Ekurhuleni writes off millions in bad debt

Wednesday, September 2, 2009

Ekurhuleni - The Ekurhuleni Metropolitan Municipality has resolved to write off R47 million in bad debts which had accumulated from unpaid water and electricity accounts.

Municipality spokesperson Zweli Dlamini said the metro had decided that the 2007/08 financial year-end adjustment of just over R47 million in respect of water and sewer be reversed and written off against bad debt provision.

"The amount of water written off was over R31 million while the sewer accounted for over R15 million in bad debt," he said.

The municipality embarked on a comprehensive water and electricity meter audit of the region in the 2005/06 financial year.

Mr Dlamini explained that the audit was necessary to ensure that a full record of existing meters was in place and that all meters were recorded and billed for consumption accordingly.

"The audit has enabled the metro to make necessary corrections and updates to existing billing records," Mr Dlamini said.

The scope of the audit included the verification of the existence and condition of all water and electricity meters per individual property, replacing old and damaged meters, reconciling meter data against billing records and recording current reading and compares this to billing data.

Mr Dlamini said during the meter audit process, the principle was applied to effect billing as from the date of confirmed reading.

He pointed out that although 47 426 meters were confirmed through the audit process, meter upload and billing could not be effected and was therefore only done as from the date of verification of the reading.

"If initial meter readings were utilised it would have resulted in a substantial increase in uncollected debt, which would affect low income groups as 41 702 meters are located in the low income group areas.

"The adjustment was only a desktop calculation of possible loss of income, based on consumption averages in respect of relevant meters and was not billed to relevant accounts, it was further assumed that in all instances sewerage charge would also have been affected," said Mr Dlamini.

He noted that the collectability of these debts was almost zero and would in any event have resulted in the Council being requested to write-off uncollectable debt if billed to the accounts.