Debt-ridden Ingwebu seeks bill payment holiday

The development was revealed in the latest council minutes in which the financial director reported last month that the company which is owned by council had requested a holiday in paying for the bill.

Bulawayo City Council-owned Ingwebu Breweries has requested water bill payment exemption after it accumulated a bill of more than US$400 000.

The development was revealed in the latest council minutes in which the financial director reported last month that the company which is owned by council had requested a holiday in paying for the bill.

Council indicated that Ingwebu Breweries had written to it on April 11, 2024 requesting a water bill payment holiday from April to December this year on its main brewery water account.

“The outstanding balance on the account was US$423 227,88 after the April 2024 levy. Monthly billings (are) from January 2024 to April 2024,” the minutes read.

Council also noted that the average monthly total water bill for the Ingwebu Breweries plant was US$36 853.

“The estimated billing based on their average bill up to December 2024 would be US$331 677. Ingwebu Breweries had an approved daily allocation of water of 645 kilolitres which was a monthly allocation of 19 350 kilolitres,” the minutes read.

“The average monthly consumption for Ingwebu Breweries based on actual meter readings from July 2023 to April 2024 had been 17 500 kilolitres.

“The daily allocation between July 2023 and October 2023 was 524 kilolitres per day, 15 720 kilolitres per month.”

Council noted that the allocation was resulting in monthly penalties due to water rationing.

“Ingwebu Breweries applied for an increase in its daily water allocation and it was granted in November 2023. The new daily allocation is now 645 kilolitres per day, that is, 19 350 kilolitres per month. This increase has resulted in the company not being penalised,” the minutes read.

“The request was unprecedented and will set a bad precedent that services like water which are consumed and are based on cost recovery can be given a payment leave.

“This may result in other companies under financial distress requesting similar arrangements.”

Council noted that it is under a tight water rationing regime and offering free water to any entity may send a wrong signal to residents and stakeholders in the city.

It noted that some consumers’ sentiments were that non-domestic consumers should be socially responsible and contribute towards rehabilitation of recycled water infrastructure for use by non-food industries.

“The total estimated volume of water involved in Ingwebu Breweries’ request was 157 500 kilolitres valued at US$331 677. The water service charge to Ingwebu Breweries was based on the user pay principle.

“The tariff was intended to recover treatment, pumping and conveyance costs of water. Council might incur a significant budget/funding deficit if the request is granted,” council said.

“The public expectation was that Ingwebu Breweries should pay a dividend to council as opposed to Ingwebu Breweries being subsidised by the local authority.

“It was resolved and recommended that the request by Ingwebu Breweries be not acceded to as it will set a bad precedent and result in financial loss to council and that Ingwebu Breweries should enter into a payment arrangement with council to settle the outstanding debt of US$423 227,88.”

Council also resolved that Ingwebu Breweries be given relief through reversal of 100% penalties charged from July to October 2023 amounting to US$38 317,71 and suspension of charging of interest on the overdue debt and that council incurs a loss of US$38 317,71 being penalty income to be written off.

“The financial director reported on May 20 that the credit control and debt management policy section 115 provided for the write off of debts under the following selected circumstances, if all reasonable notifications and cost-effective legal avenues had been exhausted to recover specific outstanding amount/debt,” the minutes read.

“An amount equal to or less than US$50 or as determined by council from time-to-time, will be considered too small after having followed basic checks to warrant further endeavours to collect it.

“The cost to recover the debt does not warrant further action. Basic accounting checks and analysis had been done and the amounts were considered too small to warrant any further collection efforts.”

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