The City of Tshwane’s bold financial rescue mission, and why we think it can be achieved

We have set a bold goal for the City’s financial performance. There is simply no other way to unlock the needed resources and drive performance. We want to increase revenue and reduce expenditure in the range of R1 billion a month in the next six months.

What we have to our advantage is a R23,3 billion debtors’ book that we aim to turn into cash. If a quarter of this debtor’s book is collectable, it is collectable in the next six months. If we succeed, we improve our cashflow, our Eskom account as well as our credibility and creditworthiness. This also buys us the time to fix problems with tariffs and to achieve better value for money in supply chain management. If we do not succeed, we will have to make a number of fundamental changes to the way we deliver services by the end of June 2024 when a new budget must be adopted.

To understand each of the aspects of the City’s financial rescue mission, you can draw a series of five concentric circles. The outside circle represents bulk purchases from Eskom and Rand Water, as well as other overhead expenses. The second circle represents the tariffs and property rates levied by the City in order to cover those expenses, including water and electricity. The third circle represents the metering of consumption. The fourth circle represents billing based on metering. And the fifth and final circle represents credit control and debt collection, in other words, collecting the money already owed to the City based on tariffs, metering and billing so that we can cover our costs.

Our performance on one of these circles impacts our performance on subsequent circles. The City’s problem can therefore be summarised as follows: The City’s tariffs do not cover our expenses to deliver services, in part because those costs are too high. Our costs are, in turn, affected by factors like the productivity and compensation of our employees and the value we receive from tenders.

Of the total consumers of the City’s services, too few are being metered due to defective meters and illegal connections. Of those whose consumption is being metered, too few receive accurate bills or have their disputes resolved in time. Of the total who are being billed, too few actually pay their bills, because our credit control and debt collection system is ineffective. So, you can see the further you go down this spiral, the less money that is due to the City is actually received in our bank account.


By fixing each one of these aspects (circles) of our revenue value chain, we will be able to achieve financial recovery. Some of the repairs can be done sooner and others later. Bulk purchases and tariffs will take a little longer, while metering, billing, credit control and debt collection are in our immediate focus.

Here follows what we intend to do for each aspect of the financial rescue mission:

Reducing bulk expenses

We believe that we can save significantly on bulk purchases and expenses if Rooiwal Power Station is brought online and a deal is concluded with a private operator. We hope that this saving will be realised during the course of 2025, but it is contingent upon many things that still need to happen. Our immediate efforts are more conservative. We aim to reduce the interest accrued on our outstanding Eskom debt by implementing the other aspects of our financial recovery plan and managing down our Eskom debt.

The City has a major problem with illegal connections and meter tampering. A new Tshwane Metro Police Department unit is being established to help us with focused attacks on illegal connections. We have applied to the National Treasury for debt relief and the City Manager will provide an update in this regard. Such debt relief will be a game changer, but we are not basing our plans on this application being successful.

Making tariffs cost reflective and managing down costs

In the budget for the new financial year that starts on 1 July 2024, we will ensure that these tariffs are as cost reflective as possible. This does not simply mean higher prices but, more importantly, managing our own costs downward. Our efforts will be focused on getting better value for money for residents who pay rates, tariffs and charges.

We have already reviewed our Supply Chain Management Policy to prefer bidders that deliver value, including original equipment manufacturers. We have also made management changes in the Supply Chain Management Division. Tender awards in the City will now be granted based on a market assessment. Systems and controls in acquisition and stock management will be tightened up. And we will be looking very carefully at which officials in the supply chain function of the City try to undercut or undermine the systems and controls we are installing. The Integrity Management Framework recently adopted by Council will allow the City Manager to order lifestyle audits on officials.

Further to the issue of tariffs, the City will update the property valuation roll in 2025. We believe there are many discrepancies on our valuation roll. Anyone who does a search on Property24 or similar apps will find large, upmarket properties in Tshwane on which nominal property rates are payable. An example of this is a house that is for sale for R14 million with property rates of less than R3 000 a month. In other parts of Tshwane, large developments have been built on unproclaimed land and so agricultural rates are still being paid. These are not all the anomalies to be sure, but they add up.


Rolling out smart prepaid metering (without replicating the PEU/TUMS disaster)

On metering, the Mayoral Committee has approved the roll-out of as many smart, prepaid electricity meter as possible. We have been very explicit in our instructions. The City Manager must avoid the mistakes and the corruption associated with the PEU/TUMS smart meter contract. We believe that this is possible with the right specifications and the right partners. The short and the long of it is that prepaid metering not only allows the consumer to control consumption, but also affords the City the power to enforce credit control and practise load-reduction, depending on the functionality and the nature of the meters.

Ensuring that everyone gets a bill and speeding up dispute-resolution processes

On billing, the City is allocating additional resources to ensure that our data is correct and that billing disputes are dealt with effectively. We will also make sure that everyone gets a bill, if not online, then on their phones. We can no longer count on the Post Office, nor require residents to visit municipal offices once a month. We must use technology.

Sharpening up credit control and debt collection

The Tshwane ya Tima campaign that was rolled out in 2022 was very effective. We wanted Tshwane ya Tima to become a standard operating procedure for the City, but our efforts were undermined by the strike. It is difficult to run a large-scale credit control effort, disconnecting high-value arrears accounts and sending a warning to all other consumers, if your city is burning and waste is piling up. Those who drove the violent, unprotected strike achieved only one thing: To make the City even less capable of paying salary increases.

But with the strike now behind us, the Chief Financial Officer is in the process of setting up a project management office to run this function. Again, all available resources, including systems and personnel, will be made available to this project. Tshwane ya Tima will be rolled out with even more intensity than in the past. We will update our credit control and debt collection toolbox, including issuing summons and taking properties in execution of judgement debt. Our focus will be on the Top 1 000 consumers, but as we work through this backlog we will also become stricter on other consumers.

So, aside from the R23,3 billion debtors’ book, why do we think we can succeed? There are three fundamental changes we have made in the past few months. We finally have a permanent Chief Financial Officer. We have new management in two critical divisions, namely supply chain and revenue. And, we have the strike behind us and a new-found understanding in the City of the efforts that will be required to secure the future of the City.

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