R1bn unspent in Cape budget

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Copy of ca De Lille4311 CAPE ARGUS Cape Town mayor Patricia de Lille will file complaints against municipalities that have "bigger" sanitation problems than the Cape. File photo: Henk Kruger

Cape Town - The City of Cape Town has only been able to spend about 80 percent of its R5.6 billion capital budget for the 2013/2014 financial year, because of “factors beyond the city’s control”.

Mayor Patricia de Lille on Wednesday morning blamed the country’s economic slowdown, the liquidation of contractors and underperformance by service providers for the lower-than-expected spend of R4.5bn of the capital budget.

There’s been a combined underspend of R251 million in various departments, including transport, human settlements and utility services, because the companies involved were liquidated or contracts cancelled.

The cancellation of the Lumen contract for the control centre of the MyCiTi bus service contributed to this underspend, said De Lille. An amount of R15m was held over.

Transport for Cape Town commissioner Melissa Whitehead admitted while the cancellation of the contracthad affected the electronic management of the scheduling system, the service was still functional.

“It is not an ideal situation. We are managing to make sure service is operational. We have to do manual checks and rechecks on the system. But there is a gap in terms of some of the management.”

Lumen was responsible for the automation of the control centre and bus service.

There had also been an underspend of R48m on the IRT project for Phase 1B, the N2 Express and Imizamo Yethu routes because of community resistance and labour unrest.

But De Lille said these issues had been resolved and the amount would be rolled over into the 2014/2015 financial year.

Housing projects in Manenberg, Ottery and Heideveld had been affected by contractors’ poor performance.

“It needs to be underscored that the reduced capital expenditure of these factors does not mean the projects are cancelled or that the funds are lost to the city,” De Lille said.

The metro had consistently achieved the highest levels of capital expenditure in the country, having spent more than R20bn in the past five years on projects. A record spend of 94.3 percent or R5.78bn of the R6.2bn capital budget was recorded last year.

But maintaining this level of spend was “complex and demanding”.

“It is because of South Africa’s economic slowdown, which the city has no ability to change, has negatively affected a number of companies that the city does business with.”

Ian Neilson, mayoral committee member for finance, said the spend of more than R4bn was still a significant achievement. Also, the contracts were in place and the underspend was simply a delay in expenditure.

The current spend of 80 percent was likely to increase once all the outstanding payments were finalised.

De Lille said the city would review project management capacity to maintain its capital expenditure and to mitigate economic risks.

“The City of Cape Town will not be satisfied until we spend 100 percent of our capital budget.”

Cape Argus



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