MEDIA STATEMENT BY THE MMC FOR FINANCE, ALDERMAN JONGIZIZWE DLABATHI ON THE CITY OF EKURHULENI’S QUARTER 3 FINANCIAL PERFORMANCE
Key Takeaways:
- Revenue Collection Improving: Electricity revenue under-collection improved significantly – from R2 billion in Quarter 1 to R417 million in Quarter 3, with meter reading accuracy rising to 85.9%.
- Financial Discipline Reinforced: Operational expenditure reduced by 19%, and no overspending recorded on bulk purchases or consumables, reflecting tighter fiscal controls.
- Debtor Relief Gains Momentum: Over 6,300 residents have applied for the Debt Relief and Rehabilitation Incentive Programme, promoting a culture of payment.
- Cash Flow and Creditor Management Stabilising: Cash-on-hand increased to 22 days, bulk service invoices totalling R3.1 billion have been settled, and repayment plans with Eskom and Rand Water are on track.
INTRODUCTION
This statement provides an update on the City of Ekurhuleni’s financial performance for the third quarter of the 2024/25 financial year. It forms part of our commitment to strengthening transparency, accountability, and good financial governance.
When I assumed responsibility for leadership and oversight of the Finance portfolio, the City was facing a concerning financial trajectory, exemplified by a staggering R3.1 billion under-collection in electricity sales during the 2023/24 financial year. This was due to lack of strategic focus. Our primary objective has since been to drive financial recovery by rebuilding effective revenue systems and enhancing operational efficiency.
REVENUE PERFORMANCE AND ENHANCEMENT
During the third quarter, the City achieved a revenue collection rate of 87.5%, falling slightly short of the 90% target. However, this represents notable progress when compared to previous quarters. We have significantly improved our electricity revenue performance, reducing the negative variance from 24% in Quarter 1 to 10% in Quarter 2, and further down to 8% in Quarter 3. The corresponding monetary under-collection has improved from R2 billion to R417 million.
Meter reading efficiency continues to improve steadily, from 76.2% in Quarter 1 to 85.9% in Quarter 3. This upward trend gives us confidence that we are on track to reaching optimal performance levels.
We also made a commitment to address the high use of interim billing, particularly for Automated Meter Reading (AMR) Large Power Users. We have reduced the number of interim readings from 1,904 to 1,037 to date. A clear directive has been issued that interim readings must be significantly curtailed due to their adverse impact on electricity revenue.
Key factors contributing to revenue pressures include:
- The high cost of electricity;
- Persistent illegal connections;
- Households shifting to alternative energy sources such as solar;
- Load reduction disruptions;
- Excessive consumption by indigent households on water and sanitation, with limited financial recovery mechanisms.
The 2022 to 2024 fiscal period saw lapses in meter reading, account manipulation, and deletion, undermining our revenue base. These issues are being addressed through strengthened internal controls, accountability, and consequence management processes executed by the Executive. We are confronted with an insurmountable task of turning the tide.
To date, 1,602 faulty electricity meters have been repaired, resulting in a tangible improvement in the energy sales. An additional 298 are in the process of being resolved. Furthermore, R317 million in revenue is being recovered through back-billing efforts stemming from earlier under-collections.
Importantly, the meter reading function has been returned to the Energy Department to ensure single-point accountability, a strategic shift aligned with our Metro Trading Entity reforms. This was a necessary and strategic reversal of a prior irrational decision that inappropriately shifted the function from the Energy Department to ICT, compromising accountability and revenue performance.
Independent forensic investigations are underway regarding allegations of account manipulation and systemic mismanagement. Despite these challenges, the City remains focused on stabilising revenue collection to enable the sustainable delivery of services. Encouragingly, our cash-on-hand improved from 11 days in Quarter 1 to 22 days in Quarter 3, which allowed us to offset reliance on the overdraft facility.
In pursuit of new revenue streams, the City issued a Request for Proposals on 28 March 2025, inviting innovative revenue-generating initiatives. This forms part of our broader Revenue Enhancement Strategy aimed at diversifying the City’s income base.
EXPENDITURE MANAGEMENT
Fiscal discipline and prudent expenditure management remain top priorities. Operational expenditure in Quarter 3 was reduced by 19% compared to 9% in Quarter 1. Notably, there was no overspending on consumables or bulk electricity purchases during this period. Overtime spending remains a concern. We are implementing the Council’s resolution to reduce overtime expenditure by 50% moving forward.
Capital expenditure, excluding commitments, stands at R1.3 billion or 46.3% of the total capital budget. With commitments included, spending reaches R1.465 billion or 50.4%. Notably, 89.5% of the amount spent on capital projects is funded through grants.
Repairs and maintenance expenditure totals R2 billion to date, against a budget of R2.4 billion. The 2025/26 draft budget proposes an increase in maintenance allocation from 5.7% to 6.3%.
Outstanding trade creditors from Quarter 2 have been reduced by R800 million. All bulk electricity-related invoices totalling R3.1 billion have been settled. On 26 February 2025, we entered into a formal agreement with Eskom to settle current accounts within 30 days. A similar arrangement with Rand Water remains on track, with no defaults recorded.
Future trade creditor arrangements will be informed by available cash flow and revenue performance. Where appropriate, structured repayment plans will be negotiated to alleviate financial pressure.
DEBTORS ANALYSIS
Outstanding consumer debt has reached R30.9 billion, owed for services including water, sanitation, electricity, waste management, and property rates. Households account for 76.04% of this debt. To address this, we have intensified credit control measures and implemented public awareness campaigns under the Siyakhokha Siyathuthuka initiative, with community engagements held in areas such as Kwa-Thema, Thembisa, Thokoza, Tsakane, and Duduza.
We have also launched a Debt Relief and Rehabilitation Incentive Programme offering, among others, a 70% write-off for qualifying historic debt. Applications have grown steadily, from 605 in Quarter 1 to 4,333 in Quarter 2, and now 6,360 in total.
A CALL TO PAY FOR SERVICES
We continue to call upon the users of municipal services, Households, Businesses and Government Departments to pay for their accounts. Non-payment undermines the City’s ability to deliver quality, sustainable services to all residents.
CONCLUSION
The financial turnaround journey is well underway. While challenges remain, the results for Quarter 3 reflect a stabilising trajectory, increased revenue effort, and enhanced financial discipline. We remain committed to building a financially resilient municipality that can meet the needs of its people.
