A special council meeting, of the Buffalo Bay Municipality, approved the decision to write off debts of R 267,574,3123.17 (including VAT).
The decision was taken on Thursday, in terms of the credit control policy, in May 2017, for 26 722 indigent debited households.
It is in respect of Property Rates and Service Charges for the period ending 30 April 2024.
In a statement, the Municipality said the council also recommended the debt impairment be disclosed in the 2023/2024 Financial Statements under the Statement of Financial Performance and the Notes to the Statements.
“When the monthly bill is produced, the indigent subsidy, and where applicable, the property rates rebate is granted, In many instances, the monthly amount billed exceeded the indigent subsidy and rates rebate. The subsidy also includes a monthly allocation of free basic electricity of 50 kWh and 6kl of water.
The expectation is that the indigent debtor will settle the balance of the account. However, in many instances, the debt accumulates.”
In terms of the collection of debt that has accumulated on the account, the debt is placed on a partial block type (60/40) on the electricity repayment system.
This means that for every rand tendered for the purchase of electricity, forty (40) cents is allocated towards the arrears. No legal action is taken against indigent debtors as this will place an additional burden on the poorest of the poor.
As no further debt collection methods can be applied, the debt is written off.
The Municipality also said a challenge associated with this action, is the subsidy and associated rebates, for these households, do not cover the monthly billing, resulting in an accumulation of debt.
“The partial block type does not fully recover the accumulated debt.
Water leaks are not reported and left unattended and therefore this results in high-value billing.”