In the coming months, the municipality will be intensifying its efforts to recover outstanding debt from slow-paying consumers.
This will be done in a bid to stabilise the city’s tenuous financial position and as part of a financial recovery plan (FRP) implemented late last year, to guide the municipality to financial recovery within the shortest time.
The city is currently in the rescue phase of the FRP, which calls for stricter credit control measures, curtailing wasteful expenditure and improving billing systems.
This means that the city will be putting pressure on ratepayers to ensure that any outstanding bills are settled, clamping down on illegal connections and reconsidering how much is allocated for ward-based funding among other strategies.
The reduce phase of the FRP is likely to last until December 2024 and marks the start of what will likely be a long and difficult time for the municipality lasting several years that will force BCMM to tread a fine line between saving money and ensuring services are met considering the already dire state of the roads, water bursts and sewage overflows which are exacerbated by backlogs dating back years, in basic services to some communities.
Between October to December last year, the collection rate for services increased marginally from 62.32%-64.61%, which is far off from the over 80% collection rate needed to balance the budget.
For the remainder of the financial year, cash will remain constrained and with no reserves to fall back on.
Councillor Geoff Walton said the success of the FRP was dependent on senior officials curtailing non-essential expenditure and the willingness of council to curtail expenditure during an election year. Walton said if council did not support the curtailing of expenditure then the plan would be in jeopardy.
He added that it was unlikely that the municipality would reapply the much-maligned 80/20 block on electricity purchases from last year however the CFO will still be forced to use any measures available to compel ratepayers to settle their debts.
Walton said the challenge would be to convince ratepayers of the validity of the billing systems.
Walton said: “Consumers appear to have little faith in the accuracy of our billing. The problem is that issues have lingered for so long, that even if the billing efficiency is good, consumers will still not feel confident.
“This is an own goal for the municipality. They created the mess in the first place, and only they can remedy that.
“While many accounts are correct, the ongoing problem with interim billing for water in particular is a matter requiring serious attention. The smart water meters were installed to deal with just that problem, but seemingly there are issues to be dealt with there.
“It will therefore be necessary for the municipality to be more open to consumers, more accommodating, more responsive, more empathetic, more willing to appreciate that the consumer also has a view, so that consumers can feel that their views are heard and acted upon.
“Currently the position is one of being defensive and rigid as opposed to being open, fair and responsive.
“The municipality has to learn to communicate with consumers regarding issues related to their accounts.
“Just applying a back charge without communicating why it is necessary, and how it is calculated, is not correct. Descriptions on the account are not useful in explaining that.
“On the credit control side, we support strict credit control measures where appropriate. Handing over an account based on interim readings is not appropriate. I have dealt with cases where after a meter was read, far from owing the municipality money, the municipality owed the consumers.
“But those who owe valid amounts, must pay, and we support action in that regard. Those consumers must expect increased attention, and must make arrangements to meet their commitments to the municipality.
“We must trust that budget will not be stripped from budgets for repairs to potholes and water and sewer bursts or other essential services.
“If that happens, then resistance to payment can be expected.
“This financial recovery plan will cause considerable pain for a number of departments not engaged in services direct to the public. That is unfortunate but necessary. There is no space for frills, and nice to haves.”
