The lack of rates and services payments and a bloated staff contingent were listed as some of the major contributors to the Enoch Mgijima Local Municipality (EMLM) financial distress by administrator Monwabisi Somana.
Somana met with the media on Tuesday to give a progress report on the financial recovery plan (FRP) he and his team were implementing to ensure the local authority was financially viable.
The administrator indicated that on matters of governance, he and his team realised the EMLM had a huge salary bill which trampled on the institution’s service delivery strides.
“We have a bloated staff contingent caused by the merging of the three erstwhile municipalities, which means a big portion of our funds goes into salary payments. However, we are working on an organogram that will be aligned to our affordability. We have since halted any kind of recruitment until our revenue challenges have improved.”
Somana said electricity payments by users was one aspect that brought huge revenue for the municipality. However, people were not paying for the resource and some stole it.
“The lack of payment by residents and our lack of revenue collection is denting our finances immensely, while we are also struggling with the scourge of electricity theft. This disabled us from paying the power entity Eskom as per the initial payment agreement. However, we spoke to Eskom to find a more affordable plan as per our cash flow projections.
“We committed to pay R25m monthly which we are also battling with, but at least we make sure to pay some money every month and our debt is about R400m currently.”
He said the municipality had managed to pay the majority of its creditors, which meant that some projects that had stopped have recommenced.
“The payment of creditors was another issue the institution struggled with. When a company contracted by the municipality is not paid they tend to halt their services which delays service delivery. However the municipality has started a pothole filling project around Komani and other areas like Ezibeleni where the main road is being refurbished. Street lights in some areas are also being fixed and we continue to ensure refuse is collected as regularly as is possible.”
Somana said they re-established the revenue enhancement committee that met weekly to look at possible ways in which revenue collection could be improved, and that provided regular reports on how much had been collected.
Asked to rate his progress since he and his team arrived in March, he said the executive council which placed the municipality under administration was responsible for that.