Mogale City local municipality is in financial trouble – DA
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Johannesburg - The DA in Mogale City in Krugersdorp says the ANC-led Mogale City local municipality is in financial trouble.
This was revealed by the DA’s mayoral candidate Tyrone Gray on Wednesday after attending a municipal Section 80 Portfolio Committee meeting on finance on Tuesday which revealed the dire financial straits the municipality found itself in.
Gray said residents would suffer poor service delivery in Mogale due to budget deficits racked up by the ANC government.
“The report presented revealed that the total revenue, excluding capital expenditure, stands at R621 million. Expenditure amounts to R442 million, which gives the municipality a surplus of R179 million.
“However, the surplus only exists on paper as it does not account for the R262 million which is owed to Eskom after the reduction from the R390 million, which was owed by the end of July 2021.
“Water and electricity finance are showing losses of over R149 million when comparing the actual income with the actual expenditure. The municipality has over-spent by R65 million.
“The surplus declared is simply an exercise in accrual compliance rather than cash-based actual performance,” Gray said.
He said there was a troubling trend with the municipality’s supply chain management process, specifically the logistics section of procurement for goods and services below R30 000.
Of the R2.8 million spent in August 2021, only 3% benefited Mogale-based businesses.
“The DA will seek to ensure that the supply chain expenditure is localised, transparent and used to build our local economy, so that we can support local businesses to ensure they are capacitated to create jobs.
“The DA is also concerned that Mogale City used R55 million on average of the overdraft facility, incurring interest penalties of almost R420 000 for August 2021. Disturbingly, the current account is R835 000 in the red,” Gray said.
He said his party has been monitoring the payment of creditors and putting political pressure on the municipality to comply with Section 65(e) of the Municipal Finance Management Act, which stipulates that service providers must be paid within 30 days.
“Due to DA pressure, the municipality paid Rand Water within the stipulated 30 days allowing residents to enjoy uninterrupted bulk water services.
“While this is to be applauded, it is concerning that trade creditors are still not paid within 30 days, and some go over 150 days without receiving payment for services rendered to the municipality,” he said.
Gray said the delay in payment had a dire effect on the cash flow of these businesses who rely on the timeous payment of invoices by the municipality, saying the DA would continue to put pressure on the municipality to put cash-flow management mechanisms in place to ensure tight financial controls.
“In DA-governed municipalities, we ensure that sound financial practices are followed, creditors are paid within the stipulated 30-days period, and that resources are used accordingly and efficiently to benefit residents,” Gray said.