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.


GROOVY: South African jazz leg­end Don Laka show­ing off his piano skills dur­ing the Chris Hani Jazz Fes­ti­val at the week­end

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