Sol Plaatje downgraded to Grade 4 municipality
WHILE Sol Plaatje’s debt to Eskom has risen to over R1 billion, councillors have expressed concern that it has been downgraded to a Grade 4 municipality. This reclassification requires a downscale of salaries for all officials and councillors.
The decision was implemented by the council on November 6.
DA caucus chairperson Elize Niemann pointed out that with fewer allocations, the municipality would face more difficulties honouring its payment commitments and delivering services.
“Grant funding will also be reduced. Instead of approving developments such as the extension of the North Cape Mall, which could grow the economy, Spellum items are being placed on the back burner,” said Niemann.
ACDP councillor Roddy Loff added that it would have a wide-reaching impact on the administration of the municipality, chamber and the business community.
“The municipal manager will have to inform us how they will decrease salaries backdated from July,” he said.
DA councillor Chris Whittaker expressed concern that the municipality was in breach of a payment agreement with Eskom’s municipal debt relief programme, as only partial payments were made between July and August.
“Failure to urgently pay R134.3 million could lead to Eskom cancelling its debt relief benefits, where the municipality will have to immediately start repaying arrears, interest and penalties. Eskom may also resume legal proceedings and attach the municipal bank account,” Whittaker warned.
“National Treasury could also institute criminal proceedings and initiate a takeover of a defaulting municipality’s electricity business. This would nullify revenue collection generated by electricity sales, plunging the municipality into an even worse financial crisis. At present, the municipality must draw on investments and redirect grant funding to pay salaries, institute a soft lock on the filling of vacancies and remove employees’ option to sell leave.
“Furthermore, the municipality must redirect grant funding between various projects to make up for a lack of own capital to invest.”
Whittaker highlighted that as of September 30, Sol Plaatje Municipality owed Eskom in excess of R1 billion for bulk electricity.
“This amount represents a fifth of the total R5.1 billion owed by Northern Cape municipalities as at June.”
Sol Plaatje Municipality spokesperson Thabo Mothibi stated that the local authority was honouring payment agreements entered into through its debt relief programme, with R1.2 billion being paid to the power utility over the past 10 months.
He added that they qualified for a R240 million debt write-off, which amounted to a third of the total debt.
“As part of our debt recovery plans, we are engaging all debtors. Household debt amounts to R2.2 billion while business owes R678 million and government R871 million. The total debt on the books amounts to R3.8 billion.”
Mothibi noted that the municipality had approached Eskom and the National Treasury when it anticipated payment shortfalls after not implementing high-season and winter electricity tariffs.
“Plans are in place to meet our debt obligations, current account and shortfalls. Despite cash flow challenges, we are not utilising grant allocations for operational costs and salaries.”
Mothibi urged all ratepayers in arrears to pay for municipal services to ensure the provision of essential services, maintain infrastructure and assist the municipality in attaining financial sustainability.
