EMLM bankrupt – DA
but municipality says no ...
THE Enoch Mgijima Local Municipality is bankrupt – and tough times lie ahead for residents, the DA has warned – but the municipality has denied a declaration of bankruptcy.
DA caucus chairman Chris de Wet, in a statement to the media this week, said the municipality had depleted its cash reserves which were standing at more than R100-million just over a year ago.
In addition, De Wet indicated, the monthly Eskom electricity bill for bulk electricity by the local authority was standing at double the amount collected from the sale of electricity to consumers.
In August/September, he indicated, the Eskom account was at R31-million while only R14-million had been received in payment from consumers.
This situation had been ongoing for some time, he said.
De Wet said it had since been found out that, following inquiries made by the party during a finance committee meeting of EMLM on September 22, and following information supplied by the budget and treasury department, that after the municipality paid its salaries for this month, there were no funds left to pay the Eskom account of about R31-million or other creditors.
The mayoral committee had then, De Wet said, authorised that R15-million be used from the Municipal Infrastructural Grants (MIG) fund to make a payment to Eskom.
“This was done without any council approval and in clear violation of the approved budget and other applicable legislation as the MIG funds are conditional grants from central government that could only be used strictly in accordance with its intended purpose which does not include paying for running expenses, such as an electricity bill from Eskom.”
De Wet said the Eskom account was in arrears of more than R16-million, with next month’s account to be delivered shortly.
“By illegally using the MIG fund to pay a running expense of the municipality, it has become clear that the municipality is technically bankrupt and is beginning to follow a doctrine of ‘robbing Peter to pay Paul’.”
He said the DA had consistently warned executive mayor Lindiwe Gunuza-Nkwentsha and the ANC mayoral committee and residents of the looming financial disaster, “but these warnings appear to have fallen on deaf ears”.
“It is clear that the ANC-led council and mayoral committee have no idea how to successfully manage
the financial affairs and administration of our municipality. This is not only evident from the financial bankruptcy we are facing, but also from the increasing deterioration of our infrastructure, lack of service delivery, etc. Komani, and all the other towns under this ANC administration, have never before in their existence been in such a bad state of disrepair and neglect. It is a shame that this once-proud town, described as the jewel of the Border area, has become a bankrupt dump.”
De Wet said the party wanted to warn residents that the viability of the municipality was at risk and that, if the situation was not remedied, Eskom would cut off the electricity supply while service providers would stop providing goods and services to the local authority.
“The DA is in consultation with its shadow minister of cooperative government in order to assess the situation and find the best way forward, most likely requesting that the municipality be put under administration.”
He said the mayor and committee should have “the courage and honesty” to reveal the true facts of the situation to residents.
“On the contrary, they not only remain dead silent, but also continue to allow unbridled expenditure and corruption to take place and flourish within municipal administration.”
EMLM spokesman Fundile Feketshane said the municipality had, since its establishment, experienced a lot of financial challenges.
“It has, however, strived to ensure that it meets its financial obligations as and when they fall due.”
He said EMLM was set to engage various creditors on payment terms “so that its financial cash flows do not deplete having paid huge sums to one creditor.”
This was the case with, for example, Eskom when arrangements could be made for payment terms if the municipality struggled to settle the entire bill.
He said council would always ensure that it had enough financial resources to pay the salary bill.
The municipality was trying to collect as much as possible from debtors to ensure that the funds were invested back into the provision of services and infrastructure.
“We are implementing our credit-control policies and revenue enhancement strategies and we call upon our customers to make such payments.”
Feketshane said there had been no declaration of bankruptcy by EMLM.
He denied that MIG funds were used by the municipality to pay Eskom.
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