INVITATION TO ALL POTENTIAL SERVICE PROVIDERS TO SUBMIT EXPRESSION OF

INTEREST FOR INCLUSION OF PROFESSIONAL FIRMS/REGISTERED COMPANIES AND

PROFESSIONALS/TRAINING PROVIDERS AND CIDB REGISTERED CONTRACTORS
INTO THE SUPPLIER DATABASE OF THE FREE STATE DEPARTMENT OF COOPERATIVE
GOVERNANCE AND TRADITIONAL AFFAIRS FOR A PERIOD OF 36 MONTHS

BID NO. - 001/2021 - 2022

CLOSING DATE: 10 DECEMBER 2021 CLOSING TIME: 11H00

METHODOLOGY – REVENUE AND

EXPENDITURE MANAGEMENT

PREPARED BY:

Head Office: Durban

306 African Palms
9 Palm Boulevard, Umhlanga Ridge, 4319
Contact Person: Mr Pradeep Ramlall
Tel: 031 584 6478
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

Department of Co-operative Governance and Traditional Affairs

Lebohang Building,
Markgraaf C/N St,
Andrews St,
Bloemfontein
9300

22 November 2021

DEAR SIR/MADAM

RE: INVITATION TO ALL POTENTIAL SERVICE PROVIDERS TO SUBMIT EXPRESSION

OF INTEREST FOR INCLUSION OF PROFESSIONAL FIRMS/REGISTERED COMPANIES
AND PROFESSIONALS/TRAINING PROVIDERS AND CIDB REGISTERED
CONTRACTORS INTO THE SUPPLIER DATABASE OF THE FREE STATE DEPARTMENT
OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS FOR A PERIOD OF 36
MONTHS

The proposal is based on the Terms of reference as set out in the tender document for Department of COGTA,
Free State.

We believe that we have the required expertise and experience to assist in meeting your requirements. We
welcome the opportunity to work closely with the Department of COGTA, Free State. and their management
team, and to be actively engaged in the process whereby skills are transferred and mutually gained experience
shared. This proposal sets forth our understanding of the engagement and the nature and scope of the services to
be provided as well as our approach to address such.

This proposal sets out our comprehensive understanding of Implementing Revenue Management and
Enhancement support. AB Projects has successfully completed similar assignments for Local Government and the
Department of Water and Sanitation and Department of Energy. Immediate Interventions are required for Demand
Side Management in water scarce catchments and where Eskom Bills are mounting in huge debt for municipalities
which are plagued by non-payment for services.

As a Registered Member Consulting Engineers SA and the Engineering Council of South Africa we pride
ourselves as a Professional Organisation. We are also registered with the Construction Industry Development
Board (CIDB) with a CIDB Grading of 7CE/PE & 7ME/PE, which confirms our experience and capacity to carry
out large turnkey WCWDM Interventions from implementation to commissioning and finally close out. AB
PROJECTS will integrate the Debt Collection, Water Metering and Electricity Metering and Collection as the
Project Engineering Team.

We have a full team of resources to undertake this project. We have included the detailed CV’s of staff indicating
their experience and qualifications. Our team comprises of experienced multidisciplinary engineers with extensive
knowledge in Water and Electricity Engineering.

We are one of very few Level 1 BEE Companies that has vast experience having completed similar projects in
South Africa with its key clients being Department of Water and Sanitation, MISA, FSCOGTA and various
WSA’s in KZN and Free State Province.

We await your letter of engagement and service level agreement.

Yours faithfully
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________________________

Pradeep Ramlall (PR Eng. B Eng. MBA)

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

CONTENTS
1 BACKGROUND.................................................................................................................................................
2 SCOPE OF WORK.............................................................................................................................................
3 REVENUE ENHANCEMENT STRATEGIES................................................................................................
3.1 Revenue Enhancement Framework..........................................................................................................
3.1.1 Phase 1: Status quo Analysis – Inception.........................................................................
3.1.2 Phase 2: Problem Identification & Improvement Opportunities......................................
3.1.3 Phase 3: Project Implementation......................................................................................
3.1.4 Phase 4: Operational Phase..............................................................................................
4 REVENUE MANAGEMENT PLAN................................................................................................................
4.1 Short Term...............................................................................................................................................
4.1.1 Debt Recovery Strategy..................................................................................................10
4.1.2 Reliable Water Metering Systems and Meter Reading Strategies.................................10
4.1.3 Tariffs.............................................................................................................................11
4.1.4 Indigent Policy...............................................................................................................11
4.1.5 Bad Debt Policy..............................................................................................................12
4.1.6 Debt Collection...............................................................................................................12
4.1.7 Legal Process..................................................................................................................15
4.2 Medium to Long Term...........................................................................................................................15
4.2.1 Enhancement of The Debt Collection Unit....................................................................15
4.2.2 Grants, Subsidies and Donations....................................................................................16
4.3 Data Cleansing.......................................................................................................................................16
4.3.1 Approach........................................................................................................................17
4.4 Meter and Stand Audit...........................................................................................................................19
4.4.1 Approach........................................................................................................................19
4.4.2 Meter reading solution....................................................................................................20
4.4.3 Pre-Paid Vending...........................................................................................................20
4.4.4 Support and Operational Management...........................................................................20
4.4.5 Communication..............................................................................................................21
5 FINANCIAL MODELLING............................................................................................................................21
5.1 Baseline Data..........................................................................................................................................21
5.2 Conditions for Implementation..............................................................................................................22
5.3 Operations & Maintenance costs............................................................................................................22
5.4 Immediate Benefit..................................................................................................................................22
5.5 Long Term Benefit.................................................................................................................................22
5.6 Contract Participation Goals..................................................................................................................22
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5.7 Funding Models & Solutions.......................................................................................................................23

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5.7.1 Municipal Infrastructure Grant (MIG)...............................................................................23

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

5.7.2 Water Services Infrastructure Grant (WSIG)....................................................................24

5.7.3 Front Loading....................................................................................................................24
5.7.4 Infrastructure Investment Programme of SA (IIPSA).......................................................24
5.7.3 Public – Private Partnership (PPP) Model.........................................................................24
6 PROPOSED TEAM AND ORGANOGRAM..................................................................................................26
6.1 Project Team Leader..............................................................................................................................26
6.2 Civil Engineer........................................................................................................................................27
6.3 Electrical Engineer.................................................................................................................................27
6.4 Town Planner.........................................................................................................................................28
6.5 Legal Advisor.........................................................................................................................................28
6.6 Professional Financial Expert.................................................................................................................29
7 CONCLUSION.................................................................................................................................................29
8 PROGRAMME OF ACTIVITIES...................................................................................................................30

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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

1 BACKGROUND
South Africa is facing significant fiscal and service delivery difficulties, which undermine the effective and
efficient performance of its functions and mandate. Some of these difficulties are ever increasing creditors and
revenue collections. FSCOGTA seeks to attract reputable and well-versed service providers with innovative ideas
which will assist in revenue management and improve Municipality’s low collections from its consumer debtors.

Revenue enhancement strategy and cash management are some of the pillars of the municipality's financial plan.
To maximize revenue generation possibilities and improve revenue performance the following activities should be
performed however the municipality requires a strategic partner to ensure that the strategies are implemented:

 Perform a complete meter audit

 Performing a physical verification of all services connection points
 Analysing electricity and water losses and draft a loss control program
 Engage a meter replacement program
 Credit control and debt collection management
 Review long-term debt and restructure where economic benefits can be attained
 Marketing of facilities and billboard usage
 Use of technology to reach all stakeholders
 Innovative methods to respond to queries and customer feedback
 Land Use

2 SCOPE OF WORK
Key deliverables expected from FSCOGTA from the appointed service provider is as follows;

 Maximization of revenue collection (debt collection and credit control)

 Minimization of revenue loss
 Revenue enhancement strategy development, implementation and monitoring

To overcome the above our approach on revenue enhancement expenditure management will consist of the
following;

1. Stake Holder Engagement and Establishment of REP Work team

a) Design and Implement Community Awareness Campaigns
b) Design and Implement Payment Incentive Schemes

2. Municipal Assessment Report including

a) As-Is or Situational Analysis Report on trading and non-trading services
b) Identify other sources of revenue for the municipality i.e. Land-fill fees, building plan copies, traffic fines
etc.

3. Data Cleansing
a) Data integrity testing – Desktop analysis of billing data i.e. Reconciling Geospatial system, Valuation
roll, Deeds Record and Billing system, Consolidation of duplicate accounts
b) Billing Data audit including customer details, verification of service coverage, metering and tariffs audits

4. Revenue Enhancement Dashboard

a) Set up Revenue Improvement scorecard
b) Set up revenue benchmarks for performance measuring e.g. evaluation of sales, purchases and collection
of trading services
c) Illustrate revenue improvements against benchmark figures
d) Compliant to best practice
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5. Information Technology (SMART)

Provide for the design and implementation of the following IT solutions:
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

a) Metering systems, Geographical Information Systems

b) Design Options for billing i.e. e-billing, mms, SMS, emails etc.
c) Interface between billing data and outside sources
d) Customer Relations Management Systems

6. Tariff Structure for all Trading Services

Review current Bulk tariff elements with emphasis on the following:
a) Possible benefits in terms of capacity upgrade.
b) Verify installation of bulk meters to ensure authenticity/correctness of bulk supplier accounts.
c) Verify the accuracy of tariffs applied by the service authority or the bulk provider
d) Optimum application of tariff levels and settings for all different categories of service users.
e) A tariff comparison study for all metered points to investigate optimal range of tariffs based on usage
patterns and zoning approved to meet customers’ requirements.
f) The municipality opportunities to unlock possible savings
g) Determine cost reflective tariffs to provide a quality of service based on supply standards

7. Review of Budget related policies and by-laws

a) Develop or update existing development contribution policies ensuring it is in line with the latest
Development Contribution Policy framework of NT for all engineering services.
b) Tariffs, Property rates, Indigent, Credit Control and Debt Collection

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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

3 REVENUE ENHANCEMENT STRATEGIES

3.1 REVENUE ENHANCEMENT FRAMEWORK

The objective of a revenue enhancement strategy to address financial and institutional challenges faced by the
municipality. This focuses on the formulation and implementation of strategies to improve financial management
and controls within the municipality. The objective of any successful financial recovery plan is to build or
improve the current payment levels and then to recover arrear debt. The revenue enhancement strategy is a
combination of bringing about additional revenue streams and also increasing revenue within existing revenue
streams.

Developing such a strategy, generally requires the following four phased approach, to ensure that the desired
revenue enhancement outcomes are achieved and sustained in the long term. The four phases are as follows:

a) Phase 1: Status quo Analysis

b) Phase 2: Problem identification and Improvement Opportunities

c) Phase 3: Project implementation

d) Phase 4: Operational phase

3.1.1 PHASE 1: STATUS QUO ANALYSIS – INCEPTION

Phase 1 analyses the municipality’s current revenue base which is made up of Grants, Interest and Own revenue.
The municipality’s own revenue is generally made up of income from rates and services (water, sanitation, refuse
removal and rental from municipal properties). The following are short, medium- and long-term revenue sources
that should be implemented fully:

 Deductions of rates and services accounts from councillors and officials who own properties
 Renew/review of all municipal contracts with market related tariffs
 Restriction of water consumption, water audits, electricity audits.
 Reliable metering systems and stakeholder plan for awareness education and consultation
 Enhancement of indigent registration and ward profiling
 Data management - verification of all data on the financial system and ensuring that all properties and
services are billed.
 Regular handing over of debtors older than 90 days and payment plants that incentivise consumers to settle
debts.
 Writing off of debts that cannot be collected in terms of municipal policies.
 Introduction and implementation of commonage management plan

3.1.2 PHASE 2: PROBLEM IDENTIFICATION & IMPROVEMENT OPPORTUNITIES

 Identify all improvement opportunities for Electricity and Water.

 Reasons for poor collection of outstanding debt. Classification and profiling of debt.
 Prepare the Non- Revenue Water Spreadsheet breaking it down to the areas of Real Losses and Commercial
Losses.
 Prepare a spreadsheet for Eskom Purchases, Distribution losses and non-payment for electricity.
 The commercial losses will be further broken down.
 Validate it against water services customer charter and by –laws.
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 Review the criteria for Free Basic Water and Free Basic Electricity and affordability of the Municipality.
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

FIGURE 1: IMPROVEMENT PLAN FOR REVENUE ENHANCEMENT

3.1.3 PHASE 3: PROJECT IMPLEMENTATION

 Councillors and officials should own up to their debt through sustainable payment of their municipal
accounts
 Renew/review of all municipal contracts with market related tariffs (Community services)
 Restriction of water consumption (Technical & Financial)
 Leak Repair Programme (Technical & Financial)
 Enforce traffic laws (Community Services)
 Implementation of tariffs for billboards and/or signage (Community Services)
 Appointment of a service provider (at risk) to verify all data on existing systems (Technical & Finance)
 Regular handing over of debtors older than 90 days (Finance)
 Writing off of debts that cannot be collected in terms of policies (Finance)
 Introduction and implementation of commonage management plan (Community Services)

3.1.4 PHASE 4: OPERATIONAL PHASE

 All departments of the municipality must own this strategy.

 This phase would speak to the capacity of the municipality to implement all the revenue enhancement
projects as set out above.
 Monthly reports to be submitted setting out the progress on the implementation of all projects.
 The key lesson within revenue management is integration, taking revenue services as part the bigger
picture of service delivery, which requires productivity, political will, efficiency and proper use of
legislation.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

4 REVENUE MANAGEMENT PLAN

The principal strategic objective of this plan is to identify key priority areas as an immediate intervention and to
set out specific intervention projects which will address the financial problems identified for a new financial year.
The plan sets parameters that bind the municipality in the preparation of future budgets until the long-term
financial plan is sustainable.

To ensure proper financial management one needs to identify the critical areas within which the municipality’s
finances must perform. The Municipal Finance Management Act (MFMA) identifies some of these major
competencies and from the functions mentioned in the Act a clear role definition can be established:

 Must have realistic income projection.

 Must have a balanced and fully funded cash budget which is cash-backed to ensure sustainability.
 3-year budgeting must be in place.
 All funds must be cash-backed.
 Adequate provision must be made for bad debts.
 Must have an effective revenue collection system consistent with the Systems Act.
 Expenditure management must be strictly managed when revenue is anticipated to be less than projected.

The Revenue Management Plan will be structured into three phases:

 Short Term (Collection from government and large business debtors).

 Medium Term (Stabilising the billing system and processes as well as collecting from small businesses
and professionals).
 Long Term (data cleansing, installation of metering systems, and collection from resident debtors).

4.1 SHORT TERM

Short-Term activities (to be completed within three to six months) will focus on the following:

 Confirm the completeness of revenue - Improved billing processes.

 Conduct community campaigns throughout the jurisdiction of the municipality to create awareness of the
need to pay, the incentives available for payment, and the various methods of payment.
 Implement a targeted approach on debt collection of Organs of State.
 Implement a targeted approach on debt collection of businesses.
 Update the indigent register for purpose of an increased equitable share.
 Conduct a desktop consumer data cleansing exercise with a view to ensure that the billing information is
correct and accurate.
 Develop and centralise customer care with focus of Batho Pele Principle to obtain a meaningful and
useful feedback of the level of services from the consumers.
 Perform monthly reconciliation of the billing file to obtain an accurate indication of collections and
debtors.
 Initiate a process of billing the cost reflective service tariffs to ensure that the municipality can recover its
cost of providing services.
 Proceed to incentify the debtors to encourage them to pay.
 Continue to collect money owed from the Government Departments as well as businesses.
 Immediate involvement of Traditional Authorities in encouraging the communities to pay as per the
signed Memorandum of Understanding (MoU).

The key focus areas for short term revenue enhancement efforts are:
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 The Billing Chain

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 Debt recovery strategies.

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 Reliable metering strategies.

 Sustainable tariff structure.
 Implementation of an indigent policy.
 Implementation of a bad dept policy.
 Minimise loss in distribution.
 Infrastructure Refurbishment.
 Community involvement (Publicity drive).
 New sources of revenue.Efficiency in the billing chain is critical for NM if it is to be able to collect its
revenue proficiently. The following key elements impact the billing chain and are discussed separately
below:
 Meter readers - key information link.
 Tariff structure - determines how much is charged to consumers.
 Indigent policy - influences policy on who gets free basic services.
 Bad debt Policy - influences the recoverability of debts.

4.1.1 DEBT RECOVERY STRATEGY

The consumer debt has been in a constant increase. Therefore, due to debt management being linked with revenue
management, it has been addressed as part of the Revenue Enhancement Strategy.

The debt recovery for NM should be prioritised, as the consumer debt sits at R1 564 141 733. The following
should be considered:

 Newcastle Municipality may have to consider appointing debt collectors whose payment becomes
commission based. The advantages of this option are that NM will not incur additional staff costs and the
debt collectors will be paid from the recovered debt income. This also eliminates the high costs associated
with the use of legal attorneys to recover debt.
 Debt Factoring - debt is sold at a discount to third parties who would then own the debt and initiate
recovery effort. This can only be an option if the above option is not taken.

An effective billing and cash receipting system is required:

 Credit control and debt collection policies need to be strictly adhered to.
 Accurate meter readings need to be taken.
 Accurate accounts that are simple to understand must be distributed as early as possible.
 Introduce a facility that allows debtors to enter into arrangements to pay.
 A good debt management strategy needs to be in put in place. This strategy should include an emphasis
on the monitoring of the top 100 debtors (based on 80-20 principle).
 The pursuance of government debt with intervention by provincial structures and national treasury.
 Enhance service delivery provision to encourage payment.

The debt to revenue ratio seeks to determine adequacy of the municipality’s own revenue to repay its debt. The
National Treasury norm is the debt of 45% to the total own revenue. The municipality recorded the ratio of 33%
and 32% in 2018 and 2019 respectively. The municipality is further projecting to record the ratio of 28% at the
end of 2020 financial year. This ratio is within the norm, which is an indication that the municipality’s revenue is
able to accommodate for the repayment of its debt. It is further noted that the ratio is decreasing over the years,
which is caused by the fact that the debt is declining due to the repayments of loans.

4.1.2 RELIABLE WATER METERING SYSTEMS AND METER READING STRATEGIES

Meter readers are a critical component of the billing chain. Their failure to read meters correctly and timeously
affects the entire billing chain. The meter reading operations need to be monitored and consistently evaluated on
their performance. Evaluation tools can be utilised to set agreed targets which will be assessed monthly by
10

supervisors and quarterly by management.

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Meter reading challenges and possible solutions

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 Priorities should be made on the top paying consumers (ICI Consumers, Industrial, government
institutions).
 Meter reading is performed manually which poses a problem regarding the accuracy of the readings.
 Newcastle Municipality should consider hiring meter readers on a permanent basis as this service is
continuous and will also mitigate certain risks relating to use of service providers. This will also be an
opportunity for NM to create employment within the area.
 Meter readers report to the technical division whereas the information they collect goes to the revenue
section.
 All meters with no movement should be investigated and corrections made. Consumers that were not
billed for the period, the meters should be replaced, averages taken for three months, and these
consumers should be billed.
 Accounts were placed on “extension” should be lifted and the consumer must arrange to settle the
account over a maximum period of six months.
 The monthly meter reading variance and exception reports must be analysed and referred to an official
dedicated to this task. For NM to have effective revenue and debt management systems, the municipality
needs to ensure that accurate and credible accounts are produced.
 Newcastle Municipality should introduce scanners for meter reading as this will be more efficient when
the readings are being taken. The scanners mitigate the risk of inaccurate readings being taken.
 Newcastle Municipality should consider a new reporting structure wherein the meter readers report
directly to the revenue department to ensure efficiency of the billing process.

4.1.3 TARIFFS
The municipality is encouraged to maintain tariff increases at levels that reflect an appropriate balance between
the affordability to poorer households and other customers while ensuring the financial sustainability of the
municipality.

Expenditure and tariff reviews need to be in line with inflation and be realistic in terms of providing a reasonable
level of service.

 Tariffs must reflect the costs reasonably associated with rendering the service, including capital,
operating, maintenance, administration, replacement costs and interest charges.
 Tariffs must be set at levels that facilitate the financial sustainability of the service, considering
subsidisation from sources other than the service concerned. A service is financially sustainable when it
is provided in a manner that would ensure its financing from internal and external sources is sufficient to
cover the costs of the initial capital expenditure required viz. operating the service, maintaining,
repairing, and replacing the physical assets used in its provision.
 Provision may be made in appropriate circumstances for a surcharge on the tariff for a service.
 Provision may be made for the promotion of local economic development through special tariffs for
categories of commercial and industrial users.
 The economical, efficient, and effective use of resources, the recycling of wastes and other appropriate
environmental objectives must be encouraged.

4.1.4 INDIGENT POLICY

The approval process of indigent applications need be made shorter. Proper indigent registration will also assist in
reducing the debt book which is growing by the day and is likely to be difficult to recover due to high levels of
indigence. The implementation of the policy criteria requires closer scrutiny to ensure that only eligible
consumers’ benefit from this policy.

The challenges and financial implications associated with the management of indigent debtors should be
streamlined. In the short term it would necessitate that the indigent register be compiled in accordance with the
11

classifications in the indigent policy. As a priority the indigent registration process must be reopened with a clear
framework and evaluation criteria to ensure only qualifying debtors are subsidised.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

It is imperative that the indigent register only reflect people that really qualify. In this regard, a cost-effective way
would be to subject all the indigent debtors on the register to a credit check through an agency or credit bureaus
where their financial ratings and credit profiles can be determined. This credit check provides valuable
information on employment details, credit records and ratings, postal addresses, and contact details. It is also
imperative that all applications will only be valid for the current financial year and those consumers renew their
registration on an annual basis.

The registration process can be done in two ways, namely: -

 Requesting consumers to complete an application form and submit it to the municipality; or

 Conduct house-to-house research where more than just indigent information is gathered. Social,
economic, infrastructure planning, street names and numbers, meter details, and more can be collected.
This option is more expensive but in the long term provides valuable information, which makes it
worthwhile.

4.1.5 BAD DEBT POLICY

The distinction between irrevocable debt and neglected debt must be worked in greater detail. The credibility of
the data of debtors and the management thereof is an important area for the implementation of this policy. If not
managed properly it could result in negligent debt being categorised as irrevocable debt. Management should
implement the policy in full which include disconnection and handover to debt collectors.

4.1.6 DEBT COLLECTION

AB Projects are able to provide professional debt management and debt recovery services to clients using a fully
integrated collections system. The team compromises of both accounting specialist and tax specialist as well non-
revenue water engineers who will use the International Water Association Model for Non-Revenue Water in terms
of Revenue Enhancement. Collectively we have a greater understanding of the socio –political environment in
which this project is grounded in terms of the resistance and culture of non-payment.

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DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

Step 1: Request It or Report It

The Municipal Call Centre shall be available 24/7, 365 days per year. A Client can contact the Municipal Call
Centre by making use of one of the following channels to log a Complaint:

 Dedicated Share Call number

 Email: [email protected]

 Online: Complete the Request It or Report It contact form on the Municipal Website
(www.Municipal.gov.za)

 Facebook

 WhatsApp.

The Municipal Call Centre will join the Facebook and WhatsApp groups. If photos of the Complaint are sent
through these channels, it will be saved with the Complaint details on the Municipal Call Centre software.

Step 2: Log Details of Complaint

The Municipal Call Centre Agent captures the details of the Complaint on the Municipal Call Centre software by
prompting the Client for all the necessary information. The call received will automatically be date and time
stamped and a unique reference number will be generated on the Municipal Call Centre software.

The Municipal Call Centre Agent verbally provides the Client with the unique reference number that can be used
for future enquiries or follow ups regarding the Complaint

Step 3: Electricity / Water Interruption?

Step 4: Account Paid?

Step 4a: Follow-up with Client for Payment

Step 4b: Second Notification via SMS

Step 4c: Pay Account

Step 5: Telephonic Notification of Complaint

The Municipal Call Centre Agent shall confirm if the Complaint is logged against the correct department. The
following four departments are applicable:

1. Development & Planning

2. Engineering Services

3. Protection Services

4. Social Services

Step 5a: Second Notification of Complaint via SMS and/or Email

Step 6: Telephonic Notification of Complaint Logged

The Municipal Call Centre Agent shall contact the Client telephonically, informing him/her that the Complaint
was logged with the relevant Technical Team.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

Step 6a: Second Notification of Complaint Logged via SMS

The Client will receive a second notification of the Complaint logged via SMS, containing the unique reference
number and details of the Complaint logged.

Step 7: Report Response

Once the Technical Team has resolved the Complaint, it is their responsibility to inform the Municipal Call
Centre of the Response.

The Technical Team can contact the Municipal Call Centre by making use of one of the following channels to
report the Response:

 Dedicated Share Call number:

 Email: reply to the Notification of Complaint Record (NCR) email

 Online: web-based portal.

Step 8: Log Details of Response

Step 9: Telephonic Notification of Response

Step 9a: Second Notification of Response via SMS

Voice Recordings

Real-time Reporting Portal

Real-time reporting is available, where the Technical Team can easily keep track of all the Complaints reported to
them and they can also note each complaint’s response on the portal.

4.1.7 LEGAL PROCESS

Debtors that do not respond to call centre agents and make an arrangement to settle a debt are handed over to a
legal department to conclude a Section 58 Consent to Judgment by using a network of tracing agents and if
necessary, instruct Attorneys to take Judgment and issue an Emoluments Attachment Order.

4.2 MEDIUM TO LONG TERM

Medium to Long Term (to be completed within seven to twelve months) should focus on;

 Improve data integrity in transaction processing.

 Metering unmetered areas (revenue enhancement).
 Implementing bulk meters for large users (revenue enhancement).
 Improve customer service - Improve communication with consumers.
 Establish internal controls and proper costing of services.
 Improve collection of government debt through engagement of CoGTA and Treasury for intervention.
 Collecting outstanding staff accounts by ensuring that monthly accounts are paid through staff payroll.

4.2.1 ENHANCEMENT OF T HE DEBT COLLECTION UNIT

Staff members should be appointed on contract to focus on business and government debt. The staff members
must dedicate their time and energy only on the allocated accounts, build the necessary relations with the
respective debtors and ensure that the debts are recovered in the shortest possible time.
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The Responsibility of The Debt Collection Unit (DCU)

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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 The DCU must perform debt collection tasks only and not be burdened with accounting and
administrative tasks. Their focus should be to contact the debtor, get him / her to arrange to pay the
outstanding account.
 They should not only use the traditional collection tools, but also employ methods such as phone,
fax, e-mail, SMS, registered mail, notices, personal visits, newspaper articles to create awareness,
notices at schools, churches, businesses, shopping centres, etc.
 This unit must prepare disconnection/cut off lists on arrear debt and liaise with the revenue unit on
their current account disconnection/cut offs to ensure co-ordination.
 The unit must manage arrangements and extensions, but no arrangements must be allowed on
current accounts, which must be paid monthly.
 Prepare notices to debtors notifying them of intention to blacklist them with the credit bureaus.
 Prepare the summonses and hand over the accounts to attorneys and debt collectors, where internal
collection efforts have failed.
 The staff in the unit must be performance driven and clear collection targets must be set for each
staff member.
 A project manager to be identified/appointed in the unit to drive the programme, prepares targets,
produce management reports and liaises with other units and departments.

Debt Collection Support Unit (DCS)

 The DCS should be constituted to provide technical support to the DCU. The purpose is to provide
NM administrative and technical support to the DCU, to enable the latter to focus on debt
collections only.
 The DCS must perform the analyses, reconciliations, and the updating of missing information on
debtor’s accounts, review deposits and hand over to DCU for collection. This unit becomes the
back office of the debt collection programme.
 The analyses of the inactive and “return to sender” accounts can be reconciled by this unit and
recommendations made on the finalisation.
 Representatives can accompany the DCU to meetings with clients where queries are discussed.
 The unit must follow up with the meter reading variances and inaccurate meters to ensure
adjustments and corrections are affected on the system and debtor’s account.
 Follow ups must be made with the revenue section on the return to drawer cheques to ensure
corrective measures are taken, or the account is to be handed over to the DCU.
 Follow ups must be made monthly on the posting of accounts, to ensure all accounts are posted on
time and “return to sender” accounts are eliminated.

4.2.2 GRANTS, SUBSIDIES AND DONATIONS

The municipality is currently carrying the loan debt amounting to R 384,4 million. The municipality will be
servicing this loan through payment of finance charges (interest on loans) of R41 million in 2021, R 38 million in
2022 and R 35 million in 2023. The loans are with DBSA (R 140.7 million) and ABSA (R 243.7 million). The
municipality is expecting to fully pay these loans by the end of 2030.

The Municipality must ensure that income from grants and subsidies are maximised. They need to ensure that they
are not missing out on any grants and subsidies. In addition, to local grants, they need to look at grants from other
funding agencies such as the Development Bank of South Africa, European Union, and the public private sector.

4.3 DATA CLEANSING

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The objective of Data Cleansing is to enhance the revenue generation and collections of the municipality by
ensuring the following:
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 Accuracy of consumer records.

 Accuracy of billing tariffs.
 Accuracy of the metering process.
 Completeness of consumer records.
 Accurate and prompt invoicing.
 Adequate control over collections and record keeping.
 Determine households to be metered.
 Stratification of consumer database.
 Identification of additional revenue sources for water.
 Identification of indigent households in the area.
 GIS of all consumers.

4.3.1 APPROACH

FIGURE 2: OUR STRATEGIC APPROACH TO YOUR NEEDS

4.3.1.1 A PROJECT WITH A “ QUICK WINS ” APPROACH .

 Focus on current consumption and payment patterns.

 Example, ensuring that all industrial and high-end customers are included in the revenue system is of a
higher priority than ensuring that indigent households using less than the free basic water
 This will set the tone for implementing the rest of the programme as enhanced revenue will be generated.
4.3.1.2 I NDIGENT C USTOMERS (FBW AND FBE)

 Identify indigent households using greater than the free basic water allowance i.e. identify indigent
communities where an installed district meter shows consumption greater than the Community’s Free Basic
Water Allowance (CFBWA) or FBW, where:
o CFBWA = No. of Indigent Households X 200 litres/day.
4.3.1.3 C REATE A GIS C ONSUMERS D ATASET

 In Formalised Areas:
17

o Assign a unique identifier (commonly called a Property Key) to each cadastral parcel in the
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existing GIS cadastral dataset.

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

o Identify all cadastral parcels that have been developed using, inter alia, aerial photography, existing
land use datasets and site visits.
 In Rural Areas:
o Create a point feature GIS dataset of all rural households using aerial photography and/or GPS site
capture.
4.3.1.4 A DD P OTENTIAL C USTOMERS TO THE R EVENUE S YSTEM

 The potential customers identified should be added to the revenue system in an order of priority:
o Priority A: Add Institutional, Commercial & Industrial Consumers (IC&I). As the largest water
and users, ICI’s should be incorporated into the revenue system as quickly as possible.
o Priority B: Add Formal Domestic Consumers. Water meters must be installed where necessary.
o Priority C: Add Indigent Consumers using more than the free basic water allowance. Water
meters must be installed where necessary.
o Priority Y: Add Indigent Consumers using less than the free basic water allowance. Water meters
need not be installed.
4.3.1.5 A NALYSE E XISTING P ROPERTY U SAGE AND Z ONING

 Ensure ICIs are correctly zoned (and a Usage Type assigned) in order that the correct fixed charges are
applied.
 Ensure remaining (domestic) property usages are correctly zoned and correct Usage Types are assigned.
 Meter Reading:
o Ensure that meter routes are linked to the GIS.
o Ensure there is authentication of the information captured by meter readers using handheld devices
with GPS technology.
o Ensure accurate billing.
o Ensure timely attention to complaints and fault reporting received via call centre.
o Implement meter replacement programme to ensure read volumes are accurate. Meters have a 10-
year lifespan before the accuracy levels deteriorates.
4.3.1.6 V ERIFY THE A CCURACY OF E XISTING C USTOMERS ’ I NFORMATION IN THE R EVENUE
S YSTEM

 Desktop:
o Identification of Conflicts within the Datasets
o For example:
 Incorrect Attribute Combinations
 Duplication of Records
 Incompleteness of Records
 Matching of Properties to Registered Deeds
18

o This desktop work would be undertaken using Python, Avenue and SQL scripting, as required.
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 On Site:
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

o Verification and Update of Consumer Details.

4.3.1.7 B USINESS P ROCESSES

 Importantly, the municipal business processes whereby customers are added to the revenue system
would need to be updated to ensure:
o The accurate generation of the “property key” identifier against the new revenue
system record; and
o The creation or identification of a feature in the GIS with the corresponding identifier.
o
4.3.1.8 C OMMUNITY P ARTICIPATION

 Develop a communication strategy to roll out various institutional policies such as free basic water,
indigent policy, amnesty and debt relief policy, disconnection policy, by-laws and enforcement.
 Involvement of political stakeholders in LM’s to encourage payment for services through a
consultative and fair process.
 Increase the awareness and education of consumers in the reporting of leaks, addressing billing
problems and customer care.
 Bills need to be user friendly and easily understood.
 Community Forums need to be created to encourage payment for services and address water related
issues objectively.
 Ensure high service delivery levels to avoid issues such as vandalism, non-payment and service
delivery protests.

4.4 METER AND STAND AUDIT

4.4.1 APPROACH

Auditing every meter and stand within the municipal boundaries. Once at the required meter or stand the auditor
will collect/obtain the following information:

1. Stand (erf) Number

2. Indicate connection or No connection Location of the meter on the property Meter Number
3. Meter Reading
4. Visible damage to meter
5. Take image of meter where required
6. Register GPS Coordinates
7. Register time and Date of audit

In addition to the above AB Projects shall identify the following:

 Multiple meters (seemingly all functional) on single service points is technically incorrect and causes
havoc on the billing side;
 Poor maintenance and vandalised meters place the integrity of consumption data in doubt and does not
boost consumer confidence in respect of water services billing;
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 Undetected and unattended water leaks in the system constitute a cost to the municipality without the
revenue to counter the expenditure.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

Upon completion of this above phase, the data will be verified and compiled in an Audit Project Report that will
be supplied to the municipality, this will also give a clear indication what has to be budgeted going forward for
water meter replacement/new installation as well as where there are water losses to be repaired.

AB Projects, shall after the approval of the Financial Officer and Council, update the newly acquired field data
directly into the Financial Management Billing System once deployed, or the information can be prepared for
another financial system if so required.

It is also important to mention that during the audit we make use of local resources to assist our auditors as
they move from ward to ward. This gets pre-arranged with the Councillors. The important fact is that they get
exposed to the methodology and solution we use to do the audit. We include this in our “project sign off
register” to show how we report this at the end of the intervention which will enable the Municipality to report
on local investment.

4.4.2 METER READING SOLUTION

 AB Projects will take readings off water meters for the municipality
 AB Projects to analyse each town and identify the number of meter readers required per town to ensure
meter reading happens within the required meter cycle

An SLA with AB Projects for access, telephonic support, upgrades, maintenance, web hosting and monitoring will
be signed under this agreement.

 AB Projects report will be used to identify problematic meters that needs repair or replacement
 Leaks, straight pipes, etc. will be identified and replaced
 Monthly reports for DWS reporting will be provided.
 Prepaid water and electricity meters will be managed by the subcontracted Vendor System.

4.4.3 PRE-PAID VENDING

 Prepaid water token purchases via the 3rd party vendor can be done through online banking, ATM, Pick
‘n Pay stores, Pep and various retain outlets.
 Ensuring the upliftment of local community members, members can become a local vendor by
registering. Creating employment for unemployed youth
 Monthly a seamless integration is established with your financial system service provider to update the
Billing system accordingly.
 Monthly reports are generated and submitted to Council, showing cashier office statistics.

4.4.3.1 S TATEMENTS
 Once the billing has been finalised AB Projects will prepare the required statement file
 File will be used to send statements to consumers

4.4.4 SUPPORT AND OPERATIONAL MANAGEMENT

The Meter Management can be defined as the overall management of the infrastructure and Meter reading process
and staff.

Up and above the management of the repairs, maintenance and actual readings, the following action will take
place and reported on;

 Install, repair and maintain plumbing systems and components.

20

 Identify required tools and special equipment. Select the type and size of pipe required.
 Locate and mark positions for connection and fixtures.
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 Install supports and hangers for pipe, fixtures and equipment.

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 Assemble and install valves and fittings.

 Install, repair and maintain water treatment equipment, piping and control.
 Install, repair and maintain water heater and conditioners.
 Install, repair and maintain plumbing fixtures, appliances and trim.
 Test pipe systems and fixtures for leaking.
 Ensure all installations, repair and maintenance are properly sized, aligned, supported and graded.
 Ensure all installations, repair and maintenance meet environmental protection requirements.
 Enforce the credit control policy where instructed

FIGURE 3: WATER METER MANAGEMENT UNIT (WMMU)

4.4.5 COMMUNICATION
Community awareness is critical for the success of such a project; AB Projects would therefore assist the
municipality as part of the project, to name just a few of the interventions;

 Communication on Notice Boards

 Flyers to communities
 Notice on Billing Statements
 Attend Community meetings with the Mayor, Councillors, Municipal Manager, CFO where the project is
explained, and Consumers can lodge issues and disputes on statements

5 FINANCIAL MODELLING
4.1 BASELINE DATA
Municipalities across South Africa face a number of challenges in collecting revenue from consumers. These
challenges relate to the following:

 Maintaining an accurate data base of each consumer.

 Applying the appropriate tariff code to each consumer’s account.
 Accurate and regular meter readings.
 Reducing water losses.
 Being able to promptly recover from consumers.

The project will thus focus on the following to address the issues identified during the preliminary analysis:
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 Potential Revenue Water

o Billed meter consumption.
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

o Billed unmetered consumption.

o Free basic services
 Non-Revenue Water
o Unbilled authorized consumption
o Unbilled Meter Consumption.
o Unbilled Unmetered Consumption.
o Apparent Losses
o Unauthorized consumption.
o Customer meter inaccuracies.

 Electricity Metering
o Billed meter consumption.
o Billed unmetered consumption.
o Free basic services
o Illegal Connections
o Unmetered Connections

4.2 CONDITIONS FOR IMPLEMENTATION

In order for the project to be successfully implemented, the municipality LM will ensure that:

 Development of a proper Community Communication and Participation Strategy and there will be
buy in from all relevant stakeholders.

 Implement interim recommendations that are necessary to advance the project e.g. in certain
instances new meters may be required to be installed.

 Ensure that sufficient capacity exists for the interim and final recommendations to be implemented.

 There are adequate staff within the finance section that is able and willing to receive training and
skills transfer.

4.3 OPERATIONS & MAINTENANCE COSTS

Indirect costs for monthly system operation and maintenance (O&M), setting up and manning a customer call
centre, establishing and assisting a local SME’s to do vending, operations, maintenance and repairs, costs to locate
& repair real losses

Costs to locate and repair all leaks, bursts and overflows on water mains, service reservoirs and service
connections up to the point of customer metering has not been included as part of the project costs at this stage.
However, in order to make the project feasible, the benefit derived from this exercise will be factored into the
viability/profitability of the project.

4.4 IMMEDIATE BENEFIT

The Implementation of Debt Recovery will address the findings of the Auditor General SA in a sustainable and
phased manner. Leak Repairs will address the high-Water Losses in Townships

4.5 LONG TERM BENEFIT

Cost recovery and debt reduction bearing in mind that more than 90% of consumers do not pay for services. The
Intelligent Metering System will ensure that those who wish to use more water & Electricity will have to pay in
advance for credit and will use water efficiently.

4.6 CONTRACT PARTICIPATION GOALS

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The objective of the empowerment initiative is to bring about meaningful transformation in all procurement
projects. This proposal submitted includes a Contract Participation Goal of 30% to a local partner.
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This will also be done by creating employment opportunities for local people when required by:
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 Meter reading staff

 Vending for prepaid vouchers
 Local Labour through the EPWP Programme
 30% to a local partner

5.7 FUNDING MODELS & SOLUTIONS

The initial funding that is required for this project may be done by the following;

Funding for water meters can be grouped into two broad categories: capital funding, and operational funding.
Capital funding is used for the construction of new infrastructure or rehabilitation and refurbishment of existing
infrastructure. Operational funding is needed for the ongoing operation and maintenance of existing infrastructure.
Both these funding sources have an economic component where consumers pay for full services, as well as a
social component where consumers are poor, and the municipality can only depend on grant funding. Figure 7
below provides a schematic overview.

FIGURE 4: THE SOUTH AFRICAN MUNICIPAL FUNDING FRAMEWORK

AB Projects is confident in accessing Grant Funding for the prepaid water meters and prepaid electricity and
various infrastructure support and planning projects to be the seed fund. This involves writing business plans
to access the funding. Our plan is to meet with National Treasury and National Cogta. We have been
23

successful in the past. The Department of Energy has limited funding and can contribute on the EEDSM
Programme.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

There are two forms of intergovernmental fund transfers, namely general purpose (i.e. unconditional) and specific
purpose (i.e. conditional). Although unconditional and conditional grants can be used for funding both operating
and capital expenditure, in most cases capital expenditure is funded through conditional grants. We shall use
conditional grants.

There are four types of local government conditional grants:

 Schedule 4B sets out general grants that supplement various programmes partly funded by
municipalities.
 Schedule 5B grants fund specific responsibilities and programmes implemented by municipalities. The
MIG falls in this category whilst the RBIG and WSIG have allocations listed in both 5B and 6B
5.7.1 MUNICIPAL INFRASTRUCTURE GRANT (MIG)
The MIG is the major funding mechanism for all municipal infrastructure for basic services to the poor consumers
such as roads, electricity, recreation facilities and water and sanitation. The MIG funding is provided directly to
municipalities with certain conditions attached. Conditions are clearly spelt out in the Division of Revenue Act
(DoRA), which is to provide specific capital finance for eradicating basic municipal infrastructure backlogs for
poor households, microenterprises and social institutions servicing poor communities. This fund is administered
by the Department of Cooperative Government and Traditional Affairs (COGTA).

5.7.2 WATER SERVICES INFRASTRUCTURE GRANT (WSIG)

As stated in DoRA (RSA, 2017), the aim of the WSIG is to accelerate the delivery of clean water and sanitation
facilities to communities that do not have access to basic water services. The grant, administered by the
Department of Water and Sanitation, provides funding for various projects, including the construction of new
infrastructure and the refurbishment and extension of existing water schemes. It has both direct and indirect
components. In areas where municipalities have the capacity to implement projects themselves, funds are
transferred through a direct grant. In other areas, the Department of Water and Sanitation implements projects on
behalf of municipalities through an indirect grant. A maximum of 3 per cent of a municipality’s allocation from
this grant can be used for capacity building to ensure municipalities can operate and maintain projects in future.

5.7.3 FRONT LOADING

The Front-Loading approach is based of accelerating Key Water and Sanitation Projects by pledging the MIG
allocations under the 3 Year MTEF (Medium term expenditure Framework) to fund project to a stage that it is
completed quickly and deliver services. Approved Water and Sanitation Business Plans must be packaged
together and approved by COGTA for funding. National Treasury will involve and consult the Department of
Water and Sanitation and COGTA at Provincial and National Level to approve the Front Loading if they are
satisfied together with political support from the Municipality. Once Treasury approves the Front Loading, it will
appoint the Development Bank of SA as a funding agent who will also charge an interest for the funding
disbursed. The process helps to complete projects by guaranteeing committed funding.

5.7.4 INFRASTRUCTURE INVESTMENT PROGRAMME OF SA (IIPSA)

Infrastructure Investment Programme for SA (IIPSA) was jointly setup by the South African Government &
European Union (EU) for a total amount of €100 million.

The main purpose of IIPSA funding is to:

 Support the implementation of the government's infrastructure programme; and

 Address the constraints to infrastructure development in South Africa and in SADC region.
FSCOGTA has been appointed as the Fund Manager to implement the IIPSA Programme.

5.7.3 PUBLIC – PRIVATE PARTNERSHIP (PPP) MODEL

South African law defines a PPP as a contract between a public sector institution/municipality and a private party,
24

in which the private party assumes substantial financial, technical and operational risk in the design, financing,
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building and operation of a project.

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

Two types of PPPs are specifically defined:

 where the private party performs an institutional/municipal function

 Where the private party acquires the use of state/municipal property for its own commercial purposes A
PPP may also be a hybrid of these types.

Payment in any scenario involves one of three mechanisms

 the institution/municipality paying the private party for the delivery of the service, or
 the private party collecting fees or charges from users of the service, or
 a combination of these

FIGURE 5: PPP MODEL

There are key features of PPPs that make them excellent for achieving BEE objectives:

 The long-term nature of PPPs provides an opportune instrument to grow black equity and black
management over time. Risk is clearly identified in PPPs, clearly costed and appropriately allocated, so
black participants know in advance what they are committing to.
 The formation of private consortia in the form of special purpose vehicles (SPVs) for many PPPs
facilitates long-term beneficial partnerships between new black enterprises and experienced, resourced
companies - both as equity partners and in project management, and both at the private party SPV and
subcontracting levels.
 Where government is the buyer of a service, and insofar as the service is provided to the agreed
standards, there is a steady revenue stream to the private party, reducing risk to new black enterprises.
 Principal equity sponsors in a PPP are often also first-tier Subcontractors, building incentives for optimal
risk management.
 PPPs provide significant subcontracting opportunities for black enterprises, where early cash-flow
benefits can be derived as delivery commences.
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 PPPs have far-reaching broad-based BEE potential: through the subcontracting and procurement
mechanisms they can involve a full spectrum of large, medium and small enterprises, and bring tangible
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local economic development benefits to targeted groups of people.

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

 Return on equity to the private party is competitive where risk is properly assumed.
 There is an increasingly strong demand for black professionals as transaction advisors to both institutions
and private parties in PPPs.
 PPPs develop skills.
 PPPs create jobs.

6 PROPOSED TEAM AND ORGANOGRAM

Project Team Leader -

Reviewer - Naran
Maharaj

Professional Financial
Civil Engineer - Collin Electrical Engineer -
Expert - Santoshnee
James Johnston Sherwyn Jairam
Sardar

Town Planner - Legal Advisor -

Yashmille Raghunundar Amushree Naidoo

6.1 PROJECT TEAM LEADER

Naran Maharajh – 28 Years’ Experience

QUALIFICATIONS PROFESSIONAL REGISTRATION

1985 – 1988 Bachelor of Accountancy SAICA REGISTERED
1989 Postgraduate Diploma in Accountancy.
1991 Admitted as a Chartered Accountant.
RESPONSIBILITIES
 Conducting financial viability analysis and develops reports for proposed developments.
 Preparation of possible financing methods and options in order to realize projects.
 Prepare quality project technical reports for submission to the Client.
 Undertakes the specific tasks from the TOR that are applicable to financial expert.
 Undertakes activities to support financial Investment analysis and financial appraisals of projects.
 Develops and manages good and effective relationships with the clients and other stakeholders.
 Undertakes activities to build the capacity of the staff identified by the client through coaching and
mentoring
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

6.2 CIVIL ENGINEER

Collin James Johnston – 27 Years’ Experience

QUALIFICATIONS PROFESSIONAL REGISTRATION

Bachelor of Engineering Professional Engineer with ECSA – 910086
MBA (Henley Management College UK) Institute of Chemical Engineers
Fellow Water Institute of SA (WISA)
South African Society for Quality
RESPONSIBILITIES
 Manage, design, develop, create and maintain small-scale through to large-scale construction projects in a
safe, timely and sustainable manner
 Conduct on site investigations and analyse data (maps, reports, tests, drawings and other)
 Carry out technical and feasibility studies and draw up blueprints that satisfy technical specifications
 Assess potential risks, materials and costs
 Provide advice and resolve creatively any emerging problems/deficiencies
 Oversee and mentor staff and liaise with a variety of stakeholders
 Handle over the resulting structures and services for use
 Monitor progress and compile reports in project status
 Manage budget and purchase equipment/materials
 Comply with guidelines and regulations including permits, safety etc and deliver technical files and other
technical documentation as required

6.3 ELECTRICAL ENGINEER

Sherwyn Jairam – 30 Years’ Experience

QUALIFICATIONS PROFESSIONAL REGISTRATION

BSC Electrical Engineering (University of KwaZulu Professional Electrical Engineer (20100410)
Natal) SAIEE Member (11600)
GCC Factories (Electrical) Certified profuse installer
RESPONSIBILITIES
 Evaluates electrical systems, products, components, and applications by designing and conducting research
programs; applying knowledge of electricity and materials.
 Confirms system's and components' capabilities by designing testing methods; testing properties.
 Develops electrical products by studying customer requirements; researching and testing manufacturing and
assembly methods and materials.
 Develops manufacturing processes by designing and modifying equipment for building and assembling
electrical components; soliciting observations from operators.
 Assures product quality by designing electrical testing methods; testing finished products and system
capabilities.
 Prepares product reports by collecting, analysing, and summarizing information and trends.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

6.4 TOWN PLANNER

Yashmille Raghunundar – 8 Years’ Experience

QUALIFICATIONS PROFESSIONAL REGISTRATION

BTech Town Regional Planning (Durban University Professional Town Planner (SACPLAN –
of Technology) A/2520/2017)
Development and Planning in African Cities
(University College London)
RESPONSIBILITIES
 Develop long- and short-term plans for land use, growth, maintenance, and revitalization.
 Monitor relevant legislation and ensure compliance of all projects with federal, state, and local
regulations.
 Assist and make recommendations on funding allocations for programs or transportation projects.
 Develop, design, and implement studies on transportation, air quality, housing, and population, and
analyse and report on results.
 Address social, economic, environmental, and health problems by making recommendations location
improvements or zoning regulations.

6.5 LEGAL ADVISOR

Amushree Naidoo – 8 Years’ Experience

QUALIFICATIONS PROFESSIONAL REGISTRATION

Bachelor of Law (LLB)
RESPONSIBILITIES
 Overseeing client and vendor contracts
 Providing commercially sensible and cost-effective legal advice for construction contracts management
 Conducting legal research
 Drafting basic legal documents for construction projects
 Ensuring compliance to construction laws and regulations
 Preparing damage claims
 Resolving buy-sell disputes and property infringements
 Providing arbitration, litigation and mediation support
 Advising on the latest building standards
 Explaining building standards to stakeholders
 Overseeing health and safety and injury claims and offering advice on court cases
 Meeting and interviewing clients
 Drafting documents, letters and contracts
 Acting on behalf of clients in disputes, if necessary.
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 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

6.6 PROFESSIONAL FINANCIAL EXPERT

Santoshnee Sardar – 8 Years’ Experience
QUALIFICATIONS PROFESSIONAL REGISTRATION
B COMM Accounting (Honour’s) (Unisa) South African Institute of Chartered Accountants
(SAICA)
African Women C A
RESPONSIBILITIES
 Compilation of the fixed asset register, annual budget and financial statements.
 Control of the bank account and arrangement of transfers between accounts.
 Preparation of items for inclusion in agendas of the Council and its committees emanating from the
Financial Services Department.
 Handle most of the correspondence of the Financial Services Department.
 Negotiations regarding contracts for professional services.
 Implementation of the Financial Regulations.
 Keep abreast with circulars and legislation affecting the finances of uThukela District Municipality
including the review of financial policies and oversee the implementation thereof.
 Act as the direct link between the Council and the Auditor-General.
 Act as consultant to the Local Councils in the Region for the administration of projects financed by the
Council.
 All areas of finance including preparation of budgets, strategic plans (short term 3years; long term 5-10
years), Annual financial statements, year-ends for auditors (ranging from 6 months after year-end to 16
days),

7 PROPOSE ACTION PLAN

The Table below, provides an envisaged timing of the key activities. The programme will be discussed and agreed
at the project inception meeting, following which a detailed programme of activities will be established with target
dates for deliverables. The following schedule assumes that the project will commence in February 2022.

Ite Key Performance Action Needed Short Term Medium Term Long Term
m Area (KPA)
No.

1 Billing
1,1 Application for
Services
1.1. Application forms / SLA must be New SLA Review and Review and
1 service level filled in and update update
agreements (SLA) signed. All
relevant
information
must be
collected.
Ensure that
previous
consumers debt
is paid in full.
1.1. Documentation Check Lists for: Checklists Electronic Electronic
29

2 required Id book, copies, scans, copies, scans,

Driver’s safe and link to safe and link to
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License, account. account.

Passport,
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

Application
form, Spouse /
partners details,
Letter from
owner.
Company
registration
certificate.
Letter of
authorization,
directors,
partners details,
references,
contact details,
next of kin
information.
1.1. Screening / Credit and use 3rd party Perform in- Perform in-
3 verification information house, online, house, online,
verification. real time real time.
Contact
employer,
references, etc.
1.1. Deposits At least an Annual review Monthly Quarterly
4 average of three review review
months account.
1,2 Meter Reading
1.2. Meter Books Read by hand/ Introduce printed Electronic Electronic
1 electronic books with no reading of all readings
history meters
1.2. Capturing / loading Capture by Manual Electronic Electronic
2 of readings hand/ load
electronically

1.2. Variances / The admin Unit to be Setting of Setting of

3 exceptions division is established to variance target variance target
supposed to provide support to of not more of not more
verify exception address variances than 95% than 95%
reports, but due
to insufficient
staff a lot of
rectifications do
not take place.
The result is that
incorrect
accounts are
send to
consumers.
Consumers not
placing reliance
on accounts and
not paying
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accounts, harm
the relationship
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between council
and consumers.
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

1.2. Special Readings Special readings DCS unit to Notice period Notice period
4 must be done on monitor and of 24 hours to of 24 hours to
the same day support be given by be given by
when a consumers. consumers
consumer gives
notice that they
are moving in or
out of a
residence. The
consumer must
verify the
special reading
and sign for the
correctness there
of.
1,3 Indigent Accounts Processes for Electronic New indigent Annual reviews
implementation verification register to be to be conducted
must be set up (sifting) of current compiled, via
according to the indigent register application
council's current and / or
staff structure. surveying
1,4 Rendering and
payment of
accounts
1.4. Household Accounts are Update details Data cleansing Monthly
1 consumers finalised on the updates
15th of the
month
1.4. Bulk consumers Accounts are Update details, Electronic Electronic
2 and Businesses finalised on the confirm receipt and delivery of delivery of
15th of the follow up payment accounts, accounts,
month incentives for incentives for
early payments early payments
1.4. Posting of accounts 15th of each Ensure accuracy Data cleansing. Regular
3 month. and early delivery Need to review updates of
distribution personal
channel of information
accounts, intro
technology (e-
mail, website,
SMS)
1.4. Return to Sender / Council must try Send final notice of Data cleansing Regular
4 inactive accounts and trace these 28 days, list debit updates of
consumers- if no balance accounts personal
success then with credit bureaus information
uses ITC.
Consumers must
be traced to do
the corrections
and to clean up
the database.
1.4. Payment due date 7th of each Geared up to Sending of Sending of
5 month. ensure cut off after reminders reminders
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due date. All (phone, SMS, (phone, SMS,

payments receipted e-mail, notices) e- mail,
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before due notices) before

date- pro active due date-
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

pro active
1.4. Print Notices 8th of each Ensure all notices Review account Update and
6 /reminders on month and issued on time lay out to print maintain.
accounts deliver by hand. notice with
account
1.4. Incentive Policy Policy must be New policy to be Review and Review and
7 reviewed. adopted update update
1.4. Cut -off list on Print final cut Disconnect and Stricter Stricter
8 current accounts off list, spot checks for measures for measures for
disconnect and illegal illegal illegal
deliver cut- off reconnection reconnections reconnections
letter to
consumer.
2 Credit Control

2,1 Reminders

2.1. Call, SMS, E-mail, Currently the More cost-effective Introduction of Maintain and
1 Fax, Flyers, Radio, system prints measures to be technology improve
letters warning letters explored
to consumer if
arrangements
were not met.
Other methods
should be
implemented
such as calls,
SMS, e-mail etc.
2,2 Payments/receipts
2.2. Direct Deposits, Must be Correct receipting Electronic Continuous
1 Internet payments, captured on a needed, clear payments to be Improvement
cheques daily basis. suspense account encouraged and
internal
systems
geared up
2,3 Disconnections
2.3. Interim Cut off lists This function is Interim cut off lists Proactive Early warning
1 not done can assist in approach electronic
effectively due contacting / needed; more system needed
to insufficient warning the debtor cost effective
staff of due date.
Notices can be
done through bulk
SMS’s
2.3. Electronically 16th of each Ensure all Reduce number Reduce number
2 prepared Cut Off month and defaulters on lists of defaulters on of defaulters on
Lists deliver by hand. Then targeted lists Stricter lists. Stricter
approach can be penalties for penalties for
followed defaulting defaulting
32

2.3. Submission to Cut 16th of each Ensure all Ensure all Ensure all
3 Off Contractors and month and disconnections disconnections disconnections
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Supervisors deliver by hand. done done done

 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

2.3. Reports, meter n/a Feedback from Feedback from Feedback from
4 number, reading, contractors to be contractors to contractors to
notes analysed and used be analysed and be analysed and
used used
2.3. Follow up, spot This is not done After hours spot- Follow up a Follow up a
5 checks due to under checks, get photo, must, heavy must, heavy
staff. Must be on and witness, penalties, penalties,
daily basis and remove criminal criminal
cut-offs to cables proceedings, proceedings,
follow, ITC, ITC ITC
garnishee
orders, Sale in
execution as a
last resort.
Policy should be
drafted to
streamline the
process and
procedures.
3 Debt Collection

3,1 Reminders - phone, 9th of each Proactive System Expand and Expand and
SMS, e- mail, fax, month a to be introduced improve improve
flyers, radio reminder is sent
out by hand to
warn people off
cut-off dates on
current
accounts.
3,2 Disconnection 16th of the Ensure weekly Ensure weekly Ensure weekly
Notice month on arrear disconnections and disconnections disconnections
accounts. follow ups /spot and follow and follow ups
checks. ups /spot /spot checks. If
If no reaction list checks. If no no reaction list
with credit bureaus reaction list with credit
with credit bureaus
bureaus
3.2. Notice for Consumers must Minimum of 24 Checks and
1 disconnection and notify council if hours’ notice to balances be
listing with credit they are going to take final readings introduced
bureau leave / vacate and process before final
the premise by final accounts credits paid out
filling in a
disconnection
for services.
Account must be
settled in full, if
not ITC
3.2. Block pre-paid Still to be Explore blocking Encourage
2 sales implemented of pre-paid sales, if installation of
where possible. consumer account pre-paid meters
Municipal is
Finance Systems in arrears
33

to explore the
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possibility of
integrating pre-
 DEPARTMENT OF COGTA: FREE STATE- REVENUE AND EXPENDITURE

paid sales with

debtor’s
accounts.
4 Community
Meetings
4.1 Engage with the Meetings must Collect information Feedback from Feedback from
community be held with the from consumers on the consumers the consumers
regarding payment community to their willingness to to be analysed to be analysed
for water get buy in from pay for water and and used. and used.
the communities note their
on willingness complaints and
to pay. recommendations

8 CONCLUSION
Municipalities across South Africa are facing significant fiscal and service delivery difficulties, which undermine
the effective and efficient performance of its functions and mandate. The Implementation of Debt Recovery will
address the difficulties of ever-increasing creditors and revenue collections in a sustainable and phased manner.

The objective of a revenue enhancement strategy as proposed by AB Projects is to address financial and
institutional challenges faced by the municipality. This focuses on the formulation and implementation of
strategies to improve financial management and controls within the municipality. The objective of this successful
financial recovery plan is to build or improve the current payment levels and then to recover arrear debt. The
revenue enhancement strategy is a combination of bringing about additional revenue streams and also increasing
revenue within existing revenue streams.

AB Projects has showcased its ability to carry out a Revenue Enhancement Project which has been accompanied
by Reference Letters from Municipalities as well as the Methodology and Financial Models.

Cost recovery and debt reduction bearing in mind that more than 90% of consumers do not pay for services. The
Intelligent Metering System will ensure that those who wish to use more water & Electricity will have to pay in
advance for credit and will use water efficiently. Revenue enhancement strategy and cash management are some
of the pillars of the municipality's financial plan. To maximize revenue generation possibilities and improve
revenue performance the activities envisaged for this project should be performed in the detailed methodology as
presented in this Proposal.

The Financial Model as prescribed in this proposal illustrates the collection of revenue as well as the reinvestment
model to continue with this approach in ensuring that services are delivered and consumers are liable for
Consumption of Water & Electricity. Our model will be used to extrapolate and address all problems and
challenges that the municipality faces.
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