Bad debt worries cities as economic woes grow

08 February 2016 - 02:17 By Shenaaz Jamal and Penwell Dlamini

South Africa's low economic growth is squeezing the life out of municipalities as ratepayers fail to pay for council services. In Gauteng, which boasts higher job opportunities, the three metros have about R30-billion of irrecoverable debt.Although Ekurhuleni, Tshwane and Johannesburg got unqualified audit opinions, t he a uditor-general expressed concern about the money he considers irrecoverable.This is debt the cities are unlikely to recover and has been on the books for more than one year.A City of Johannesburg source said its irrecoverable debt is about R17-billion. Its capital budget for 2014-15 is R10.8-billion.For Ekurhuleni, which received a clean audit, the auditor-general identified R9.1-billion of irrecoverable debt. The metro's budget is R3.9-billion.Tshwane had a capital budget of R4.1-billion and irrecoverable debt of R800-million.Tshwane experienced non-technical losses of R548-million last year, up from R416-million the previous year. These were due to unauthorised consumption, tampering of and faulty meters.Ekurhuleni's electricity loss amounted to more than R748-million last year, down from R790-million the previous year.SA Local Government Association's Nhlanhla Ngidi said: "Once you alleviate the poverty levels in your supply area, a lot of people will be able to pay their bills."In a place where you have people who can afford to pay and choose not to, when you cut their energy, they find a way to [pay]. But, if you cut energy of a person who cannot afford to pay, they will connect illegally."..

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