1. PRESENTATION TO SCOPA ON REVENUE SOURCES/ESKOM ACCOUNT – NALEDI LOCAL MUNICIPALITY (NW 392) 13 JUNE 2018

2. INTRODUCTION
Naledi (NW 392) is a category B Municipality situated in the North West Province.
The total population and households as per census community survey (2016) data is and respectively
Eskom and Naledi are both suppliers of electricity within the Naledi area of jurisdiction.
Naledi is amongst the highest in terms of money owed to ESKOM, with a total of R owed as at May 2018.
A cumbersome payment agreement has been entered into.

3. Bulk Supply - Electricity
There are five bulk supply accounts from Eskom.
Vryburg Main
Stella Bulk
Naledi Sub
Biesies
FBE

4. Vryburg Main This is the main supply to Naledi LM.
The contracted NMD is 15,4 MVA.
The average purchased units is
KWH monthly.
The average purchase per month is R
This also depends on the season and the peak.

5. Naledi Sub
This is the second supply to Naledi LM at the Low cost housing.
The contracted NMD is 2,5 MVA.
The average purchased units is
KWH monthly.
The average purchase per month is R 411,647.19
This also depends on the season and the peak.

6. Stella Sub This is the second largest supply to Naledi LM at Stella.
The contracted NMD is 1 MVA.
The average purchased units is
KWH monthly.
The average purchase per month is R
This also depends on the season and the peak.

7. Free Basic Electricity (FBE)
This is the free electricity given monthly to registered Indigents.
The Basic units is 50 KWH per household.
It is given to all registered households in all areas of Eskom and Municipality supply.
The total number of indigents receiving FBE from the municipality is 2184

8. CHALLENGES No meters to determine municipal usage
The tariff is not competitive as cost of supply is too high compared to the tariff.
Cost of maintenance too high with Aging infrastructure
Fluctuating rate of kwh/units per annum brings instability in terms of pricing
Over expenditure on capital projects (MIG and INEP) puts pressure on revenue received.

9. REMIDIAL ACTIONS Installation of bulk meters at main substation
Installation of SMART meters in households
Installation of meters to monitor and track municipal usage

10. ESKOM PAYMENTS - CURRENT
Payment of suppliers within 30 days as required by MFMA remains a challenge due to cash flow challenges.
Eskom remains our biggest liability with the debt currently at R 274 977 064.55
Naledi Local Municipality is currently in negotiations with Eskom for a payment arrangement which should be finalised by the end of the month May 2018
The ensuing negotiations have seen the current account reduce monthly as follows:
Naledi intends to ensure that the current account is maintained to avoid further penalties and maintain the payment arrangement entered into with Eskom.

11. REVENUE BY SOURCE 11

12. REVENUE BY SERVICE ELECTRICITY - PREPAID12

13. REVENUE BY SERVICE ELECTRICITY - PREPAID13

14. REVENUE BY SERVICE RMS-VRYBURG ELECTRICITY - PREPAID14

15. REVENUE BY SERVICE RMS-STELLA ELECTRICITY - PREPAID15

16. Revenue Management and Cash Flow Challenges and Interventions
High Debtors Book due to inaccurate billing
Consumers are receiving separate bills for property rates and services
Inaccurate water billing due to meters not being read, broken meters
Low Collection Rate
High Electricity and water Loss
Inconsistent and Unreliable IT
Culture on non-payment
New water meters are being installed, 3500 already installed at Huhudi. Debtors book cleansing exercise is being implemented. Rollout of electricity smart meters in areas that are still using conventional and prepaid meters
The debt collection policy has been reviewed to cater for consolidation of consumer accounts
Meter reading contract to be terminated and readings be done in-house.
Conduct meter audits to determine leakages in water and electricity. Install meters for own consumption determination and recording
Gradual investment in ICT infrastructure
Introduce consumer education and use all relevant platforms including those provided by other stakeholders. 16

17. Revenue Management and Cash Flow Challenges and Interventions
Outdated and incorrect indigent register
Unmetered stands in new extensions-water
Ineffective legal collections
Dependency on grants
Employees and councillors not paying accounts
Updated indigent policy. Indigents registration campaign to be embarked upon annually.
The District Municipality is assisting with the installation of new meters, once they are done with Huhudi, they will then move to new extensions
Legal collection process is under review.
Development and implementation of revenue enhancement strategy
Payment arrangement made with employees and councillors. For those without one have been notified to do so from June 2018, the total debt of about R3m to be collected within the next 12 months 17

18. CONCLUSION
Naledi Local Municipality has the potential to grow over the long term as it has many strategic opportunities in terms of its location and surrounding economic activities.
The Eskom debt places a difficult decision at the end of each month as income is lower than expenses, therefore the Municipality finds itself in a predicament to pay debt instead of servicing the communities as mandated by the Constitution.
A cash injection/bailout or better payment agreement between the Municipality and Eskom should be investigated as it would be the most efficient and effective way for the Municipality to strategically turn the situation around and hit the ground running with full service delivery as expected by our communities.

19. THANK YOU