Administrators of the Walvis Bay Municipality say negotiations with Red Force will commence following the official termination of the contract on Wednesday.
Red Force, however, says the latest development is disturbing and comical because it violates the agreement between the two parties.
Over the past four weeks, Walvis Bay residents and all local authority councillors have ganged up on Red Force, which was appointed six months ago to collect more than N$300 million owed by residents in outstanding water debts.
Residents believe that Red Force uses unethical methods of collecting debts, with many of their homes having been disconnected from the water supply.
Fueling the fire, the councillors also claim that they never gave the administrators permission to appoint the debt collectors.
At a special council meeting on Tuesday, councillor Ephraim Shozi's motion to remove Red Force was passed unopposed.
The following day, the administrators announced that the contract with Red Force had ended with immediate effect.
The municipality's public relations officer said they will most likely start the negotiation process with Red Force following the termination.
Anita Kaihiva has yet to respond to the questions about the full repercussions of cutting ties with Red Force.
Meanwhile, the Deputy Chief Executive Officer at Red Force says the council passed a resolution to hire a debt collection company through public bidding, and Red Force won the tender.
Margaret Malambo, in an email, says various consultations were held and a presentation of the contract was made to the council.
She says it is misleading for the same councillors to say they had no knowledge of the contract.
Malambo explained that, because Red Force followed the procurement procedures, it would be logical and legal to terminate the contract in compliance with the Public Procurement Act.
The company, which has thus far recovered N$85 million, believes debt collectors generally have a bad reputation because no one wants to be reminded of their debts.