The Committee met virtually to hear the response of the Masilonyana Local Municipality, the Free State Provincial Department of Cooperative Governance and Traditional Affairs (FSCOGTA), South African Local Government Association (SALGA), and the Petitions Committee of Free State Provincial Legislature to the concerns raised by Masilonyana Municipality residents in the Lesawell Petition.
The Masilonyana Municipality responded to the numerous concerns raised by the petitioners such as the lack of annual financial statements and audits; access to clean water and sanitation; stable electricity supply by servicing its Eskom account preventing cut-offs; installation of prepaid and smart meters; inaccurate municipal accounts and the non-receipt thereof; and the inability to access municipal budgets and minutes of municipal meetings.
SALGA spoke to the support it had given for the challenges of the municipality. SALGA spoke about the poor internal systems, the large number of indigent customers which impacted the ability to pay creditors and roll out infrastructure maintenance. There was a number of service delivery challenges which led to the tension between communities and the council. Its capacity to collect revenue had been impacted by the struggle to recruit people into strategic positions which impeded the ability of the municipality to deliver on its mandate. The advent of Covid-19 meant there was no revenue collection for three full months which has affected the municipality as a going concern. The disaster management grant to the municipality was insignificant to deal with the revenue gap caused by pandemic. The municipality had a series of challenges in its relationship with Eskom. Debt escalation was taking place which risked non-supply of electricity and thus much needed investment was being turned away. There was also a risk to bulk electricity supply. Royalties due to the municipality was not being paid by Eskom and this was the essence of the dispute between the two parties. In addition, mines were directly serviced by Eskom through bulk electricity supply – therefore taking away the ‘cream’ of the municipal market and undermined the municipality as a going concern. Biochemical energy resources had been identified but the municipality did not have the capital to exploit this.
FSCOGTA spoke to the lifting of the Section139 intervention that had placed the municipality under administration. The Province had assisted the municipality with payments to a service provider and to pay staff salaries.
The Petitions Committee of Free State Provincial Legislature said the petition to Parliament came as a surprise to them as they had never received a petition on this.
Members requested the financial recovery plan of the municipality, the close-out report, the preliminary forensic report and the CAS number of the Hawks case about wrongful payment of monies meant for Eskom. Members asked why the municipality was not placed under administration under section 139(5) of the Constitution which would have imposed a financial recovery plan on the municipality. Members asked in what way the NCOP could assist the municipality in its complaint against Eskom. Members said the municipality had appeared before the Standing Committee on Public Accounts (SCOPA) on 17 September 2019 where most of these concerns were discussed. They noted that although it had not submitted its annual financial statements (AFS) yet, it received its Local Government Equitable Share (LGES) while in other municipalities in Mpumalanga these monies were withheld if the AFS were not submitted. Members asked who was doing the valuation roll and what process was being followed to ensure it was correct. They asked if the municipality had a fire and rescue plan and how was the function performed. Members wanted clarity on LGES spending and what percentage of the budget went to payment of staff. They asked how many senior management positions were filled. For how long did the province pay for staff and for which service providers and how much?
The Chairperson said the way forward was for the Committee to have its own meeting, then to meet Eskom, the Municipal Public Accounts Committee (MPAC), and Treasury when it visited Free State on an oversight visit. The Committee wanted a report on the funds spent to pay staff and service providers and the Mayor had to give a statement on the repayment of those funds. The Committee requested the municipality agreement with Eskom and the amount paid to date.
The Chairperson said she was disappointed at the non-availability of the Free State MEC for Cooperative Governance at the meeting of 23 September 2020. Some departments and municipalities made light of the work of the Committee. The reason the petition was before the Committee was the petitioner had tried all other avenues and the Committee was the last resort where things not attended to could be challenged. The report by the Executive Mayor on concerns raised by the Petitioner was only sent to the Committee on the morning of the meeting.
Mr Mokete Duma, FSCOGTA Head of Department, submitted the apology of Mr Thembeni Nxangisa, Free State MEC for Cooperative Governance.
The Chairperson said the absence of the MEC was a show of disrespect for the Committee.
Mr G Michalakis (DA, Free State) said he had some political questions on provincial interventions and the province's failure to act in time. These questions could not be responded to due to the MEC’s absence.
Masilonyana Executive Mayor response to petition
Cllr Stephen Koalane, Executive Mayor of Masilonyana, said it was correct that the municipality was no longer under a section 139 intervention. He was accompanied by the new Municipal Manager. He addressed the concerns raised. The section 139 administration was lifted in December 2019 and said it was not the intention of the municipality not to give responses to the issues raised.
On why the municipality had not handed in financial statements for audit, the last audit of the municipality was in 2016, then it went into administration. The Municipality struggled with an incomplete asset register, missing records, challenges with its finance system and capex challenges. The AFS for 2017/18 was completed.
On how the municipality got revenue if there was no finance, the municipality was in the process of implementing a finance recovery plan and 'Operation Re Ya Patala' (Operation We Pay) was initiated for effective credit control. All major debtors were being engaged on their municipal debts. Accounts were being issued. In the past accounts had not been issued because there had been problems with the systems, but the municipality was now in a position to send out accounts. Tariffs were being corrected and disputes were attended to.
On why no actions had been taken against illegal dumping, on traffic fines to gain revenue, the municipality was working with FSCOGTA to promulgate and implement the bylaws.
On why the government did not ensure the municipality was evaluated according to Section 155(7) of the Constitution and on how many staff were on the payroll, how many were paid overtime and how many of them were ghost workers, there were 543 staff workers on the payroll with around 150 paid overtime and the municipality did not have ghost workers.
On why the municipality charged full-service charges to the community, yet there was no service delivery and provision of clean water, the municipality was fully reliant on the service charges for effective service delivery. The initial focus was on water and sanitation and the next focus would be on refuse removal, roads and electricity. He also noted that the municipality was also providing full services to consumers who were not paying anything at all.
On security at water plants with very expensive equipment, all water plants were secured 24/7.
On why the municipality did not pay service providers, service providers were paid
when cash flow allowed or the municipality entered into payment arrangements with service providers.
On why the municipality kept on changing service providers for the chemicals it required, the municipality did not do this. A necessary change was effected only in October 2019 and to date, the water supply disruption due non-delivery of chemicals was now history.
The Executive Mayor spoke about the municipality receiving R14.5m for the upgrade of water works and R82.2m from the Department of Water and Sanitation (DWS) to upgrade the waterworks at Brandfort, yet services failed year after year. A Regional Bulk Infrastructure Grant (RBIG) for bulk infrastructure through DWS had an initial allocation of R153m for 2020/21FY. However, due to the assessment through a consultant appointed by the municipality being incomplete by the end of 2019/20FY, the allocation was reduced to R31m for 20/21FY. From the assessment, two phases were identified. Phase 1 being the refurbishment of Winburg Water Treatment Works and Phase 2 being Construction of Sedibeng-Winburg bulk water pipeline. The plant refurbishments resumed in 2019/20FY and would be completed in this financial year. The 20/21FY allocation will be utilised for consulting fees on the construction of the Sedibeng-Winburg water pipeline and completion of the Winburg refurbishment and rehabilitation of the water treatment works.
The municipality is sourcing funding for the dam desludging process. This will assist with the quality of the raw water. To address the water quality challenges, investigations were underway to resolve these. One of the planned water quality activities was to flush the main line that supplies water to the community and to clean the reservoirs. These activities will be completed by mid-October 2020. The Municipality was monitoring the water through frequent sampling and testing, to ensure that the water complied with SANS standards. To augment the water supply and quality, the Municipality supplies potable water through water tankers from the Sibanye Mine.
Through the Water Infrastructure Service Grant (WSIG), the municipality had R5.1m allocated for the 20/21FY to the Winburg/Makeleketla refurbishment of sewer pump stations and waste water treatment works project.
On the lack of recycling for waste management, the Director for Community Services Ms Michele Sello was in talks with a group of youths from Winburg to start a recycling project; a container was donated by Harmony Mine through its Social and Labour Plan (SLP).
On the lack of funds for fuel to collect refuse and to maintain the trucks and the community having to pay for this, the lack of funds was a once in a while incident that occurred when there was a delay in submission and processing of payments towards fuel.
On the lack of pre-paid meters installed in Winburg areas, the municipality went out on tender and has subsequently appointed a service provider that will install smart and prepaid meters. To date 20 smart meters has been installed for large power users (LPU) and billed throughout the municipality. Such customers cannot be placed on prepaid meters as they consume more power as compared to domestic consumers. An application has been sent through to Eskom to provide the municipality with a supply group code. Once that has been finalized and approved then installation will take place of pre-paid meters for all four towns. For the record, the municipality embarked on public participation as to the installation of the meters.
On the municipality still having an outstanding R73m Eskom debt, not paying Eskom and sticking to the agreement made with Eskom, the municipality was still in talks with Eskom on a payment plan and has also roped in the services of Development Bank of Southern Africa (DBSA).
On the municipality violating the community’s human and constitutional rights by not paying service providers like Eskom who then cut the electricity to towns, the municipality was working very hard to ensure payments were made regularly to Eskom. Non-payers were the ones violating the rights of paying consumers. Electricity was stolen and the municipality was implementing “Operation Patala”.
On the payment of R3m into the wrong account instead of Eskom’s account and lack of feedback about the findings and consequence management, the actual amount was R3.7m, Rampai Attorneys was appointed to recover the money. The case was moved from Bloemfontein to Johannesburg High Court due to challenges by merchants from whom substantial purchases were made.
On zero service delivery as all municipal vehicles were not roadworthy and not maintained, did not have valid licences and were out of fuel, only some vehicles were not roadworthy. The process of getting vehicles roadworthy was delayed by systemic challenges at the Winburg testing stations. The municipality had however appointed a service provider that would supply the municipality with a service delivery fleet.
On the concerns that all Masilonyana towns pay the same electricity rate, that all streetlights work and be on at night, it was practically impossible that each individual be charged the same rate. Business customers cannot be compared to household customers due to the different power usage and that created variances in the bills being charged. The municipality has embarked on street and high mast repair projects with Theunissen being the first town due to high crime, including murders, registered there. To date the municipality has fixed 683 street lights and 31 high mast lights in all four towns and the maintenance is ongoing for both street and high mast lights.
The Executive Mayor referred to the concern about municipal employees not being provided adequate PPE in the past and noted that the post of Health and Safety Officer was advertised and is due to close on 12 October 2020.
On incorrect tariffs being charged, the tariffs according to the 2020/21 tariff book were correct as per the Division of Revenue Act (DoRA) and the advert could have been an oversight.
On increasing DoRA service charges prior to the set legal dates and in some cases increasing it twice in one year, there was never an incident where they were increased twice in one year.
On residents still waiting for their accounts to be printed, the current printing machine could not handle the pressure during the printing of accounts. Talks would resume with service providers for a specialised machine for printing accounts.
On the failure of the municipality to provide accounts timeously and then community having to pay interest on the account, it was the consumer’s responsibility to pay their account for services rendered, as much as it was the Municipality’s responsibility to issue accounts. Acquiring a machine specifically for accounts was being looked into. Consumers who want to pay their account always request the accounts at the municipal office and pay them.
On payments not being deducted from accounts, the backlog on payment allocations to accounts was due to the lockdown and COVID-19 regulations. However the backlog has been addressed and will be reflected in the following accounts.
On why the community needed to pay for services not delivered, services were rendered daily to communities, except where there were technical challenges.
On why the municipality stayed in bad debt and why its assets were auctioned for non-payment, every effort has been employed to stop opportunistic elements from putting municipal assets on auction.
On why some areas have to pay more for non-service delivery than others, the tariffs were the same for all Masilonyana towns. Payments were influenced by how services were consumed.
On the delays in people getting clearance certificates on accounts, this was due to the lockdown. The backlog of paid clearance certificates requests has been addressed. The figures for those awaiting – this was currently underway as the municipality was waiting for the August billing to be completed.
On medical aid and pension deductions of staff not being paid, the non-payment of municipal services resulted in the municipality being over-burdened with debt, and as a result it could not afford to pay these third parties.
The Executive Mayor noted the concerns about why the municipality overcharged on property rates if it failed the community and the Winburg economy was thus depleted; that the community had to beg for minutes of meetings and did not get them; and the big delay in the valuation of property. He replied that the previous Valuation Roll had challenges and COGTA even assisted with handling of the process to ensure that he concerns were mostly addressed. The advert for the new Valuation Roll would be going out on tender before the end of October 2020 to ensure its implementation by 01 July 2021.
Masilonyana Municipal Manager comments
Mr Pule Tsekedi, Masilonyana Municipal Manager, replied to the concern that the Municipal Manager was not attending council meetings. He arrived to take up his post in January 2018 so most of the events predated his arrival and referred to the previous Municipal Manager. He said vandalism of municipal property, like the stadium or boreholes in Winburg and Brandfort, was disturbing. The petition referred to concerns that occurred some years ago and that they would be furnished with details in some instances. The community was actively engaged with by the municipality.
SALGA comments about Masilonyana challenges
Mr Zanoxolo Futwa, SALGA Provincial Executive Officer for Free State, said he would give a high- level reflection of the challenges of the municipality and the support given by SALGA.
The municipality was in distress and placed under Section 139(1)(b) administration in the Sixth Administration and the Fifth Administration. The municipality was currently struggling with difficulties with internal systems and external experiences. The municipality had a large number of indigent customers which impacted on the ability of the municipality to pay creditors and roll out infrastructure maintenance which was ageing. There were a number of service delivery challenges which led to the tension between communities and the council.
SALGA, with COGTA and the Exco, had set up committees to assist the municipality regarding the intervention. The municipality was still in distress. Its capacity to collect revenue had been impacted by the struggle to recruit people into strategic positions which impeded the ability of the municipality to deliver on its mandate. SALGA was trying to assist the municipality in developing biochemical energy. There were still capacity challenges in the municipality.
There were challenges in service delivery and the supply of electricity and water. Between 2014-2016 the Free State experienced drought. SALGA had spoken to the Free State Chamber of Mines to get support from mines to assist with the water challenge through a partnership mechanism on technical support. The municipality did not have a qualified engineer heading its technical services and it did not have sufficient industry to collect from to sustain a 90% revenue collection rate. The advent of Covid-19 meant there was no revenue collection for three full months which has affected the municipality as a going concern. The disaster management grant to the municipality was insignificant to deal with the revenue gap caused by the pandemic.
SALGA had done capacity building training on the Municipal Public Accounts Committee (MPAC) and was helping the municipality to fill the Section 57 appointments to vacant leadership positions and to strengthen oversight. SALGA together with FSCOGTA was assisting the municipality as it was not fully compliant with the Spatial Planning and Land Use Management Act (SPLUMA).
The municipality had a series of challenges in its relationship with Eskom. Currently there was an inter-governmental relations (IGR) dispute and SALGA were working towards an amicable settlement of the IGR dispute. Debt escalation was taking place which risked non-supply of electricity, and the risk of needed investment being turned away, there was also a risk to bulk electricity supply, with both parties alleging reneging on their obligations with the municipality saying that royalties due to it was not being paid by Eskom. This was the essence of the dispute between the two parties.
The Committee needed to take account of the legislation relating to municipalities and Eskom. Mines were directly serviced by Eskom through bulk electricity supply and therefore taking away the ‘cream’ of the municipal market and undermined the municipality as a going concern.
Biochemical energy resources had been identified in the municipality but it did not have the capital to exploit this.
Free State COGTA comments
Mr Mokete Duma, FSCOGTA HOD, explained that the Free State COGTA MEC was absent, attending a legislative engagement, and any political questions in the meeting would be brought to his attention and a written response would be provided.
Mr Duma said it was correct that the Provincial Exco withdrew the municipality's Section 139 intervention based on a number of factors.
The Chairperson, for clarity, asked if the Free State executive had lifted the Section 139 intervention as a letter was supposed to be written to the NCOP to inform it this was being done.
Mr C Dodovu (ANC, North West) added that a close-out report also needed to be submitted.
Mr Duma confirmed that when the order for a municipality to be placed under administration was lifted by the Provincial Executive Council (Exco) decision to withdraw a s139 intervention, the NCOP and the COGTA and Finance Ministers had to be informed and a close-out report had to be submitted. The relevant bodies were informed but a close-out report was not attached because a forensic investigation report which led to the former Municipal Manager resigning and which formed part of the close-out report attachments was not completed, because there had been a burglary in the forensic investigators office where computers were stolen. This in turn led to a delay in compiling the forensic report. The close-out report would be finalised once the municipality received the forensic investigation report.
The Chairperson asked on what basis the administration of the municipality was lifted without a finalised close-out report.
Mr Duma replied the close-out report was complete. It was only waiting for the forensic investigators to coordinate information they had lost through the burglary and then the full report would be submitted.
Mr Dodovu said the intervention was lifted in November 2019 and it could not be the case that a close-out report could not be produced without the forensic report. Could the Committee get a copy of the close-out report without the finalised forensic report.
Mr Duma replied that it was not the first time that Parliament claimed it had not received a report when a report had been sent to it.
The municipality was placed under administration in 2017 and Mr Steven Kau was appointed as administrator but there had been unhappiness and complaints that he was exceeding his powers and his services were withdrawn. The Exco had appointed the HOD and Director General to assume the administrator responsibilities. A report was presented by the administrators in November 2019 giving details of their achievements. While it was under administration, Treasury had implemented penalties against the municipality because of the misuse of Municipal Infrastructure Grant (MIG) funds to pay salaries. The municipality had come to an arrangement with Treasury to repay this debt.
The municipality was also approached by fraudsters who claimed to be Eskom officials leading to money being paid into the wrong account. This matter was with SAPS and arrests would soon be made.
FSCOGTA had assisted the municipality with payments to the property valuator so the valuation database could be made available to the municipality for use in upgrading its financial IT systems and municipal invoice bills could be generated. FSCOGTA had assisted the municipality with the payment of salaries and the payments for service providers supplying chemicals used in cleaning extracted water. The onset of Covid-19 had reversed some of the progress made.
The Chairperson said the Committee had not received the audit report because the Auditor General (AG) had said it did not receive the 2017/18 and 2018/19 information from the municipality so could not audit the municipality.
The Chairperson requested a copy of the agreement the municipality had with Eskom on the servicing of the Eskom debt. She noted that Eskom was not in attendance at the meeting.
Mr Michalakis said the Committee needed to request the financial recovery plan of the municipality, the close-out report, the preliminary forensic report and the CAS number of the Hawks case about wrongful payment of monies meant for Eskom. He was a resident of the area for the last 33 years and the municipality had no money for petrol for the municipality delivery vehicles and the petrol money had to be paid by the community. There was no money to buy chemicals to treat water. This clearly indicated a cash flow problem and the municipality was operating on a day to day basis. He asked Mr Duma why the municipality was not placed under administration under section 139(5) of the Constitution which would have imposed a financial recovery plan on the municipality. The municipality was under administration twice already in the last 13 years. He asked why the Eskom debt had increased from R55m to R77m in one year. There were instances of third-party payments not being paid, therefore there had to be consequence management as money was deducted from employee salaries but were not paid to insurers. On public participation, he had put in a request to see the municipality budget as a resident but there had been no response. He feared the public participation process was not up to scratch and wanted to know how the municipality advertised public participation meetings.
Mr E Mthethwa (ANC, KZN) asked in what way the NCOP could assist the municipality in its complaint against Eskom. Were the mines receiving electricity directly from Eskom rather than the municipality? Was the third-party payments not being made to insurers still a major concern or was the matter resolved and were employees now covered?
Mr Dodovu said the municipality had appeared before the Standing Committee on Public Accounts (SCOPA) on 17 September 2019 where most of these concerns were discussed. SCOPA was worried then about the state of the municipality, yet two months later the Provincial Exco had lifted the intervention. SCOPA had observed the worsening financial situation and service delivery of the municipality. Employees were not paid, Eskom’s debt had increased to R77m, and the two administrators were not attending council meetings. There was political instability and senior managerial posts were vacant. The MIG funds were used to pay staff salaries. He viewed all of this as a municipality in crisis. What did FSCOGTA see differently? He felt the situation had not improved so why would FSCOGTA want to lift the intervention and what was its post intervention plan? He commented on the AG's letter stating there were audit disclaimers in 2015/16 and 2016/17 while AFS were not submitted for 2017/18 and 2018/19. He asked the Mayor if he was aware that he was breaking the law in not submitting AFS for auditing. Why was it taking so long to present the AFS?
Mr I Sileku (DA, Western Cape) said that the municipality had not submitted its AFS yet it received its Local Government Equitable Share (LGES) while in other municipalities in Mpumalanga these monies were withheld if the AFS were not submitted. If the municipality had listened to its residents who petitioned them, there would not be a need for the municipality to respond to the NCOP. The municipality's answers were vague containing no detail. He wanted clarity on the public participation process for bylaws. He asked who was doing the valuation roll and what process was being followed to ensure that it was correct. He asked if the municipality had a fire and rescue plan and how the function was performed. He became worried when the Mayor said the municipality was still determining how many indigent people were in the municipality as this number should be on his fingertips. Covid-19 could not be used as an excuse, if people were not paying the municipality. People were reluctant to pay the municipality because there appeared to be no value for money and no AFS were submitted. The community needed to trust the municipal officials to be accountable. Vehicles not being roadworthy could not be accepted. How many municipality vehicles were not roadworthy and how did the municipality then render services? Nothing was happening in the municipality. There was no consequence management and what oversight role was the Mayor taking?
Mayor Koalane objected to attacks against his position.
The Chairperson said Mr Sileku should focus on the issues not the person.
Mr Sileku said he wanted clarity on the LGES spending and what percentage of the budget went to payment of staff.
Ms C Visser (DA, North West) said that water purification could not be done by a chemical process only, it needed filtration also. People petitioning was a form of public participation. There was no consequence management in the municipality and why were the AFS not submitted for audit in compliance with the MFMA? Employee deductions for third-party payments which were not made was theft and a criminal case needed to be opened.
The Chairperson asked how many senior management positions were unfilled. How long did the province pay for municipal staff and for which service providers and how much. The municipality was accountable to the Auditor General for the spending of taxpayers' money.
Executive Mayor response
Mayor Koalane replied that the MIG money was repaid to Treasury. The municipality was spending on MIG projects and might even be the leading spender on MIG infrastructure projects.
On breaking the law, the municipality was under a s139 intervention and the company that was appointed to do the asset registry was appointed by the province.
There were five senior posts vacant and the municipality was in the process of appointing a CFO, a Technical Manager, a Social and Community Manager and a Local Economic Development Manager, apart from the Municipal Manager.
Municipal Manager response
Mr Pule Tsekedi replied that the municipality did have cash flow challenges. Payments to third parties and for chemicals were given a high priority. Cars were not roadworthy due to systemic issues. He had engaged with the chief traffic officer in Winburg to handle the matter. The matter was due to processing payments for the servicing of cars and the proof of payment got delayed. The fleet of 12 bakkies and five tipper truck vehicles was being assessed.
The chemicals service provider had not been paid and therefore had not supplied chemicals.
The lack of third-party payments to insurers was a fact starting from 2012. Most of the employees involved had resigned but their benefits had been paid in 2018.
The Eskom account had escalated because of the way Eskom charged abnormal interest. R55m had been owed and Eskom charged interest twice a month. There were challenges in talking to Eskom on their 1992 contracts where municipalities had to forfeit all their assets to Eskom and the municipality had engaged with SALGA and the Development Bank of South Africa (DBSA) on this.
There had been public participation when installing prepaid meters. A number of the halls were full. The municipality had engaged with the community and on the budget. The budget was made available to community members.
An agreement about rates and taxes was reached with the mines and also on the Social and Labour Plan (SLP) where there had been an impasse. On Eskom supplying the mines with electricity, this was a major challenge as the municipality not getting money because Eskom had taken over the electricity supply and Sedibeng Water Board had taken over the water supply to mines.
On the municipality getting LGES special treatment, there had been challenges with the AFS but the 2017/18 AFS were ready and the AG would start the audit. One of the critical challenges the municipality was trying to stop was the leakage of documents which went amiss in the institution such that the municipality could not account for money spent. There was no conscious intention to withhold the AFS. Some concerns raised in the petition were new such as the dam built three years ago, which he could find no instance of this being raised with the municipality.
The municipality had challenges with the valuation roll for more than ten years. COGTA had intervened by appointing a service provider, Mandla Holdings. The valuation roll had attracted a number of disputes where community members were hiding behind valuation disputes and the municipality cash flow suffered as many were not paying despite services being provided. There would be advertising for the valuation roll before the end of October with the new roll being implemented in July 2021.
On fire and rescue services, there was one bakkie with a skid to provide services and therefore they were not responding promptly. The municipality had requested it be allowed to source funding for a fire station which would also serve as a disaster management centre and an emergency medical services base. Santam had said it would donate fire equipment. The municipality was also engaging with the national disaster management centre and DBSA. The municipality was located in an area that contained three major road routes, the N1, N5 and the R30.
Most of the municipality’s plans were tied to the LGES. The Eskom debt for example was serviced via the LGES, as was the debt related to third-party payments.
Five Senior Management Team posts were filled and two were still vacant .
The provincial assistance was R2m for the payment of salaries and chemicals for a period of a month.
It was taking time to turn the municipality around. The municipality was implementing projects and was the best in MIG projects in the province.
The communication methods used for public participation were WhatsApp, Facebook and flyers and the municipality had entered into a Memorandum of Understanding with two local radio stations.
Free State COGTA response
Mr Mokete Duma, FSCOGTA HOD, replied about the SCOPA deliberations on his appointment as an administrator. The feeling was that the administrator had to be someone who was full time in the community. He acknowledged that because he oversaw all municipalities in the provinces there was limited time to engage with Masilonyana and its problems. One of the main concerns was revenue collection. The municipal revenue collection was compromised by the non-availability of a valuation roll therefore a new valuer was appointed to get a proper valuation roll. He had identified that the property value of the mines was suspect and the municipality needed to engage with banks on the property valuation of the mines. The current difference in values meant the municipality was losing out on rates and taxes money.
As part of the engagement under the s139 intervention on the municipality growth strategy, the municipality was developing a coal gasification project. This project was a Strategic Integrated Project in the Office of the Presidency which could boost the municipality's economy and provide employment opportunities.
On the role mines played in their social and labour plan responsibilities, the mines presented rosy plans but there was no monitoring of the implementation of the plans. It was risky for the mines to give money while the municipality was not administratively and politically stable.
Eskom charged the municipality prime plus 5% levied on the 15th of the month if the monies were not paid. One third of the municipality debt was actual consumption cost while two thirds were interest costs. An inter-ministerial task team had intervened and now the municipality was charged prime plus 2.5% which would only be levied after 30 days. However, the total debt comprised interest charges incurred over 20 to 30 years. Eskom was not honouring the 1994 agreement which states that where Eskom supplies electricity in municipality space it had to pay servitude fees and royalties to the municipality.
The municipality had been assisted by the establishment of SPLUMA to develop as a revenue stream. Municipalities were given full responsibility on rezoning and consent use is now one of the revenue streams of the municipality.
On veld fires, the municipality was confronted with litigation from farmers claiming damages arising from veld fires. Veld fires were the responsibility of the district. The municipality did not have the means to determine the origin of the veld fire as farmers were claiming the fires started on municipal land and claiming crop damages.
One of the reasons for the withdrawal of the s139 administration was new investment that would come in to the area. Issues that had to be seen to were revenue enhancement and the filling of vacant posts. On the filling of vacancies, the head of corporate services had done verification checks which reflected potential problems based on the employment history of the CFO candidate.
On why a section 139(5) intervention was not used, there would be a number of political and administrative problems with this and s139(5) would fall short. Section 139(1)(b) dealt with all the matters affecting the municipality such as finance, service delivery and political matters. FSCOGTA was providing a support package to the municipality.
Some service provider companies were appointed to assist with preparing the financial statements and with Generally Recognised Accounting Practice (GRAP) 17 but some did not do a transfer of skills as they wanted to maintain the municipality as a client needing to use their services. It was spending a lot of money on these consultants and this was echoed in the Auditor General's report on Free State municipalities. An investigation was done during the transitional period of local government which found that information was stolen from the municipality by senior technical managers who now as consultants were using this information in their dealings with the municipality.
The Chairperson said any questions that needed research could be forwarded in writing.
Mr Sileku said his question on the budget percentage spent on salaries was not answered.
Free State Provincial Legislature response
Mr Jabulane Radebe, Chairperson: Petitions Committee of Free State Provincial Legislature, said the petition came as a surprise to them as they had never received a petition on these concerns. He asked that the Provincial Petitions Committee be given time to review the contents of the petition
The Chairperson thanked him for his input as she had wanted confirmation on whether the Provincial Petitions Committee had received a petition, what processes had been followed and what interaction there had been with the petition.
Mr Michael Landsman, the petitioner, said the petition was forwarded to the provincial legislature.
On public participation, the elderly did not get notices and did not listen to radio stations.
He was disappointed at the lifting of the Section 139 intervention and was not happy. He asked why the Guptas intervened to give money to pay staff salaries and why it took four years to comply with an order.
On property rates, in 2014 some businesses property rates were less than residential rates. No valuation rolls were in place for some years and the valuations meant some people were overcharged while others were undercharged and the rolls needed to be fixed. The standard of the town went down because there was no service delivery. Therefore there was no link to the property’s valuation as you were paying for something you were not receiving. Residents were paying to live in a ghost town.
He wanted clarity on the consequence management for the forensic audit results. He asked for the consequence management for the mismanagement of tax money and the establishment of a proper financial planning force by the Province and Treasury.
He reaffirmed that the petition was from the community and not from an NGO.
The Chairperson said she had already made a ruling acknowledging that the petition came from the community.
Mr Landsman said the municipality responses were not clear and he wanted more detail in the answers.
The Chairperson said the Committee had sent the petition correspondence timeously and the municipality's Office of the Speaker confirmed it had received it on 23 September. The communication problem was from that point and this was where the delay in receipt of the petition reaching the Municipal Manager and Mayor lay.
The way forward was for the Committee to have its own meeting, then to meet Eskom, the Municipal Public Accounts Committee (MPAC) and Treasury when it visited Free State on an oversight visit. The Committee wanted a report on the funds spent to pay staff and service providers and the Mayor’s office had to give a statement on the repayment of those funds back to province. The Committee wanted a copy of the municipality agreement with Eskom and the amount paid to date to Eskom.
Mr Michalakis said the documents he requested earlier on in the meeting should also be included.
Mr Tsekedi said they would also attach case studies to the written correspondence.
Mr Duma corrected the Chairperson and said the municipality repayments were not to the province, it was to Treasury.
The Chairperson said the information was to be given within seven days.
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