27 February 2004 Press Release DEBT WRITE OFF MISLEADING Media reports alleging that the City of Johannesburg Council Meeting yesterday (Thursday 26 February) wrote off a water debt of R878 million in Soweto, Alexandra and Ivory Park are inaccurate and misleading. Council Meeting approved plans to introduce conditional incentives for installation of prepaid meters for communities who do not have meters systems and may have payment challenges in order conserve water and broaden its revenue streams over a seven-year period. Former township areas in greater Johannesburg have been billed on a deemed consumption (estimate charges) basis for the last decade. The collection rates in these areas is low ­ currenntly 15%, 14% and 5% for Soweto, Alexandra and Ivory Park respectively. The combination of a poor condition of the network, lack of household accountability for actual consumption and low collection rates has led to unacceptable high levels of unaccounted for water in these areas. Soweto accounts for one third of the total bulk water purchased by Johannesburg Water from Rand Water. This is about 7 billion litres a month, which is the total amount of water provided to the entire city in a week, which escalates, equates to about R156 million annually! The total outstanding water and sanitation debt (inclusive of interest) at end March 2003 for these areas stood at R878 million. This amounts to about R6 700 per houses and due to low collection rates this amount will be rising every month. For this reason, Johannesburg Water embarked on a water saving and expansion of the city’s revenue streams. The project will include Network replacement, replacement of plumbing defects on a once off basis and the installation of meters per household as well as businesses. The project is currently underway in Phiri Soweto and is scheduled for completion in 2006. As part of the incentive to encourage households in these communities to install pre-paid meters, Council approved a household debt write off into 36 months. This means for each month that payment is made in full for services rendered, whatever the meter reading, 1/36th debt will be written off. The debt write off will be conditional and will run for approximately seven years. Eskom in Soweto adopted a therefore similar option earlier this year. Council will continue to look at similar incentives in other areas to ensure improved payment for municipal service and the delivery of quality services in a sustainable manner. Mbangwa Xaba Media Liaison Tel: 407 7226 Fax: 403 3494 082 467 9230 Or visit our website www.joburg.org.za