Use it or lose it? BCM must spend R700m in next 5 days

Buffalo City Metro’s executive mayor Xola Pakati
Buffalo City Metro’s executive mayor Xola Pakati
Image: File / Mark Andrews

Buffalo City Metro has until the end of the week to spend more than R700m of its capital budget for service delivery projects -a situation that critics say may see the municipality losing out in the future.

The municipality only managed to spend 66% of its service delivery budget by June 21.

Out of R2.1bn, BCM had managed to spend just R1.18bn by May 31, leaving R920m unspent by the end of the financial year on June 30.

Despite BCM mayor Xola Pakati calling mayoral committee members and department heads to account for the slow expenditure on Friday, opposition parties are highly doubtful that the metro can spend so much in so little time.

Pakati did not want to comment on Monday, saying it was premature to do so when the financial year had not ended.

Opposition parties, however, voiced their concerns at the metro’s finance committee meeting on Monday.

ACDP councillor Luke Quse told the Dispatch: “I don’t think they will spend all of the money. It does not look good. Even if you are to force matters you are opening yourself to cutting corners and that is a problem.”

Quse lambasted BCM for “poor planning”.

“They just blame processes for this slow spending, which includes the supply chain processes, but that is no excuse. If the planning was solid the supply chain processes would have been foreseen and accommodated. They failed to plan.

“We all know the processes. If they had planned none of this rush would be on now.” Quse said the committee wanted to meet with each department to understand why they were not spending “on time”.

DA councillor Bill Gould said slow expenditure could have serious consequences.

“Anyone who is not able to spend within the given time will feel under pressure because that raises questions about their capacity to spend.

“If they fail to spend, why should they be given the money? They put themselves at risk to lose money in future. We know that spending increases towards the end of the year but we are waiting for a final report regarding the month on June,” Gould said.

Last year, BCM had a capital budget of R1.77bn and managed to spend R911.97m by May 31 (51%).

Acting CFO Ntsikelelo Sigcau said in his report to the finance committee: “Based on past performance trends, expenditure is expected to progressively improve during the last month of the financial year as major projects have passed procurement to implementation stage.”

On Monday BCM spokesperson Samkelo Ngwenya was confident the capital budget would be spent after receiving “new figures”. “As at June 21, BCM has spent 66% of its capital budget. We can confidently assure the public that the unspent conditional funding is fully committed and will be 100% spent by 30 June,” he said.

“The operating expenditure is 92% spent. The spike in expenditure patterns that one will observe towards the end of the financial year is mainly as a result of the big companies that handle huge infrastructure projects who have cash flows and implement projects with their own budgets and only submit invoices towards the end.

“Smaller companies are more dependent on payments and submit claims regularly while bigger companies consolidate.

“We have catered for this by anticipating it and committing our finance staff to work throughout this time period in processing these payments,” Ngwenya said.