The DA in the Western Cape remains concerned about the dire situation at the Kannaland Municipality, where Eskom has threatened to terminate energy supply following the municipality’s inability to settle an outstanding account of R12.7m. The municipality briefed the Standing Committee on its plan of action to resolve its current debt crisis. It came to light that the municipality has opted to take out a loan of R7.3m, with which to pay Eskom.
The municipality briefed the Standing Committee on Local Government today, on its plan of action to resolve its current debt crisis. It came to light that the municipality has opted to take out a loan of R7.3m, with which to pay Eskom.
In my capacity as the Chairperson of the Standing Committee on Local Government in the Western Cape Provincial Parliament, I have initiated a meeting with the Western Cape Minister of Local Government, Anton Bredell, the National Minister of Cooperative Governance and Traditional Affairs, David van Rooyen, as well as the Minister of Finance, Pravin Gordhan. At that meeting, we will discuss the way forward in dealing with the maladministration at Kannaland.
A sum of R5.3m, which the municipality has invested with the Development Bank of South Africa (DBSA), will mature in August this year. The Kannaland Council has taken a decision to release these funds. However, it is questionable whether the DBSA will release this money, in light of other obligations that the Kannaland Municipality has to the DBSA.
In addition to the R12.7m that Kannaland owes to Eskom, it owes a further R1m in interest. That the municipality plans to incur further debts as a means by which to settle existing debt, is a matter of serious concern. In terms of the Municipal Finance Management Act Section 46 (1a) and 3A and B, the municipality can rightly take out loans. However, these are to a threshold and it need be only for capital expenditure projects; this is an operational issue.
It is alarming that the municipality intends to rely on debt and grants to pay the bill for its maladministration. The burden on the national fiscus is high, government, local, provincial as well as national, must implement innovate approaches to creating a growth enabling environment where industry and jobs can flourish.
