DURBAN - THE loss-making Durban Marine Theme Park (uShaka Marine World) could be dissolved as an independent entity and its functions taken over by the municipality as the entity is in deep debt and battling to stay afloat.
Last week the city’s executive committee made the proposal with the hope that it could turn around the financial fortunes of the entity that has relied on municipal bailouts since it was built in 2004.
No details have been available as to how this could change the operations of the entity, which is owned by the city.
According to the monthly budget statement released last month, the entity is about R40 million in debt to the municipality for rates and services and it's doubtful that it will be able to pay it back. The statement listed the entity as owing the city about R14.7 billion.
“Marine Theme Park – The entity is not doing well, and recovery of this debt amount is doubtful. A suggestion is for council to look into dissolving this entity and incorporating it within the city, ” the report said.
UShaka has experienced mixed fortunes in terms of economic performance, according to some city councillors.
Last year The Mercury reported that the theme park had been hard hit by Covid-19 regulations and asked for a multimillion-rand bailout from the municipality.
The entity requested financial assistance of R66.9m from the municipality, saying it had to repurpose millions in internal funds designated for other functions, and stop paying some of its bills in order to stay afloat.
However, the municipality declined to offer the full cash injection, saying it was also facing financial difficulties and offered just R15m in financial assistance.
The management of the entity was contacted yesterday for comment and promised to respond.
DA councillor Nicole Graham said the city was the financial surety for the entity, which is a problem because if “UShaka goes belly-up, it becomes the responsibility of ratepayers”.
She said the entity was becoming increasingly reliant on the city. “The city recently took the decision to buy the funfair at the beachfront at the cost of R40m, which was not a good idea as they are taking over additional assets which you have to maintain and run.”
She said whether Ushaka was dissolved or assists as an independent entity, the reality was the same.
“Something has to be done to make it stay financially viable,” said Graham.
She said the tourist attraction should attract visitors year-round, make its own money, and not be a burden to the city’s fiscus and ratepayers. “At the moment, we have not seen anything to indicate there is a plan in place to do that.”
IFP councillor Mdu Nkosi said dissolving the entity and placing it under the municipality did not make sense unless the final objective was to sell it outright.
“This is a municipal entity. The council has given it money to bail it out before as it has done with other entities that have struggled, like the Moses Mabhida Stadium. Even when the municipality was giving rates rebates because of Covid, this entity was among those that benefited,” he said.
It was advisable that the entity should have plans in place to ensure that it attracted tourists and remained profitable, he added.
Nkosi said the city should clarify what dissolving the entity would look like. “Will it become one of the departments? If that is the case, in the long run the city would also complain that more money needs to be put there for it to survive.
“I foresee a bad situation that transpired with the buses, running the city buses was a problem and the buses were sold and the city had to buy them back at a much higher price when they were old,” he said.
Municipal spokesperson Msawakhe Mayisela said the current financial issues arose purely because of the Covid-19 pandemic. To remedy this, the city was looking at various options for managing the entity, he said.
“To date, we have looked at various expenditure cuts and innovation on revenue enhancement. However, the bottom line is that Covid-19 infections impacted on our economy and the confidence that tourists have in being safe to travel.
“The submissions by the board and economic development unit will be further reviewed by the economic development committee and following this by exco and council,” said Mayisela.
The Mercury