NATIONAL NEWS - The newly-elected Tshwane mayor has described the metro’s finances as “truly alarming”, saying revenue collection and aggressive cost-cutting measures were the only way to improve it.
“The metro is now operating at a significant deficit of R4.4-billion,” said mayor Randall Williams.
At the end of the 2018/19 financial year, when the DA was in government, the metro had a surplus of R545-million; while between July 2019 and March 2020, there was a surplus of R284-million.
“Having now scrutinised the pre-audited financial results for the 2019/20 financial year, I have learnt that this surplus has been completely eroded,” he said.
This meant that over the period from April 2020 to June 2020, the temporary administrators spent the surplus that they found – along with an additional R4.4-billion.
On Monday, Williams held a working session with the acting city manager and the chief financial officer to discuss the state of the metro’s finances.
He said the cash/cost coverage ratio was particularly worrying, indicating the metro’s ability to meet at least its monthly fixed operating commitments from cash and short-term investment.
He said these commitments could be met without collecting any additional revenue, during a month.
“The norm for a financially sound municipality is between one and three months.
“This situation has seen the metro take up a short-term debt facility of R800-million and accessed withdrawals from its long-term debt redemption fund of R680-million.
“There is also evidence that while debt owed to the city has increased, the collection of this debt deteriorated under the administrators.”
He said the metro’s debt book also showed that there had been a significant increase from June 2020 from R12.6-billion to R17.4-billion.
He said the increase had not been matched by collection.
“At the end of June 2019, the collection rate was 88.75%, however, by the end of June 2020 financial year end, it had dropped to 74.48%.”
Williams said it was imperative that his members brought the metro’s revenue collection up to a sustainable level by the end of July 2021.
“When I took office, I promised to focus on improving core service delivery and this is why my first mayoral priority will be the restoration of financial stability in the capital.”
He said to achieve this, the metro would require a multi-pronged approach that seeks to expand the metro’s revenue collection while also aggressively cutting costs and unnecessary expenditure.
“I want to assure every resident that my administration will stabilise the city’s finances with great urgency.”
He said that revenue on electricity had been identified as a key risk.
Williams said his plan was to ensure that meter readings across the metro were regularised to ensure accurate billing to residents.
“We cannot have a situation where it takes months to take meter readings and the residents receive massive back-dated or inaccurate bills.
“I want to emphasise my commitment towards ensuring that residents are issued with accurate municipal accounts.”
Williams said he wanted to aggressively unroll a meter replacement programme that focused on the installation of prepaid meters.
“The installation of prepaid meters can alleviate the need for regular meter reading and create a more affordable management process into the future.
“I know that the e-Tshwane system has immense potential and want to encourage consumers to register on the platform If we are able to move away from issuing hard copy reports via the SA postal service, which has irregular performance.”
He said this would prevent billing delays and save costs.
Williams said it was critical that the metro enhanced customer care operations for residents to query accounts, report complaints and get the feedback that they need.
He said this would require constant tracking to assess how responsive the metro’s customer call centres were.
“I intend to ensure that the financial stability of the metro improves significantly as the future of the capital and our ability to deliver services depends on it.”
