A Budget Statement Report from the eThekwini Municipality expresses doubt that the city will be able to recover close to R600 million from the well-connected Durban-based bus company Tansnat. PICTURE: DOCTOR NGCOBO African News Agency (ANA)
A Budget Statement Report from the eThekwini Municipality expresses doubt that the city will be able to recover close to R600 million from the well-connected Durban-based bus company Tansnat. PICTURE: DOCTOR NGCOBO African News Agency (ANA)

Ethekwini expresses doubt over recovering almost R600 million debt from bus company

By Thami Magubane Time of article published Jan 27, 2021

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Durban - A Budget Statement Report from the eThekwini Municipality expresses doubt that the city will be able to recover close to R600 million from the well-connected Durban-based bus company Tansnat to the city.

The debt stems from disputed leasing charges and other unspecified charges the company is said to have incurred to the city.

Tansnat manages the city’s bus service on behalf of the municipality, and has been involved in a protracted legal battle with the city over the management of these buses.

The city has claimed the company owes it money and the company has claimed the same against the city.

In the past, there have been reports that the council had passed a resolution for the city to set up its own company that will manage these buses, but to date it has not been carried out.

A sentence in the December 2020 Budget Statement Report, which was tabled before the executive committee yesterday, suggests that there is uncertainty over whether the money owed can be recovered.

The statement in the 200-page-long document said: “Since this debt is doubtful due to the long outstanding legal battle between the City and the Bus Company Tansnat, a Council decision is required for this account.”

DA councillor Nicole Graham questioned the meaning of the statement and said it implied that the city was now looking for a “political solution” to the debt and may want to seek to write off the debt.

However the city’s chief financial officer, Krish Kumar, said the municipality was not going to write off the debt.

Graham said a city that was barely surviving due to a dip in revenue collection and dwindling cash reserves could ill afford to write off such a debt.

She demanded to know from officials what the statement meant.

She told The Mercury that the DA was deeply concerned about the latest information about Tansnat that indicated that it was now the municipality's top debtor, owing R598 236 100.

She said the report further indicated that there was an ongoing “legal process”. “This is the same reason that has been given for years, with Tansnat moving on to 12 years of a month-to-month lease with the municipality.

“The origin of the debt – as detailed in previous budget statement reports – is that Tansnat is allegedly not paying security, lease, ticket roll and rental charges to the municipality on a monthly basis. Council has taken numerous resolutions over the years about insourcing the bus service as a municipal entity. Despite this, progress is seemingly non-existent,” she said.

Graham said the most worrying aspect of the latest budget statement was the inclusion of a comment that the Tansnat debt now requires a “Council decision”. This seems to indicate that the ANC-led administration is attempting a move towards a political manoeuvre around this mammoth debt.

“It cannot be fair that ordinary residents and business owners face harsh action for non-payment, but Tansnat seems to get off scot-free. The lack of political will to resolve this situation is clear for all to see.

“The DA will continue to fight for accessible and fair public transport for all in eThekwini, and payment of what is due. The same report indicates that eThekwini is in deep financial trouble, with only 25 days cash on hand,” she said.

When contacted by The Mercury, Kumar said the city was not planning to cancel the debt. He said there was an arbitration process that was under way and therefore no decision could be taken before that process was completed.

He added that Graham was correct in raising the matter and questioned whether the statement should be reviewed and whether it should be in the document.

He said the debt was largely due to leasing and other charges. He said part of the dispute was over the buses as Tansnat had felt that because some of the buses had been paid for, there should not be any leasing charges.

IFP councillor Mdu Nkosi said it was not fair for councillors to be asked to intervene regarding the debt.

“All along we have been told that Tansnat owes the municipality, why should we now be asked to intervene?”

The Mercury

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