By Johan Pretorius
In a wide ranging briefing on Tuesday, Ugu Municipal Manager DD Naidoo outlined the tremendous problems the municipality was facing, touching on several issues, emphasising that at the moment, it could not sustain itself in terms of a sound business model. He was quite blunt in his admission that Ugu was spending more than it was earning, and mentioned a series of factors which had caused or were still contributing to the current crisis.
The municipal manager said the municipality informed the council at its monthly meeting last week about the seriousness of the situation, and after council implored management to reverse the trend, gave the assurance that it had already embarked on an extensive turn-around strategy. It presented council with a detailed document in this regard, which, inter alia, sketched a revised revenue collection plan, a co-ordinated water services delivery strategy, a revised expenditure plan for operational services, and an overall cost containment strategy.
Mr. Naidoo pointed out that Ugu’s income revenue was about R28-million per month, while it was invoicing R38-million for services rendered. Because of this R10-million rand shortfall, the municipality was ‘eating into its reserves’, which was an untenable situation. He then listed the main reasons for the current situation.
Ugu’s government grant was R245-million per annum, and it was not keeping up with the demand for capital works programmes. Capital expenditure was R750-million, and certain projects had to be financed out of Ugu’s own reserves. A big reason for the huge capital expenditure were unexpected events, for instance the aged Shelly Beach relay pipe which recently broke 13 times in three weeks, and cost R8-million to repair. Contributing to the cost was the huge amount of water losses, or water that Ugu had to provide but received no revenue for. A good example was the water provided via tankers or stationary tanks during breakdowns, and via standpipes in rural and other areas. Ugu had an agreement with Umgeni Water to supply water in the northern areas which it had to pay for. As the district municipality it had a duty to assist constituent municipalities in various ways, which brought no income, such as local economic programmes. In addition, every water user was entitled to free six kilolitres per month.
Mr Naidoo revealed that the municipality’s debt book on Monday stood at R501-million, and there was no way this situation could be allowed to continue. Therefore drastic measures had to be taken to step up debt collection. One of the issues he touched on was outstanding water accounts. He thanked members of the public who were paying on a monthly basis, despite billing problems, which helped to boost the monthly income to more than R28-million. Unfortunately, this was R10-million less than should be coming in. On Monday the municipality’s debt book totalled R501-million, which meant that something drastic had to be done to increase revenue collection. Mr. Naidoo said besides the concientious regular payers, there were three other categories of account holders. Those who had genuine disputes, but who paid while the disputed part was being sorted out, those who bluntly refused to pay for reasons of their own, and those who simply couldn’t pay because of their dire financial situation. He had the greatest sympathy with the last category of people, and their circumstances would be taken into account. However, the water supply of those individuals, businesses and government departments who should pay, but don’t, was going to be terminated. The water billing system should be sorted out very soon, he said. He appealed to people who had queries to contact the municipality to get clarity on what their situation was, and to continue paying the average amount until the matter had been sorted out. Mr. Naidoo emphasised this was no idle threat. There was simply no other way to force people to pay for the water they used.
The problems with the billing system were in the process of being sorted out as members of the public communicated with the accounts department, and there was light at the end of the tunnel. He announced that from 1 November the call centre would be moving from Oslo Beach to the control centre in Marburg to improve communicating accurate information to the public. The financial section would be operational from 07h30 to 16h00 during the week for billing inquiries.
He was quite adamant that long-term solutions had to be found at all costs and in every possible way. ‘We will have to go into a cycle of recovery. Two years down the line when we have built up our reserves, it will be senseless to have to go through it all again”. Referring to Ugu’s staff complement, Mr, Naidoo pointed out that there were differing opinions. Some people said Ugu’s staff complement was acceptable, some contended it was understaffed, and others said it was overstaffed. Whatever the case might be, he stated, the simple truth was that Ugu could not afford the current staff complement. It was as simple as that. Vacancies were not being filled. Three senior managers left recently, and they had not been replaced. In the lower ranks the same principle was being followed, and the HR section would need a solid motivation for departing workers to be replaced. Only posts critical to service delivery would be filled. A policy of natural attrition would be followed, and if that did not work, other measures would be considered. The unions would be engaged and consulted on any action to be taken. Mr Naidoo stressed that new organisational structures were being formulated and the whole staff complement, from the top right to the bottom, would be scrutinised in the process, to enable Ugu to deliver its services with the available manpower.
Mr.Naidoo pointed out that the salary increase of 7% ( which also inflated perks like housing loans and car allowances), and which was determined nationally, was considerably more than the increase in Ugu’s tarriffs by 5.3%. The majority of other municipalities’ tariff increases were much more than that, some in double figures, and it was probably, with hindsight, a big mistake on the municipality’s part not to have implemented a bigger tarriff increase. Compounding the issue was the huge petrol price hike, which affected travel costs. In a big geographical area such as Ugu the extra expense was astronomical. Part of the turn-around strategy would be a monitoring of Ugu vehicles after hours to prevent staff from using them for social purposes. Ugu vehicles travelling at night or parked somewhere, should be reported to the municipality immediately so it could check whether it was sanctioned or not. The municipal manager stated: “We brought this upon ourselves. We need to change the way we do things, and stop spending money on non-core items. Some of us do not want to accept that we have a shortage of money, and think that the government will provide. We are not getting more money from the province. Officials will have to handle the situation and fix it by themselves.”
Mr. Naidoo said individuals could not be blamed for the current situation and it was not the time to start blaming each other. If someone should be blamed, it was the the accounting officer, i.e. the municipal manager. That was why everything possible would be done to turn the situation around.
Addressing the possibility of the municipality being placed under administration, Mr. Naidoo said it would not change anything. All that would happen was that people from the outside, normally ex-municipal managers and other officials who reported to the MEC, would be brought in to ensure that the officials implement the turn-around strategies and do their work.
In response to a question, Mr. Naidoo gave the assurance that it was all systems go for the Festive Season, and that services would be rendered as normal.