Eyebrows raised after millions in debt written off

THE FF+ in the Northern Cape is seeking legal advice after fruitless, wasteful and unauthorised expenditure amounting to millions of rand was written off by the municipal public accounts committee (MPAC) at Phokwane Municipality between 2017 and 2023.

The provincial convener of the Forum 4 Service Delivery (F4SD), Moeketsi Ntema, called for a thorough investigation to be conducted into all deviations mentioned in reports.

“The reports were tabled while the majority of councillors did not attend the committee meeting last week.”

The MPAC committee indicated that it was unable to pay debts, interest and penalties owed to Eskom because of a “constrained cash flow”.

Interests and penalties to Eskom on overdue accounts, including R11.2 million incurred during 2019/20, R8.9 million during 2021/22 and R22.2 million in 2022/23, were written off.

Unauthorised Unemployment Insurance Fund (UIF) expenditure incurred during 2017/18, amounting to R131 million, R117 million during 2018/19 and R333.5 million during 2022/23 were also written off.

It also wrote off interests and penalties to the SA Revenue Service due to late payments amounting to R191.215.

Interest payable to the auditor-general, amounting to R41,542, was written off as it stated that the municipality was operating with an unfunded budget that restricted it from having a written payment agreement in place.

The MPAC reasoned that due to the “financial situation”, it was unable to identify any criminality and indicated that it would be “impractical to pay overdue accounts within the prescribed time frames due to cash flow problems”.

It explained that the municipality was operating on an unfunded budget and it was struggling to pay its service providers within the specified time frames.

The committee believed that officials had “acted in good faith” to ensure the delivery of services and that the municipality fulfilled its obligations.

“It does not seem that any single official can be held responsible for incurring this expenditure. The municipality as such received value for money. As such no disciplinary action needs to be instituted,” it advised.

FF+ councillor and chairperson of the public accounts committee at Phokwane Municipality Rickus Te Baerts stated that the MPAC had never discussed the reports before it was approved.

“Two committee meetings were postponed last week as I was the only councillor who attended, along with the secretary. There is over R1.7 billion of unauthorised expenditure on the books, where around R100 million was written off,” said Te Baerts.

He indicated that councillors approved the recommendations while they were in breach of the code of conduct as they collectively owed outstanding rates and taxes amounting to R1.2 million.

“They participated in a council meeting where a resolution was taken to grant discounts of 50 percent to persons who paid their accounts that were in arrears.”

Eskom communication and stakeholder relations practitioner Patricia Tsepane pointed out that Phokwane Municipality could not write off debt that was owed to its creditors.

“Municipalities are guided by the National Treasury debt relief programme, which stipulates that one-third of the ring-fenced debt will be written off by Eskom guided by National Treasury annually until the debt is fully written off.

“National Treasury and Eskom have collaborated on the programme and a significant feature is the priority of paying the current accounts by municipalities followed by paying the outstanding amount. The intent is to prevent further debt growth.”

Tsepane added that as at July 31, the municipality owed Eskom R365.8 million.

“The municipality is currently not fully complying with the conditions of the Treasury municipal debt relief programme.”

She noted that should the municipality fail to comply, Eskom would embark on the necessary mediation processes.

Phokwane Municipality did not respond to media enquiries at the time of publication.