Ricochet News

Metro writes off business debt to preserve jobs

Metro writes off business debt to preserve jobs

Recently elected Nelson Mandela Bay Executive Mayor, Danny Jordaan, reportedly passed an agreement to reduce the electricity debt of 13 “high-ranking” businesses in the metro by two-thirds, as part of R100-million “motivational” gift.

According to a weekend CityPress article, the agreement formed part of an initiative to smoothen out business relations with the sector, as well as saving the jobs of 3 800 employees who would have faced the chop if the companies had to pay up.

Addressing council at the Old Wood Exchange building in Port Elizabeth last week, Jordaan stated that the city used electricity tariffs as a means of increasing its budget in the past, and that this approach had resulted in its running becoming “inefficient”.

“We have been charging consumers progressively higher service charges and rates without a concomitant improvement in service quality. We have been using income from electricity to cross-subsidise budget expenditure, and this can no longer continue,” he said, adding that the metro will implement long-term measures to regain the money used to save the aforementioned number of jobs.

The article also indicated that documents obtained by the paper from an out-of-court agreement, identified most of the business as having links to the automotive industry, and that some the recommendations include the writing-off of overdue accounts, the compliance of electricity tariffs with the law, and the formulation of the 2015 / 2016 financial year tariff structure for high-energy uses as per category.

“One of the priorities of his first month in office was to identify priority projects that needed to be unblocked through political intervention,” the paper quoted Jordaan’s spokesperson, Mlungisi Ncame, as saying.

“In this regard, we are pleased that council approved the deal with the 13 biggest energy users to write off R100-million of R149-million owed to the municipality. This matter has strained relations with business for far too long, and it was also threatening to affect jobs”.

Speaking after the meeting, Nelson Mandela Bay Ratepayers Association Chairperson, Kobus Gerber, said that the metro was left without a choice as it “created this mess in the first place by increasing tariffs illegally”.

“We also understand that some of these companies were threatening to close shop and take their business to other provinces or countries such as Mozambique. You must remember these factories create lots of jobs. A conducive environment is needed to retain them and make sure more investors are attracted,” he said.