The City of Ekurhuleni has projected a R1.2-billion revenue shortfall and a sharp increase in bad debt as cash-strapped consumers battle the Covid-19 pandemic.

Mayor Mzwandile Masina told a virtual sitting of Parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs on Wednesday that the situation in his municipality will worsen.

Masina says they expect more consumers to apply for indigent support, and the subsequent rise in bad debt.

"The revenue decline is a reality. We must now continue with revenue control for us to see it through. Sooner or later, we will have no resources because we pay Eskom and Rand Water upfront (for services)," he said.

Masina said the municipality had implemented a six months suspension of interest on current arrears accumulated from April 1 (during lockdown). Payment extension considerations (with month to month extensions) had also been introduced.

The municipality had also made debt repayment arrangements for those who were struggling.

The council was also considering applying no increases in rates tariffs for the 2020/21 financial year. 

He added that there was also 5% discount on ratepayers' current bill on settlement of arrears and the maintenance of their account up to date for a 12-month period.

Non-adherence

Apart from the looming financial crisis, Masina said their biggest challenge was the non-adherence to social distancing guidelines in informal settlements.

He also said land invasions were on the rise because many believed that they would not be evicted during the lockdown.

There are 868 cases of Covid-19 in the Ekurhuleni municipality, of which 526 people have recovered. 

Masina called on the provincial and national governments to increase screening and testing efforts, and for police visibility to tighten security control operations.

"Ensure regulation compliance in public and work spaces in partnership with relevant stakeholders. Intensify measures of public education and awareness using various platforms. Define the criteria for the allocation and accessibility of the R20-billion municipal Covid-19 relief fund," Masina said.

He added that the council had applied for funds from the Disaster Relief Grant in April, but were still awaiting an outcome on the application.

In April, President Cyril Ramaphosa announced a R20-billion relief fund to assist struggling municipalities.