According to a City Press report, the Nelson Mandela Bay metro has agreed to write off two thirds of an electricity debt owed by 13 high-energy-user companies – amounting to R100 million – in a bid to salvage relations with the private business sector and save almost 3 800 jobs the companies threatened to cut if forced to repay the debt.
The out-of-court settlement was reached after the companies took the metro to court in 2011 as it sought to have the 2011/2012 financial year budget declared unlawful after the municipality introduced hiked electricity tariffs that the companies said were too expensive.
The rationale behind the deal was that the outstanding money could be recouped from other ratepayers as well as from the 3 800 people whose jobs were in jeopardy.
“Our city is run inefficiently. 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 was quoted saying.
The companies, most of which are component suppliers to the automotive industry and had the backing of the Nelson Mandela Bay Business Chamber, had initially sought to have the full amount of R149 million written off.
Other recommendations made in the settlement