Oudtshoorn battles to keep wolves from door

WORN DOWN by creditors demanding a total debt of over R300 million, the team tasked with repairing the financial damage to the beleaguered Oudtshoorn Municipality has painted a grim picture of their daily struggles to keep “the wolves from the door”.

Briefing the Western Cape legislature’s standing committee on local government last week, Oudtshoorn administrator Kam Chetty, the acting municipal manager Allen Paulse and acting chief financial officer Felix Lotter described the depths of the crisis at the local government authority as “unimaginable”.

The municipality was placed under administration last July, following years of political instability.

Paulse said: “In a nutshell, after we pay salaries and Eskom there is not even money to pay for toilet paper, that is how that place has been run.”

He stressed that their predecessors flaunted all types of procedures, which he said bordered on criminality.

Outlining their struggles, Chetty said the first thing they did was to “stop the bleeding to try and get some money out to pay creditors and others”.

Chetty said they had a cash-flow crisis and all non-essential expenditure had been cut. “There is no entertainment and no travel.

“There’s literally no money to spend on

on anything, except absolutely urgent matters,” he said.

Chetty said the municipality’s total debt when placed under administration was more than R310 million.

However, they managed to reduce it by paying off R14m owed to a construction company by the end of December, while the R53m owed to Eskom had been reduced to R41m following an agreement to pay off the amount over a two-year period.

Lotter said servicing the Eskom debt of R41.4m cost just over R2m a month.

He said money owed to the municipality by ratepayers and consumers amounted to R117m, of which R28m was current debt still payable.

“If we exclude the current billings we would be looking at just under R90m that is recoverable.

“The problem is we are not so sure about the accuracy of the billing, because there’s inconsistent billing due to meter reading estimations, as a result of meter reading vacancies,” he said.

The average payment rate in the municipality stood at 92 percent after the implementation of strict credit controls to collect easily recoverable debt.

“Of the R90m owing to the municipality, there’s about R22m in indigent debt that is locked up in the amount, which is most probably not recoverable,” he said.

A further R32m had to be deducted from the R90m for other irrecoverable debt including legal fees, pension and salaries, telephone expenses and others dating back to 2004.

Lotter said the municipality also owed creditors for services in extent of R63.5m, the bulk of which was older than six months.

“What we are currently struggling is every single day keeping the wolves from the door. We have to manage the creditors, everyone wants to take action against the municipality to get their share of the money for services already rendered,” he said.

He said the cash balance was about R5.5m, but there was also a figure of R29.72m in unspent grants that reflected on the books.

Regarding the Cango Caves, Lotter said it seemed “there was a big sponge somewhere just absorbing money”.

He said they needed R7.5m for refurbishment of the attraction.

The report uncovered 132 contraventions, and called for disciplinary action against individuals.