City underspends budget by R2.1 bn

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iol news pic James Nxumalo INDEPENDENT NEWSPAPERS eThekwini mayor James Nxumalo.

Durban - The eThekwini municipality’s 2010/11 budget performance report has reflected that it has underspent by about R2 billion, yet the city recently borrowed R1bn to fund “infrastructure projects”.

The figures, that were released to the KZN public accounts committee (Scopa) last month and made public yesterday, have triggered calls by opposition parties for better planning and management of finances.

Auditor-General Terence Nombembe’s report noted that the city had incurred irregular expenditure to the tune of R1.3bn in the 2010/11 financial year.

Nombembe said the irregular expenditure disclosed in the financial statements for the past three financial years amounted to R2.1bn.

Opposition parties have in the past cautioned the city against taking loans, saying constant borrowing would plunge the municipality into bankruptcy. But, in February, the ANC-led executive committee approved a R1bn loan from FirstRand Bank to fund long-term capital expenditure. At the time city treasurer Krish Kumar said the city needed to borrow an additional R1bn.

The council has also been rocked by the controversial Manase and Associates forensic investigation report, which uncovered non-compliance with, and disregard for, supply-chain management policies, lack of budgetary controls on expenditure, and evidence of corruption and fraud by certain employees in collusion with suppliers, among a host of issues.

Repeated calls

Only a handful of officials and senior ANC politicians have been privy to the full Manase report despite repeated calls for the city to publicly release it.

Last week, mayor James Nxumalo said the report would be made public by the end of December when all the internal disciplinary hearings have been completed.

DA MPL and the spokesman on local government, George Mari, said the municipality’s housing budget was under-spent by 45 percent, resulting in only half its delivery target being met.

Mari said a document that was presented by Nombembe to Scopa also referred to tender irregularities within the city’s housing department.

“The report is with the city manager [S’bu Sithole] and this information must be made public,” he said.

Minority Front councillor Patrick Pillay said councillors were told that the budget would be fully spent but the revelation that R2bn had been underspent was a reflection of the city’s inability to fast-track service delivery.

“Our roads are riddled with potholes and people in some areas are living in squalor. The level of underspending is unacceptable and the city manager needs to explain how this is possible,” he said.

Municipality spokesman Thabo Mofokeng said the underspending was a result of issues of supply-chain management in the housing unit where some contracts had to be reviewed.

“Also the Western Aqueduct Pipe Replacement Project was delayed because of court challenges but steps are in place to address these issues.” - The Mercury


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