Startling revelations have emerged regarding the staggering consumer debt owed to the Newcastle Municipality. The debt, according to the municipal entity, has soared to R1 billion as of the end of June 2023.
These revelations followed a comprehensive inquiry initiated by the ANC Mbuso Kubheka Region on 22 August 2023. The political party sought to gain insights into the financial standing of the municipality, and these findings were now made public.
The Acting Municipal Manager, Dr Dumisani Thabethe, was scheduled to present the response during a council meeting held on Wednesday, 30 August 2023. However, in an unexpected turn of events, the response was not presented. Nonetheless, a detailed report outlining his response was acquired by Newcastillian News from a reliable Municipal Official.
According to the provided response, consumer debt had surged to the monumental figure of R1 billion, a statistic consistent with the figures presented in the June section 71 report. This alarming escalation of debt is primarily attributed to the nonpayment of municipal services, particularly by residents residing in the Eastern Region of the Newcastle Municipality.
The response also underscores a significant factor contributing to this debt surge. It reveals that the municipality lacks the authority to enforce robust credit control measures due to the unique situation where the electricity supply is managed by Eskom, not the local municipal authority.
“The collection rate in the areas where we supply electricity is as high as 95%, but the areas where we do not supply electricity is on average 25%. We have reached a situation where the Municipality can no longer afford to have this low collection rate in the areas where we do not supply electricity,” reads the Acting Municipal Manager’s response.
The report further highlights that the declining economic situation in Newcastle and the country (high inflation rates, high levels of unemployment, and high food and fuel costs) is making it increasingly difficult for consumers to not only be able to pay their municipal bills but other costs of living expenses such as rental payments, bond payments, fuel, and groceries.
“The municipal bill is usually left as the last bill to be paid as other expenses are prioritised, leaving the consumer in a situation where they are unable to pay their municipal bills,” the report reads, adding that the tampering of electrical metres is also another contributing factor.
Moreover, Dr Thabethe’s response includes a comprehensive analysis of billed revenue versus actual receipts over the past four years, presented in the following table:
The accumulated figures from this table, spanning the period between 1 July 2019 and 30 June 2023, illustrate a staggering discrepancy of R1,086,645,971 between billed amounts and received payments.
Furthermore, Dr Thabethe’s response underscores that this substantial deficit represents longstanding arrears, exacerbating the growing burden of debt that has persisted for over two decades.
The response also acknowledges a fundamental issue: the Newcastle Municipality’s available cash balance of R12 million in June was woefully inadequate to address the mounting outstanding debts.
ANC’s Councillor Reuben Molelekoa emphasised the urgent need for the Newcastle Municipality to confront its financial quandary. He stated, “The Municipality owes billions to its creditors, and the problem is that there is no cash flow; we don’t have money in the bank.”
With the Newcastle Municipality now grappling to enhance its collection rates, the question looms: What strategies will prove effective in reversing this alarming financial trajectory?
We Newcastillians to share their perspectives in the comments section below.