Komani’s Financial Alarm Bells Ring as Collections Sink to 49%

While the two reports tabled at the ordinary council meeting in Komani on Wednesday, August 26, acknowledged that while the municipalitywas moving to tighten financial controls, it admits that it is under strain on both the financial and governance fronts, with pressure on bulk-service debt recovery and questions over whether internal decisions are being properly tracked to completion.

The July section 71 report says council has proposed a payment arrangement with Eskom for R500 000 a month from 15 July 2026, but Eskom has not yet agreed to this payment plan.

The municipality achieved 98% compliance in July after paying the Eskom invoice in full during June, but the report shows the debt burden remains severe.

The same report says the gross debtors’ book stood at R1.98 billion at 31 July. It adds that delays in data cleansing are causing misalignment in the municipality’s financial statements, as the process continues to remove indigent and deceased customers’ debts from the books.

The municipality has also adopted an unfunded budget for the 2026/27 financial year, which means that the municipality does not have enough money to fulfil its commitments. Monthly progress reports to National Treasury, to demonstrate the implementation of its budget funding plan, approved by council on 30 May 2024, is required, while quarterly reports to council, will suffice.

A separate report on the municipality's financial recovery plan paints an even sharper picture of the pressure on cash flow. It says the collection rate was 49% against a norm of 95%, net debtors’ days were 955 against a norm of 30 days, and electricity distribution losses were 48% when the accepted norm is between 7% and 10%.

The report also says only four of the 34 activities in the recovery plan had been completed by the end of the 2025/26 financial year.

On the governance side, a resolution register covering 66 resolutions adopted in the fourth quarter of 2025/26 shows that 54 were implemented and closed. Four were still open within the municipality, four were awaiting action outside the municipality and four had no status recorded.

Council now wants no resolutions from the register until it has been formally closed. The report also says a directorate recorded as non-responsive in two successive quarters should be dealt with in line with the consequence management framework.

The report proposes stricter reporting rules for directorates, as councillors seek to prevent items from falling off the register before they have been properly finalised. That is meant to help the municipality keep track of decisions on issues ranging from finance and roads to staff discipline and recovery plans.

The same council agenda also states that R82.6 million in closing irregular expenditure for the quarter ended 30 June 2026, which council is asked to note and accept before the matter is processed through section 32 of the Municipal Finance Management Act (MFMA).