Cape Town public can have their say on R1.4bn City loan residents have to pay back

Processed sewage spills from a sewer pipe leading from the Zandvliet Wastewater Treatment Works in Macassar. Photo: Supplied

Processed sewage spills from a sewer pipe leading from the Zandvliet Wastewater Treatment Works in Macassar. Photo: Supplied

Published Sep 18, 2018

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Cape Town - The public has been invited to comment on the City of Cape Town's proposal to take out a €80 million (about R1.4 billion) loan to upgrade its wastewater facilities. 

"The City of Cape Town invites members of the public to comment on its proposal to take up a substantial loan that has been offered at a highly subsidised interest rate to help it refurbish and expand several wastewater treatment plants in Cape Town over the next years," the City of Cape Town said in a statement. 

"The multi-million rand projects are being implemented at locations across the metro and the loan funding will assist to spread the costs required for these projects to avoid excessively burdening ratepayers."

The public comment period closes next Tuesday, meaning you only have one week until September 25, 2018, to make submissions. 

"The loan funding offer from the German government-owned KfW Development Bank comprises 80 million euros in total. The equivalent amount in rand will be determined at the date of signing the agreement, which is envisioned to be in November 2018. That is not to say that the entire amount would be taken up by the City," the City said.

"The City has chosen to obtain funding from KfW Development Bank after it was approached by this institution and a funding offer was submitted to the City at a highly subsidised interest rate. The City then advertised a Request for Funding Proposal to compare this offer to the market. Responses were received from both local and international banks and KfW proved to have the best rate compared to the proposals received, being 2% lower than the local market rates.

"The rand amount of the unsecured loan would be fixed upfront and repaid over the term of the loan, which is 15 years," the City said. 

"The City approved its budget during May 2018 after a comprehensive public participation process in which the City’s funding strategy to fund its capital programme was also approved," mayoral committee member for finance, Johan van der Merwe said. 

Johan van der Merwe

"All costs have already been factored into the tariffs which were implemented from 1 July 2018 and would therefore have no further impact on such tariffs due to the taking up of the funding.

"The taking up of debt is necessary to spread the related costs over the lifetime of the wastewater projects to mitigate against an undue burden on the current ratepayer. All cost implications have been considered in terms of affordability in advance.

"Cape Town is a growing city and it is important that we are able to sufficiently invest in infrastructure over the coming years. Our debt level as a City is at an acceptable rate and the City will continue to follow a conservative approach to loan funding while balancing what investment is required for the metro going forward. The City continues to exercise sound governance and prudent financial management," he said. 

Processed sewage spills from a sewer pipe leading from the Zandvliet Wastewater Treatment Works in Macassar. Photo: Supplied

Earmarked projects include work at the Cape Flats, Bellville, Mitchells Plain, Borchard’s Quarry, Hout Bay, Gordon’s Bay and Zandvliet wastewater treatment plants.  

How to comment

The City invites written comments or representations from members of the public, the National Treasury and the Western Cape Provincial Treasury in respect of the proposed debt.

Comments should be directed to:

Director: Treasury

City of Cape Town

P O Box 655, Cape Town, 8000

Comment may also be sent via email to [email protected]

Any person who cannot write may come during office hours to the 7th Floor, Civic Centre, 12 Herzog Boulevard, Cape Town where assistance in transcribing that person’s comments or representations will be given.

You can also click here for more information.

@TheCapeArgus

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