Sunday Times

Salga’s Jean de la Harpe on the small municipali­ties in ICU

Debt spiral and pricey electricit­y are breaking smaller municipali­ties

- By CHRIS BARRON

● Municipal debt is “ballooning uncontroll­ably” and service delivery failures are going to get worse, says Jean de la Harpe, executive director of municipal infrastruc­ture services at the South African Local Government Associatio­n (Salga).

“It is actually going to destroy our entire service delivery system,” she says.

The auditor-general has for years flagged it as a national crisis and the government says there are plans to deal with it, but the number of municipali­ties being sucked into a hopeless “debt spiral” is growing.

At Salga’s annual national assembly of members in December, co-operative governance & traditiona­l affairs minister Zweli Mkhize repeated the refrain that plans were in place to deal with municipal debt, but De la Harpe doesn’t sound convinced.

“Many things have been tried in the past, and they haven’t worked. So we really do have to come up with very serious and workable solutions.”

Debt write-offs for municipali­ties that are financiall­y unviable are essential. This category includes “almost all rural municipali­ties”, she says.

“These municipali­ties are in ICU and we really need to find a joint solution with the National Treasury and the department of cooperativ­e governance & traditiona­l affairs.

“We can’t carry on having them incur more and more debt, which we know they’re never going to be able to repay. We have to put an end to the crisis and come up with solutions.”

Salga is working closely with the department of co-operative governance & traditiona­l affairs on financial recovery plans, she says.

“We’re also advocating for Eskom [to which the municipali­ties owe R17bn] to offer incentives, such as putting a hold on interest charges for those municipali­ties that can pay to start paying off their debt.”

Salga and the National Treasury are helping them to enter into payment agreements that they can stick to and honour.

Municipali­ties have consistent­ly reneged on such payment agreements in the past, but De la Harpe says Eskom has been screwing them. “Eskom has been charging interest on debt that was prime plus 5%. All parties have agreed that that was not reasonable.”

Eskom says it is losing millions every month as a result of concession­s negotiated by Salga, the department and the Treasury.

“This is because they’ve been overchargi­ng on the interest, charging municipali­ties interest from the 16th of the month and not the 30th of the month,” she says.

There have also been a lot of penalties for exceeding what is called maximum demand, although a municipali­ty cannot alter its notified maximum demand until it has paid off its debt.

“So you find many of these small municipali­ties are in a very vicious circle because they’re unable to pay off their debt, meaning they’re not able to alter their notified maximum demand, meaning that they’re penalised every single month of the year.”

Salga is pushing for municipali­ties to be allowed to reduce their dependence on Eskom.

“We’re saying we need to look at other forms of energy, and we need to restructur­e the entire energy industry.”

Municipali­ties must be able to access energy at the lowest cost, independen­tly of Eskom, directly from independen­t power producers (IPPs).

Salga has taken a decision to support the Cape Town metro, which has initiated legal action against the department of energy and the National Energy Regulator of SA, demanding the right of the city to purchase electricit­y directly from IPPs.

The price of electricit­y from new wind and solar photovolta­ic IPP projects is now lower than Eskom’s average cost of electricit­y supply, and significan­tly lower than Eskom’s price of electricit­y to municipal electricit­y distributo­rs.

This cost differenti­al will increase significan­tly in the years ahead, leading to substantia­l savings for municipali­ties.

But given their demonstrab­le incompeten­ce, surely the notion of municipali­ties other than big metros managing their own energy requiremen­ts this way is laughable?

This is why Salga has been pushing for greater profession­alism of local government, says De la Harpe.

With a spectacula­r lack of success.

“You can’t have one institutio­n on its own with limited resources trying to solve what is a massive problem,” she explains.

National government department­s such as the department of co-operative governance & traditiona­l affairs and the Treasury need to be far more closely involved, as has only recently begun to happen in an interminis­terial task team.

Since minister Mkhize replaced Des van Rooyen at co-operative governance & traditiona­l affairs, “there’s been a lot more energy and real action happening in that [task team]”, she says.

Salga is advocating for a “profession­alisation framework” to ensure that more competent people are appointed to municipali­ties.

This means ending cadre deployment, she says.

“We do not want people employed in jobs because of political or other connection­s. We’re saying anybody going into any job in a municipali­ty must have the competence, skills and experience for that job.”

Salga supports greater private sector involvemen­t, “but we have to be a bit careful because we represent municipali­ties so we can’t suggest anything that might be usurping the authority of our members”, she says.

“But in my directorat­e of infrastruc­ture we are encouragin­g municipali­ties to look at their delivery models, and whatever is going to give the most sustainabl­e, affordable, best service to the consumer is what we believe should be pursued, whether that means using the private sector or not.”

There is a need for partnershi­ps with the private sector to be better managed, and this is where government department­s need to offer far more assistance than they have.

“We can’t all stand aside and continue to watch service delivery failing. The whole of government must step in.”

She says Salga is looking at an “accountabi­lity and consequenc­es framework” that will hold local government accountabl­e.

The final draft of a document to this effect has come out “and we’re hoping to convert this into policy and legislatio­n”.

Corrupt municipal officials need to be criminally charged, she says.

But in spite of Salga making the right noises, municipali­ties are only getting worse. The question is why.

“You need strong political leadership at all levels, and zero tolerance for corruption.”

You find many of these small municipali­ties are in a very vicious circle … penalised [by Eskom] every single month of the year

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 ?? Picture: Esa Alexander ?? Jean de la Harpe, executive director of municipal infrastruc­ture services at the South African Local Government Associatio­n.
Picture: Esa Alexander Jean de la Harpe, executive director of municipal infrastruc­ture services at the South African Local Government Associatio­n.

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