Three financially-strained Eastern Cape municipalities face a bleak future as some of their allocation from National Treasury will be withheld due to their failure to pay creditors on time.
Treasury yesterday revealed they will delay releasing equity share allocation to troubled Makana, Nxuba and Aliwal North-based Maletswai municipalities because they had failed to settle their electricity and water debts.
Treasury spokeswoman Phumza Macanda said the “persistent and material breach of financial obligations” by the three municipalities, and others across the country, was tantamount to financial mismanagement.
They are part of 60 municipalities across the country who will have their equity share allocation withheld due to their failure to settle long outstanding debts with state power utility Eskom and water boards.
“The persistent failure by some municipalities to pay creditors within 30 days amounts to financial mismanagement and National Treasury deems it important to take steps to ensure they meet their financial commitments,” Macanda said.
The transfer of equitable share destined for the 60 councils had been halted and such funds would only be released once the councils entered into repayment arrangements with creditors.
Even though Macanda refused to divulge how much each of the councils owed, she revealed as at December last year they owed Eskom a combined R9-billion while water boards were owed R3.6-billion.
She said R4.5-billion of the money owed to Eskom was for current accounts, while the balance related to arrears in excess of 30 days.
Of the R3.6-billion owed to water boards, R1.3-billion was current debt, while R2.3-billion related to arrears.
“Early in March, National Treasury informed municipalities with persistent arrears in respect of Eskom and water boards of its intention, subject to municipalities entering into repayment arrangements with these creditors.
“In addition, municipalities were advised to obtain a council resolution to confirm the municipality’s commitment to the process,” said Macanda.
She said the persistent arrears and failure of municipalities to settle their Eskom payments within 30 days, as was legally required, “negatively impacts Eskom’s cash-flow thereby compromising the utility’s operations and financial position”.
“Although the decision will affect municipalities’ ability to meet some of their financial obligations, financial mismanagement cannot be condoned under any circumstances.”
Makana spokeswoman Yoliswa Ramakolo yesterday said they had received correspondence R19.5-million of their equitable share would be withheld if they did not make plans to pay Eskom.
Eskom provincial spokeswoman Ntombekhaya Mafumbatha could not be reached, while attempts to get comment from Nxuba and Maletswai proved fruitless at the time of writing. — asandan@dispatch.co.za
Treasury to withhold funds from municipalities
Treasury yesterday revealed they will delay releasing equity share allocation to troubled Makana, Nxuba and Aliwal North-based Maletswai municipalities because they had failed to settle their electricity and water debts.
Treasury spokeswoman Phumza Macanda said the “persistent and material breach of financial obligations” by the three municipalities, and others across the country, was tantamount to financial mismanagement.
They are part of 60 municipalities across the country who will have their equity share allocation withheld due to their failure to settle long outstanding debts with state power utility Eskom and water boards.
“The persistent failure by some municipalities to pay creditors within 30 days amounts to financial mismanagement and National Treasury deems it important to take steps to ensure they meet their financial commitments,” Macanda said.
The transfer of equitable share destined for the 60 councils had been halted and such funds would only be released once the councils entered into repayment arrangements with creditors.
Even though Macanda refused to divulge how much each of the councils owed, she revealed as at December last year they owed Eskom a combined R9-billion while water boards were owed R3.6-billion.
She said R4.5-billion of the money owed to Eskom was for current accounts, while the balance related to arrears in excess of 30 days.
Of the R3.6-billion owed to water boards, R1.3-billion was current debt, while R2.3-billion related to arrears.
“Early in March, National Treasury informed municipalities with persistent arrears in respect of Eskom and water boards of its intention, subject to municipalities entering into repayment arrangements with these creditors.
“In addition, municipalities were advised to obtain a council resolution to confirm the municipality’s commitment to the process,” said Macanda.
She said the persistent arrears and failure of municipalities to settle their Eskom payments within 30 days, as was legally required, “negatively impacts Eskom’s cash-flow thereby compromising the utility’s operations and financial position”.
“Although the decision will affect municipalities’ ability to meet some of their financial obligations, financial mismanagement cannot be condoned under any circumstances.”
Makana spokeswoman Yoliswa Ramakolo yesterday said they had received correspondence R19.5-million of their equitable share would be withheld if they did not make plans to pay Eskom.
Eskom provincial spokeswoman Ntombekhaya Mafumbatha could not be reached, while attempts to get comment from Nxuba and Maletswai proved fruitless at the time of writing. — asandan@dispatch.co.za
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