Joburg residents who wish to open new accounts for water and electricity services from 1 February 2006 will be subjected to stringent new procedures that are to be introduced by the City’s Department of Revenue.

According to the Department’s spokesperson Mandy Jean Woods the new procedures are in line with the City’s new Credit Control and Debt Management By Law that was promulgated in May 2005.

The By Law (which can be found on the City’s website at www.joburg.org.za) requires the Department to apply, among others, two important new procedures – a new deposit structure and credit vetting.

“Firstly,” says Woods, “all new and existing customers who wish to apply to open an account for the provision of water and electricity services to their property will be charged a deposit equal to the average consumption of two months services. This is different from the past where a flat rate deposit of R540 was charged against all new account applications,” she says.

The effect of this is that properties with generally higher consumption of services will be paying a bigger deposit. “This is important to consider especially when people are buying or renting because it could have an impact on their budgeting,” she says.

The City has developed a schedule against which deposits will be considered which is essentially as follows:

In addition, customers who have had their services cut off or restricted will also have to pay the new deposit applicable to their property.

“The average deemed consumption for the new accounts will be averaged and automatically regulated after 6 months. Then we will adjust the deposit and reflect it on the account as either a credit or a debit,” says Woods.

Secondly, the City will now apply credit vetting to all new account applications. “Essentially, we know that the credit risk of individual people is something that is developed over a period of time and tracked by many companies. The assessment of a person’s risk is a procedure used by the majority of companies in South Africa when they open accounts. By applying credit vetting to applications for our services we will be ensuring that we have all the available information on a person to consider before we make any decision,” she says.

Importantly, the objective of the credit vetting is not to deny any person access to the basic services of water and power, but rather to ensure that the City obtains additional deposits and additional guarantees where applicable to cover the risk when opening new accounts, says Woods.

Issues to be considered in the credit vetting process include the age of the applicant, the citizenship of the applicant, whether not there have been any judgements in the past 5 years, whether or not the applicant is an owner or a tenant of the property where services will be provided and finally, whether or not the person has any outstanding debt with the City (departments or companies)

“A score will then be applied to the application. All applicants who receive below a certain score, will then be requested to provide personal surety ship or, in the case of a company or close corporation, a personal guarantee by the owner or directors or the cession of their debtors book,” she says.

“We believe that these new procedures will substantially improve the city’s ability to manage its credit risk and put us on track to reduce the debtors book.“

ENDS

Issued by: 
Mandy Jean Woods
General Manager: Marketing and Communications
Department of Revenue
City of Johannesburg

Phone: 358-3420
Fax:     358-3639 
Cell:     082 553 4211 (Please send sms if urgent)
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