The Concerned Citizens Committee of Makana has sent copies of a letter to the Eastern Cape Provincial and national governments urgently requesting that the municipality be placed under administration. The drastic move follows the failure of Makana Municipality to comply with an earlier Committee letter demanding that Council voluntarily submit to administration.
At a Council meeting held on 27 June to discuss the municipality’s financial crisis, it was revealed that municipal accounts are out of control and deteriorating every month.
The Committee, comprising the Grahamstown Business Forum, the Grahamstown Residents’ Association and the Makana Unity League, said that Makana Municipality is not only in serious financial difficulty, it “is in fact insolvent”. It says that the municipality is currently running an operating deficit of approximately R5 million per month.
The gravity of Makana’s financial crisis and its inability to deal with the effects of the drought caused the Committee to ask Fikile Xasa, the MEC for Cooperative Governance and Traditional Affairs (COGTA), to put this municipality under administration in terms of Section 139 (5) of the South African Constitution.
Copies of the letter, together with the original correspondence with Makana Municipality, have been sent to the Eastern Cape Premier Phumulo Masualle; the Minister of Cooperative Governance and Traditional Affairs, Des Van Rooyen; and the Finance Minister, Malusi Gigaba.
The municipality shows on its books that it is owed almost R367 million but it acknowledges that most of that outstanding debt will never be recovered. The debt includes large amounts of money owed to the municipality by people who have no means of paying arrears on municipal services.
The municipality is unable to service its Eskom debt even though a payment plan was negotiated with the electricity provider earlier this year. The Eskom account currently stands at just over R55 million. There are fears now that Eskom might cut electricity to Makana if the municipality continues to default on payments.
Eskom would probably cut electricity for a certain number of hours per day. There is a real possibility that such cuts could affect water pumps that feed our water system. This means that residents could face not only power cuts but also more serious water outages.
It was revealed at the Council meeting that the electricity payments made by Makana residents in June 2017 (R9,468,505.00) were not used to pay Eskom. Only R750,000 was paid to Eskom while the remainder was used to pay salaries and to service the municipality’s debt.
The Committee’s letter describes this diversion of funds as a violation of the Constitution, the Municipal Finance Management Act and common law because “at no stage did electricity users consent to electricity income being utilised for anything else other than the Eskom electricity account”.
It goes on to says the transfer of amounts from the electricity account to salaries and other expenses is “a misappropriation of funds”.
The Committee letter signed by Chairman Ron Weissenberg states that if the Minister does not put Makana Municipality under administration within 14 days, the member organisations reserve the right to appeal to the High Court to compel the Minister to do so in terms of his obligations in the law.
