R1,5?bln loan for city - eThekwini owed more than R5,7?bln by govt depts and businesses

2013-10-24 00:00

THE failure by government departments, including Housing and Public Works, to pay their rates bills has forced the eThekwini Municipality to apply for a R1,5 billion loan.

City manager Sbu Sithole on Tuesday said the city’s recoverable debt stood at R2 billion, but in order to fund capital expenditure, it was necessary to apply to banks for the loan.

Unpaid rates and other services amounted to more than R5,7 billion, he said.

Sithole said 16 government departments owed R142 million, the Ingonyama Trust R73,7 million and businesses in the city owed R195,9 million.

Residential debt was R1,6 billion.

The city’s executive committee approved the loan, despite the reservations of the opposition parties.

Sithole said without the loan the 2013/14 capital fund budget, necessary for development and service delivery, would be exhausted.

He said the loan would be used to fund the municipality’s long-term capital projects. “It’s necessary to take a loan. The capital expenditure would be amended in the adjustment budget in February, and the borrowing amount would be amended.”

Sithole said the money would not be used for the daily running of the municipalities, but rather for maintenance of road infrastructure, housing and small towns rejuvenation.

Government owes about R142 million, with the biggest offender being the Housing Department, which has not paid more than R57 million. The national Department of Public Works owes R52 million and the Education Department owes R51 million.

The Department of Water Affairs owes over R11 million and Health owes over R6 million, while the provincial Department of Public Works is also in the red, owing more than R5 million.

DA caucus leader Zwakele Mncwango said the city must formulate ways to recover debt.

“Taking loans has become a standard practice, but we have R2 billion owed to us. The loan option is more like admitting failure in collecting our debt,” said Mncwango.

ANC member and chairperson of finance councillor Fawzia Peer said the DA must understand that the municipality is run like a business. “We cannot wait for people who owe us to pay, while at the same time we have to deliver on services.”

DA councillor Heinz de Boer said the city should not allow itself to be treated like a little brother by national and government departments. “We need to have strong debt collection mechanisms. Cutting off services to all debtors, especially business, would make them take care of their accounts.”

Mayor James Nxumalo said the city would engage with Finance MEC, Ina Cronjé, to deal with government’s failure in paying their bills.

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