DURBAN – The executive committee of the eThekwini Municipality tabled a report outlining the process to issue a Request For Proposal for a R1 billion loan.
The RFP invites people to tender for the provision of long-term debt finance of R1bn which will finance the Municipality’s Capital Budget for the 2018/2019 financial year.
According to the report, earlier this year council approved the Capital Budget for the three-year Medium-term Revenue and Expenditure Framework (MTREF).
The budget allocated R7.029bn for 2018/19, R7.623bn for 2019/20 and R7.747bn for the 2020/21 financial year.
The report also states that the raising of outside funding will be to ensure that critically needed expenditure continues and the service delivery programme is not interrupted or postponed.
Deputy city manager of finance Krish Kumar told the executive committee that this was a loan budgeted for the 2018/19 financial year.
Kumar said: "This will not be the last time the executive committee will be hearing about the loan. Once it is advertised it will come back to the committee in January and again in May. There is a need for this loan, if we don’t take it we will have to reduce capital expenditure. We only borrow for capital expenditure, nothing else."
Kumar also spoke about the outstanding debt owed to the city saying the city is doing our best to collect outstanding debt.
"We will continue to endeavour to improve on this. Our collection rates have improved since last year," said Kumar.
According to Kumar, the loan will be used on infrastructure including upgrading substations and networks to ensure a stable supply of electricity to residents.
Growth in certain areas also called for the need to spend on water, electricity and sanitation infrastructure expenditure.
"We are trying to grow the economy by attracting potential investors but we can’t do this without improved infrastructure,” he concluded.
Chairperson of the Human Settlements and Infrastructure Committee Councillor Mondli Mthembu said Council approved the MTREF budget and it was clear the City had a shortfall of R1bn.
“We resolved in principle that we would borrow R1bn over the next three years. Officials are now unpacking how that process is going to unfold,” he said.