 976 294	211 814 005

	(a)	(b)	(c)
MUNICIPALITY	TOTAL DEBT 30_Sep_2017	INTEREST	CURRENT DEBT	30 DAYS	60 DAYS	90 DAYS	>90 DAYS
MPUMALANGA DEMARCATED PROVINCE
ALBERT LUTHULI LOCAL MUNICIPALITY	32 604 094	1 138 051	13 552 319	0	10 633 117	5 474 041	2 944 617
DIPALESENG LOCAL MUNICIPALITY	43 090 511	1 985 290	14 288 462	315 662	10 737 751	7 737 832	10 010 804
EMAKHAZENI LOCAL MUNICIPALITY	49 448 289	2 170 952	6 046 095	0	5 850 586	9 615 724	27 935 885
EMALAHLENI LOCAL MUNICIPALITY	1 394 152 980	41 896 695	91 266 170	0	133 250 603	145 596 329	1 024 039 878
GOVAN MBEKI MUNICIPALITY	625 058 977	15 680 191	61 169 490	0	81 305 996	83 750 718	398 832 772
LEKWA LOCAL MUNICIPALITY	419 338 081	12 584 465	44 370 553	790 601	49 036 497	45 445 515	279 694 916
MKHONDO LOCAL MUNICIPALITY	87 115 135	3 773 920	12 660 480	0	16 713 987	17 065 493	40 675 175
MSUKALIGWA LOCAL MUNICIPALITY	142 222 603	3 390 920	24 270 565	0	117 952 038	0	0
THABA CHWEU LOCAL MUNICIPALITY	428 302 648	7 861 794	34 778 688	0	19 489 235	17 817 195	356 217 531
VICTOR KHANYE LOCAL MUNICIPALITY	39 493 244	1 289 041	10 265 317	0	14 711 919	14 516 008	0

	(a)	(b)	(c)
MUNICIPALITY	TOTAL DEBT 30_Sep_2017	INTEREST	CURRENT DEBT	30 DAYS	60 DAYS	90 DAYS	>90 DAYS
NORTH WEST DEMARCATED PROVINCE
CITY OF MATLOSANA LOCAL MUNICIPALITY	213 038 425	5 843 412	36 505 037	0	176 291 541	241 848	0
DITSOBOTLA LOCAL MUNICIPALITY	253 931 599	13 839 721	20 025 581	25 121	17 181 418	16 473 194	200 226 285
KGETLENGRIVIER LOCAL MUNICIPALITY	61 344 312	4 565 248	7 408 245	0	4 592 008	4 590 027	44 754 032
LEKWA - TEEMANE	34 906 738	858 489	7 952 252	0	16 693 998	4 456 863	5 803 625
MAMUSA LOCAL MUNICIPALITY	61 720 073	3 516 650	3 903 160	15 335	4 949 245	4 585 970	48 266 364
NALEDI LOCAL MUNICIPALITY	254 809 233	17 819 567	10 305 481	0	23 983 445	13 684 245	206 836 062
RAMOTSHERE MOILOA LOCAL MUNICIPALITY (including Zeerust Waterworks)	25 011 848	1 085 610	5 786 046	0	19 056 027	169 776	0
TSWAING LOCAL MUNICIPALTY	74 347 281	5 578 434	8 763 774	41 290	5 510 089	5 848 426	54 183 702
VENTERSDORP LOCAL MUNICIPALITY	28 487 985	9 961	11 028 213	0	17 063 189	396 584	0

	(a)	(b)	(c)
MUNICIPALITY	TOTAL DEBT 30_Sep_2017	INTEREST	CURRENT DEBT	30 DAYS	60 DAYS	90 DAYS	>90 DAYS
NORTHERN CAPE DEMARCATED PROVINCE
DIKGATLONG LOCAL MUNICIPALITY	57 144 069	4 571 615	3 094 917	0	4 004 001	7 394 627	42 650 524
EMTHANJENI LOCAL MUNICIPALITY	25 499 235	674 932	6 679 526	160 137	8 128 160	8 113 536	2 417 876
GAMAGARA LOCAL MUNICIPALITY	64 306 601	1 535 503	21 144 252	0	13 205 830	13 343 265	16 613 254
GA-SEGONYANA LOCAL MUNICIPALITY	45 088 792	3 087 214	15 755 328	0	10 775 231	9 475 887	9 082 346
KAI !GARIB LOCAL MUNICIPALITY	117 636 009	6 325 057	15 786 644	0	7 642 127	7 008 675	87 198 563
KAMIESBERG LOCAL MUNICIPALITY	7 071 005	277 195	953 374	96 019	970 848	760 389	4 290 375
KHAI-MA LOCAL MUNICIPALITY	9 646 955	356 218	940 134	0	946 180	931 858	6 828 783
MAGARENG MUNICIPALITY	34 787 020	1 975 667	2 094 612	0	2 467 163	2 351 992	27 873 254
NAMA KHOI LOCAL MUNICIPALITY	86 363 718	2 637 868	8 514 448	0	10 416 388	8 355 357	59 077 524
PHOKWANE MUNICIPALITY	13 477 667	204 232	10 780 967	0	409 185	395 067	1 892 449
RENOSTERBERG LOCAL MUNICIPALITY	51 519 365	7 022 946	1 606 651	0	1 849 124	1 794 376	46 269 214
SIYANCUMA LOCAL MUNICIPALITY	105 818 693	7 375 505	9 867 262	0	5 627 054	5 639 561	84 684 816
SIYATHEMBA LOCAL MUNICIPALITY	23 837 846	1 365 590	1 885 459	0	2 209 734	2 350 199	17 392 454
TSANTSABANE LOCAL MUNICIPALITY	86 966 733	5 775 730	8 768 969	0	5 539 969	5 678 174	66 979 621
UBUNTU LOCAL MUNICIPALITY	37 885 994	1 982 834	2 129 956	0	2 342 064	2 366 392	31 047 581
WESTERN CAPE DEMARCATED PROVINCE
KANNALAND LOCAL MUNICIPALITY	10 152 055	132 753	10 106 523	0	45 532	0	0
OUDTSHOORN LOCAL MUNICIPALITY	19 115 523	102 139	11 542 110	0	7 573 412	0	0