Question NW858 to the Minister of Public Works and Infrastructure:

Reply:

The Minister of Public Works and Infrastructure:

(A) Yes, Municipalities are owed money by the Department of Public Works and Infrastructure (DPWI) for two reasons:

• Municipal accounts must be verified and validated prior to processing payments in order to avoid irregular and fruitless and wasteful expenditure.
• DPWI pays these accounts on behalf of other user departments.
• Many government departments not refunding DPWI and this creates cash flow problems for DPWI.
• Many municipalities submit inflated accounts.

In August 2019 the Department of Public Works and Infrastructure (DPWI) started with a project to settle all the Government debt owed by DPWI to municipalities.

The Department’s Chief Financial Officer is spearheading the project and his office developed a project plan to:

• Reconcile outstanding government debt for municipal service billed;
• Agree with municipalities for settlement or recovery of the outstanding amount and obtain sign-off;
• Verification of accounts;
• Provide clear recommendations to avoid repetition of issues.

Each of DPWI’s ten regional offices provides a weekly update to the CFO and the Minister on progress.

As of 30 June 2019, Municipalities reported in terms Section 71 (S. 71) of the Municipal Finance Management Act (MFMA) that the overall government debt was R3.1 Billion. There are 135 municipalities of the 256 municipalities that reported to be owed by DPWI. The Department is in the process of verifying the debt owed for all 256 municipalities.

The said amounts above, have, however, proven to be unreliable and incorrect as is displayed in Section.71 MFMA information. Below are just the three (3) examples:

• Bushbuckridge Local Municipality disclosed an outstanding debt of R925.5 million as per S.71, however, our regional office after verification has agreed that the outstanding debt is R6.9 million as per our joint reconciliation work performed;

• Emfuleni Local Municipality disclosed an outstanding debt of R185.9 million as per S.71, however, they were unable to provide any supporting documentation to support this rand value on enquiry from the regional office;

• Makhuduthamaga Local Municipality disclosed an outstanding debt of R362.2 million as per S.71, however, our regional office after verification agreed that the outstanding debt is R1.3 million as per our joint reconciliation work performed.

It is therefore essential that amounts disclosed by municipalities require verification and validation prior to processing payments in order to avoid irregular and fruitless and wasteful expenditure.

As at 4 October 2019, DPWI has obtained sign-offs from 21 Municipalities and will send letters to municipalities to raise awareness and ensure cooperation and commitment in relation to all records and reconciliation for verification of Government debt.

The DPWI is resolute in its commitment to settle all verified debts within 30 days of receipt of the statements invoices and sign-offs.

The DPWI has already engaged with 62 municipalities and is in the process to verify and settle outstanding debt. After that the DPWI will engage with the remaining 192 municipalities. Details of the engagement with the 62 municipalities are as follows:

Regional Office	Number of engagements per Regional Office	Total as Per Section 71: 30 June 2019	Outstanding Amount As Per Municipal Statement of Account	Confirmed Amounts: Rand Value Amount Agreed by both Stakeholders
Bloemfontein	10	58,397,000	103,377,101	Busy with verification
Cape Town	10	31,408,000	19,006,003	15,347,561
Johannesburg	5	191,629,000	10,321,647	Busy with verification
Kimberley	6	13,642,000	3,254,110	Busy with verification
Mmabatho	3	14,987,000	27,478,397	15,486,167
Mthatha	7	6,093,000	6,539,086	2,423,686
Nelspruit	13	1,182,177,000	311,474,151	Busy with verification
Polokwane	4	460,069,000	14,544,124	Busy with verification
Port Elizabeth	3	24,580,000	21,781,653	Busy with verification
Pretoria	1	15,694,000	14,336,000	Busy with verification
Grand Total	62	1,998,676,000	532,112,273	33,257,414

As illustrated the S 71 submissions from many municipalities are often different from their own billing system.

(B) Public Entities of the Department of Public Works & Infrastructure

Whether (a) her department,	(b) any entity reporting to her and/or	(c) any provincial department of public works owes any unpaid rates and services to any municipality, if so, in each case	(i) what amount is owed,	(ii) to which municipality is each amount owed and	(iii) by what date will the outstanding amount be settled?
N/A	Agrèment SA (ASA)	N/A	R Nil	City of Tshwane	N/A
	Council for the Built Environment (CBE)	N/A	R Nil	City of Tshwane	Paid on the first of each month
	Construction Industry Development Board (CIDB)	N/A	R Nil	N/A	N/A
	Yes, the Independent Development Trust (IDT) does owe unpaid rates and services to a municipality	N/A	R5 499 091.00	City of Tshwane Municipality	The outstanding amount is currently in dispute and will be paid once the dispute is resolved. The IDT however, pays in full the current monthly invoices, as they become due.

(C) Provincial departments responsible for Public Works are directly responsible for settling their municipal accounts. This information was provided to the Department by each of the provinces.

 

Whether (a) her department, owes any unpaid rates and services to any municipality, if so, in each case	(c) any provincial department of public works owes any unpaid rates and services to any municipality, if so, in each case	(i) what amount is owed,
	Eastern Cape	R395 064 271.00
	Free State	R629,701,094.00
	Gauteng	R313,634,764.76
	Kwa-Zulu Natal	R48 958 633.65
	Limpopo	R422,063,976.35
	Mpumalanga	R 100,710,881.99
	Northern Cape	R575 081 688.1
	North West	R151 175 599 11
	Western Cape	21,948,331.41