ATC201118: Report of the Select Committee on Petitions and Executive Undertakings on Lesawell Petition Hearings Held on 23 September 2020 and 30 September 2020, as adopted on 18 November 2020
REPORT OF THE SELECT COMMITTEE ON PETITIONS AND EXECUTIVE UNDERTAKINGS ON LESAWELL PETITION HEARINGS HELD ON 23 SEPTEMBER 2020 AND 30 SEPTEMBER 2020, AS ADOPTED ON 18 NOVEMBER 2020
The petition is dated 30 October 2019, and was referred to the Chairperson of the Select Committee on Petitions and Executive Undertakings (Committee) by the Chairperson of the National Council of Provinces (NCOP) for consideration and report.
The petitioner, Mr Michael Landsman, who had filed a petition in his capacity as director of Lesawell, a local NGO, on behalf of residents of Winburg and Makeleketla township of the Free State Province against the Masilonyana Local Municipality (the Municipality).
The petitioner alleges that the Municipality is facing challenges in relation to the billing system, maintenance of roads and water infrastructure, financial management, replacement of outdated water and electricity meters, governance and other related service delivery related matters.
According to the petitioner, the community had raised the aforementioned concerns with the Municipality to no avail. Further, the petition alleges that they had previously submitted their petition to Parliament.
The petitioner seeks the intervention of the Committee for the following:
- The evaluation of jobs for the entire municipality especially managerial positions and the mayorhsip;
- Dams to be cleaned out and adequately maintained;
- The landfill site is to operate without illegal dumping;
- Pre-paid electricity meters should be installed in order to enable the community to buy pre-paid electricity directly from Eskom;
- In terms of administration, the petitioner requests that minutes of all meetings with the municipal manager be provided to the petitioner;
- Sport ground to be fixed and maintained;
- Maintenance of road infrastructure;
- Town hall to be fenced off;
- Initiation of forensic audits on all grants received by the municipality from 2014 until 2019; and
- Initiation of forensic audit into insurance claims made by the municipality.
The petitioner indicated that the Community of Winburg will not make any payments to the Municipality until these matters are sorted and until the Municipality complies with the standards of the law – to provide service delivery stated in government rules, regulations and law.
2. HEARING ON THE PETITION
The Committee, held a total of two hearings on the petition at Parliament. The primary purpose of these hearings was to afford the petitioner as well as the relevant stakeholders the opportunity to make first hand oral submissions, to the Committee, on the petition.
3. FIRST HEARING ON THE LESAWELL PETITION
The first hearing on the petition was held on 23 September 2020 at Parliament via virtual platform.
3.1 Committee Members, Officials and Stakeholders
The following Committee Members attended the hearing on the petition:
3.1.1 Hon Z V Ncitha, ANC, Eastern Cape;
3.1.2 Hon T S C Dodovu, ANC, North West;
3.1.3 Hon E M Mthethwa, ANC, Kwa-Zulu Natal;
3.1.4 Hon G Michalakis, DA, Free State;
3.1.5 Hon C Visser, DA, North-West;
3.1.6 Hon I M Sileku, DA, Western Cape;
3.1.7 Hon S Zandamela, EEF, Mpumalanga;
3.1.8 Hon K Motsamai, EFF, Gauteng; and
3.1.9 Hon S E Mfayela, IFP, Kwa-Zulu Natal
The Committee Members present were supported by the following Committee officials:
- Mr N Mkhize, Committee Secretary;
3.1.11 Adv. T Sterris-Jaffer, Committee Researcher;
3.1.12 Mrs N Fakier, Executive Secretary, and
3.1.13 Mr M Dumezweni, Committee Assistant
The following stakeholder attended the hearing on the petition:
3.1.14 Mr Michael Landsman, Petitioner
4. SUBMISSIONS BY THE PETITIONER
4.1 Submissions by the Petitioner, Mr M Landsman
In his opening remarks, Mr Landsman indicated that despite court orders and interventions by Ministers of several departments, the Municipality had still not addressed the matters raised in the petition and neither had it attended any of the scheduled meetings.
Mr Landsman then submitted on the alleged current status on the Community of Winburg. He pointed out that the biggest problem with Municipality is it financial instability resulting in no revenue income. The petitioner further addressed the following grievance in detail:
- The Assets and Audits;
- Water and Sanitation;
- Property Rates ;
- Economic Development;
- Tenders and Contracts; and
4.1.1 The Assets and Audits
The first grievance raised by Mr Landsman was with regard to the assets and audits, pointing out that Municipality must structure and manage its administration and budgeting and planning process to give priority to the basic needs of the community and to promote the social and economic development of the community.
It was further indicated that the Municipality has a history of financial constraints but it is working towards improving the situation. There is cash-flow problem for the current year and the past two years for Masilonyana Local Municipality, the audit outcomes in the province continued to regress for the third consecutive year. The outcomes were characterised by a lack of basic financial disciplines, an unwillingness to comply with legislation, and a general disregard for internal controls and accountability.
Mr Landsman insisted that a full forensic audit on the above matters for the past years since 2016 be instituted as well as individual forensic audits per independent investigation of the Municipality in order for the Municipality to be held accountable and criminally charged where there is a finding of mismanagement. Action should be taken against the previous Municipal Manager (MM) and the Chief Financial Officer (CFO) as they left without proof of finances and need to be held responsible for any findings of mismanagement. The petitioner further recommended that that the Municipal By-laws need to be in place, published and available to all.
4.1.2 Water and Sanitation
Mr Landsman submitted that the Regional Bulk Infrastructure Grant (RBIG), grant for bulk infrastructure improvements, was allocated R153 064 000. This money will be used for Sedibeng – Winburg water pipeline and Winburg refurbishment and rehabilitation of the water treatment works. R33 million has also been budgeted for in the next financial year through the Water Infrastructure Service Grant (WSIG) for Winburg/Makeleketla refurbishment of sewer pump stations and jetting of the Winburg Clear Water Rising Main in the amount of R6,215,739.13.
Mr Landsman informing that Winburg derives its raw water from three dams namely; Rietfontein dam, Wolvas 1 and Wolvas 2. During dry seasons, the dams are affected by drought hence a construction of Bulk Water Pipeline from Sedibeng Storage Reservoirs to Winburg was initiated. For the 2020/21 financial year, the Municipality received an allocation of R120 million for the water pipeline project from Sedibeng to Winburg.
The upgrading of the Winburg Treatment Works has jointly benefited a company from Masilonyana and the project to value of R36 million is still under construction.
He is concerned that the community is already paying for service delivery they do not receive. The Municipality still expects the community to ensure clean water for themselves but still require payments for service charges and usage. Acknowledging that the Municipality is currently busy upgrading the system while the previous service supplier struggles to get payments from the Municipality. This has resulted in the community not receiving clean water. It was also indicated that the Municipality is in a process of securing another service provider for chemicals and still the water has a “brown soot” look, is not of a drinkable standard and “wreaks of fish”.
Mr Landsman recommended that an investigation needs to be done on details for the approval of the current contractors, the cost involved in the project and any mismanagement of funds needs to be investigated while the relevant people need to charged in order to ensure accountability.
All funding on water treatment plants, infrastructure and upgrading regarding water systems should be investigated as the amounts do not tally. The Brandfort water works upgrade of R82, 2 million needs to be investigated and any mismanagement finding the person/persons needs to be accountable for it and be legally charge.
In addressing the landfill grievance, Mr Landsman first made reference to the court case between Verkeerdevlei and the Municipality. As well as a court judgment between the Municipality and Afriforum. Pointing out that millions of rands are spent on defending litigation while this money could have been redirected elsewhere. Mr Landsman also averred that even though there are court orders in place, the Municipality fails to comply with the order of the respective courts.
To elaborate, in the matter between the Municipality and Afriforum, The Municipality was ordered to pay R500 000 (five hundred thousand rand). However, two years after the court case the Municipality had still not fenced off the landfill as was ordered by the court. Lesawell NGO contacted the green scorpions who started erecting a fence within 48 hours.
In addition, averred by Mr Landsman, the landfill site was built on the doorstep of a heritage site.
The Municipality wants private businesses and individuals to pay for refuge removal regardless of whether the Municipality delivers the service. The Municipality regularly fails to collect refuse, which has resulted in community members delivering refuse themselves. When this happens, the Municipality uses a weight bridge charging people additional costs for refuse removal. Another grievance is that there is no security officer/security detail at the office at the landfill site. The community is not prepared to pay more money other than the regular basic fee for refuse removal. The officers that were supposed to work at the landfill still are still on the payroll of the Municipality but are not present at the landfill site. The issue with the landfill site was discussed in the meeting with the Ministers Office of Environmental Affairs as well as Ministers Office of Water and Sanitation. However, the Municipality had ignored the Ministers’ while the MM failed to even attend the meetings at the Ministers Office as requested.
Mr Landsman then suggested that the landfill site should be moved further away and requires to be fenced and properly, controlled and maintained. Refuge needs to be collected per roster. The Municipality needs to comply with Section 152. (b) (c) (d) of Chapter 7 of the Constitution. The Municipality is also required to comply with the relevant court rulings. All accounts need to be corrected and the community should not be charged for a service not rendered by the Municipality. Since beginning of 2018, the landfill has not been up to standard and the community cannot be held liable for refuse removal as the Municipality is not complying with the prescript of the law.
The Committee was made aware that the percentage increases of both Eskom and Bulk Water tariffs are beyond the South African Reserve Bank inflation target. Given that these tariff increases are determined by external agencies, the impact that they have on the Municipality are largely outside the control of the Municipality.
Mr Landsman submitted that in March 2017, the Municipality received R80 million from the Department of Energy for pre-paid meters and to date nothing was used for the pre-paid meters in Winburg. Petition upon petition was raised to many departments and officials and still nothing was forthcoming The community wants to pay for electricity but the community is negatively impacted by load shedding due to the negligence of the Municipality. The Municipality was paying millions into an incorrect account instead of Eskom. In addition, there is a collapse of infrastructure and no maintenance of meters despite numerous complaints to the Municipality.
Despite previous meetings, the community is not kept abreast of issues in this regard to the extent that minutes of meetings are not shared with the community and the community is oftentimes not even allowed to partake in inputs regarding the municipal matters.
Mr Landsman requested that normal pre-paid meters be installed and the community should be given access to buy electricity directly from Eskom. He further requested a detailed audit on the R80 million grant and where findings of mismanagement of funds is found that the person responsible be legally charged. To this end, Mr Landsman requested a full investigation into the R80 million that was provided for pre-paid meters. In addition, Mr Landsman requested Eskom to be paid in full and the Municipality to respond to the R3 million rand paid into incorrect account instead of Eskom’s account. Mr Landsman further emphasised that everyone in the Masilonyana towns should pay the same rate for electricity.
Once again, Mr Landsman raised concerns that there is no service delivery but are expected to pay for services not rendered. Further to this, Mr Landsman reported failure by the Municipality to provide accounts on reasonable dates and then expect the residents to pay interest on “overdue” accounts. He further indicated that the Municipality would send out letters of demand for accounts but they do not deliver services and it is more than a battle to get accounts sorted.
Clearance certificates takes an endless time to be issued to customers while some community members have even had to institute litigation against the Municipality.
In addition to this, Mr Landsman pointed out that Municipal staff also feel neglected because the Municipality is not paying the staff medical aids, pension funds and other benefits entitled to them. This has resulted in low staff morale where staff are also doing less since they feel they are not being prioritised by the Municipality. Pointing out that this has resulted even resulted in the vandalism of the house of the Manager in Winburg due to Municipality not paying its staff.
Mr Landsman suggested that financial soundness and systems need to be in place while running in a sound and effective manner. It was further suggested that the community should be given an option to buy electricity directly from Eskom. On the issue of property, Mr Landsman emphasised that pproperty evaluation should be done according to the current state of the Municipality. All accounts need to be updated taking into account deductions for overcharges, interest, unfair charges like refuse removal and over-charged property taxes. All clearance certificates to be given within three days from the application. Water meters and pre-paid meters must be fixed and be in a working condition and installed. Emphasis was once again placed on the community not being held reliable to pay for faulty meters due to no service delivery.
4.1.6 Property Rates
The Committee was made aware that Winburg properties are still evaluated according to the old standards. Mr Landsman is of the opinion that the Municipality is over-charging the community properties. Pointing out for example, the pharmacy property rates increased within one month almost three times the standard price. The community struggles and due to lack of service delivery and more people are selling their properties to relocate as of result of the standard of the town depreciation. The property valuations are far below the current Municipal evaluation price. Despite meetings in the town hall with the MM, the Municipality had still failed the community. Thus resulting in the community refusing to pay towards property rates due to non-service delivery and outrageous evaluation amounts.
Mr Landsman suggest the evaluation of all properties need to be re-evaluated according to the current standard and status of the current Municipality with no exception to the area, or any community members. All accounts should be updated according to the lesser property evaluation roll and all accounts should be updated where overcharged amounts are deducted from accounts.
4.1.7 Economic Development
Mr Landsman submitted that the Municipality has neglected the town hall, the sports grounds, the Malaketla Stadium. All the economic development facilities are not maintained and not usable for the community.
He suggested that the sport stadium in town should be upgraded urgently to gain revenue for the Municipality. He suggested that funerals, church events, athletics, auctions and more could be hosted which would generate a steady revenue to build the community. The town hall needs urgent maintenance and should be fenced off as the Municipality lost a substantial amount of revenue by not utilising the existing infrastructure. The main facilities can create a lot of income while non-profit organisations want to utilise the facilities to assist the community at a negotiated rental fee. This would in turn assist the community and create revenue income. Mr Landsman strongly believes that job creation and economic development can take place at these facilities once they are restored and maintained.
4.1.8 Tenders and Contracts
Mr Landsman suggested that the Municipal Board inclusive of Section 18 members should provide input on appointing contractors. Tenders should be advertised on the system and all application of funds for tenders need should be recorded on the Municipal website as well how much tender application funds amount to.
It was further suggested that once a contractor is appointed that the company appointed should complete the project it was appointed for. To this end no contractor should receive all the funds at the beginning of the contract and it should be based on progress assessments before payments are made in full.
Mr Landsman submitted that the Municipality has been faced with veld fire challenges during winter seasons and most of the community members’ had many incidents where houses burned down including several cars. In the coming financial year of 2020/21, the Municipality made an undertaking that it will build fire stations in four towns to ensure state readiness to extinguish any fire that might erupt at any given time. But, Mr Landsman firmly believes that there is no need for the erection of a new building as there is a current one that needs maintenance.
- SECOND HEARING ON THE LESAWELL PETITION
The second hearing on the petition was held on 30 September 2020 at Parliament via virtual platform.
- Committee Members, Officials and Stakeholders
The following Committee Members attended the hearing on the petition:
5.1.1 Hon Z V Ncitha, ANC, Eastern Cape;
5.1.2 Hon T S C Dodovu, ANC, North West;
5.1.3 Hon E M Mthethwa, ANC, Kwa-Zulu Natal;
5.1.4 Hon G Michalakis, DA, Free State;
5.1.5 Hon C Visser, DA, North-West;
5.1.6 Hon I M Sileku, DA, Western Cape;
5.1.7 Hon S Zandamela, EEF, Mpumalanga;
5.1.8 Hon K Motsamai, EFF, Gauteng; and
5.1.9 Hon S E Mfayela, IFP, Kwa-Zulu Natal
The Committee Members present were supported by the following Committee officials:
- Mr N Mkhize, Committee Secretary;
5.1.11 Adv. T Sterris-Jaffer, Committee Researcher;
5.1.12 Mrs N Fakier, Executive Secretary, and
5.1.13 Mr M Dumezweni, Committee Assistance
The following stakeholder attended the hearing on the petition:
5.1.14 Mr M Landsman, Petitioner;
5.1.15 Representatives of the Masilonyana Local Municipality: Cllr S Koalane, Executive Mayor of Masilonyana; Mr P Tsekedi, Masilonyana Municipal Manager,
5.1.16 Representatives of South African Local Government Association: Mr Z Futwa, SALGA Provincial Executive Officer for Free State
5.1.17Representatives of Free State Department of Cooperative Governance and Traditional Affairs: Mr M Duma, Head of Department
5.1.18 Representatives of the Petitions Committee of Free State Provincial Legislature: Mr J Radebe, Chairperson Petitions Committee of Free State Provincial Legislature,
6. Submissions by the Masilonyana Local Municipality
Cllr S Koalane, Executive Mayor of Masilonyana Local Municipality, in his opening remarks reported that the Municipality was no longer under a section 139 intervention and that the administration was lifted in December 2019.Therafter with the Masilonyana Municipal Manager addressed the following grievances raised in the petition.
Grievance 1: Assets / Audits
It was reported that the Municipality is in the process of implementing the Finance Recovery Plan employing among others, the following means to raise revenue:
- The Municipality has initiated an Operation Patala for effective implementation of credit control;
- All Major debtors such as Mines, Senwes, OK stores, Spar etc. are being engaged on their municipal debts;
- Issuing of accounts;
- Data Cleansing Project (4000 accounts completed to date);
- Correction of tariffs (NERSA and ESKOM offering assistance); and
- Attending to Disputes.
The following by- laws have been promulgated and the Municipality is in the process of determining the correct fines through the office of Adv. Mantsho from COGTA for purposes of gazetting.
- Standard Refuse removal By- Laws;
- Standard Environmental Health By- Laws;
- Standard Dumping and Littering By- Laws; and
- Standard Waste Management By- Laws.
On the other hand, it was reported that the Municipality is experiencing the shortage of personnel, indicating they will be augmenting the number with the six trainees. Reporting that the Municipality has 543 staff workers who are on the payroll assuring and dismissing the allegation that they have ghost workers. It was added that the number of employees getting overtime varies monthly.
Grievance 2: Water and Sanitation
The Executive Mayor reported that every that effort is being made to ensure that consumers realise value for money in terms of services, that the Municipalities focus was initially on water and sanitation while serious strides have since been registered in this regard. The next focus will be on refuse removal, roads and electricity,
The Municipality is also providing full services to consumers who are not paying anything at all. All their water plants have been secured 24/7, when cash flow allows, service providers are indeed paid, and mainly they enter into payment arrangements with service providers. The Committee was assured that the Municipality does not keep changing service providers on chemicals, a necessary change was effected only in October 2019 and to date, the water supply disruption due to non-delivery of chemicals is “a thing of the past”.
Service Providers are appointed through SCM processes, the court order in this regard relates to a different aspect and the consultant is aware of such.
It was also submitted that a grant for bulk infrastructure through the Department of Water and Sanitation (DWS) that the Municipality had an initial allocation of R153 million for 2020/21 financial year and due to processes of Assessment through a Consultant appointed by the Municipality, by the end of 2019/20 financial year the process of Assessment was still not complete. As a result, the allocation was then reduced to R31 million for the 2020/21 financial year.
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 2019/20 financial year to be completed in the current financial year. The 2020/21 financial year allocation will be utilised for consulting fees on the phase 2: Construction of Sedibeng – Winburg water pipeline and completion of the phase 1: Winburg refurbishment and rehabilitation of the water treatment works.
Regarding Phase 1: It was reported that progress on the plant refurbishment project is at 67%. Currently at the Wolwas Pump Station construction progress is underway with electrical works 100% completed. The contractor is currently busy with preparation for installation of new pumps and motors. The plan is to have Wolwas pump station completed by the end October 2020, which will assist with water storage in Wolwas dam during the rainy season which will deal with both water shortages and quality.
Phase 2: The Construction of Sedibeng – Winburg water pipeline is at a preliminary stage, however indicating, that there are contractual discussions underway between the Municipality and the appointed Consultants which will be resolved by end of the week next week, While progress will be underway to finalise the detailed designs and advertise for the Contractor.
Operationally; currently there is insufficient raw water due to a dry season; as a result, the dam is full of sludge due to the sluice gate which is non-operational, and as a result water quality is compromised. The Municipality has started with investigations to source funding for the dam desludging process. This will assist with the quality of the raw water. As part of the process of addressing the water quality challenges, investigations are underway to resolve the challenges. One of the planned activities as a way of dealing with the quality issue, is to flush the main line that supplies water to the community, and also clean the reservoirs. These activities will be completed by mid-October 2020. The Municipality is closely monitoring the water through frequent sampling and testing to ensure that the water complies with SANS standards. Currently water samples have been sent for analysis at the accredited laboratory and the results will assist the Municipality in determining the exact deficiencies with water and the plan to resolve such will be implemented. To augment the water shortage and water quality, the Municipality supplies potable water through the water tankers from the Sibanye Mine.
The Municipality reported that the plant is 100% desludged and cleaned as it was full of sludge to the plant being non-operational for a long period. The mechanical works components e.g. pump at the plant were removed for refurbishments. The new mechanicals items are being procured and to be delivered on site before the end of October 2020. The contractor has started with installation on electrical works and these will be completed the end of October 2020. The plant will be fully operational by mid-November 2020. Once the plant is fully operational, the effluent will have better quality that meet the required standards.
Pumpstation 1 at Disco Section:
The construction of the new pump is almost completed, while the only component outstanding is the cover slab. Two new pumps and two motors have been installed (One being the stand-by pump). The new transformer and electrical line is to be installed, the progress is underway. The control panel is also being refurbished. The items will be finished end of October 2020.
Pumpstation 2 at Boitumelo Section:
The construction of new pump station sumps is underway. The repair pump station inlet works is almost complete. The repair of the existing operating pump is completed with the installation of new motors. On the electrical components, the motors connected to the pumps are being serviced and tested. The DB components such as main switch, pilots, lights, voltmeter and ammeter should be tested for proper functionality. Repair to the electrical motor on the operating pump is completed. The new generator is yet to be installed.
Pumpstation 3 at Fora Section
The construct bund wall is completed which assists in the case of spillages not to spill into the houses. The replacement of submersible pumps with Gorman Rupp (both duty and standby) is underway. On electrical; two induction motors have been serviced and tested for operation. The panel is being refurbished. These items will be completed by mid-November 2020.
Grievance 3: Landfill
It was reported that there are security deployed to the landfill site in Winburg, and day shift is also taken care of.
Regarding the recycling project, it was informed that Director for Community Services, Mr Michele Sello is in talks with a group of youth from Winburg to start a recycling project, a container has been donated through SLP by Harmony mine in this regard.
The Municipality dismissed claims that there were no funds from the Municipality for fuel to collect refuge and maintain the trucks therefore the community had to intervene for the payment of fuel services. The Municipality reported that the lack of funds is an occasional incident that occurs when there was a delay in submission and processing of payments towards fuel.
Grievance 4: Electricity
The Municipality reported that it went out on tender and have subsequently appointed a service provider that will install smart and prepaid meters and currently have registered the following progress:
- 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 finalised and approved the installation which will take place for all four towns.
The Municipality reported that it is now at a point where they are to start with small businesses and residences. For the record, the Municipality embarked on Public Participation with regard to the installation of the meters, like the LPU will be using smart and all else prepaid. It is therefore misleading to say the MM unilaterally took a decision and concluded on the matter.
Further reporting that the Business forum attempted to have ESKOM take over the electricity in areas of supply while ESKOM, SALGA, and the Office of the MEC for Finance made it clear in the meeting that the license in those areas belong to Masilonyana.
In its tender advert to attract service providers, the Municipality had stipulated a condition that says “Without the municipality incurring costs.” The Development Bank of South Africa (DBSA) was then engaged and the application has been sent to their Investment Committee that is awaiting Legal Advice to make a final decision.
Indicating that the Municipality still has an outstanding R73 million debt with Eskom. The Municipality is still in talks with Eskom on a payment plan and have also sourced the services of DBSA in this regard. The Municipality is working very hard to ensure payments are made regularly to ESKOM, non-payers are the ones violating any right of paying consumers.
The actual amount paid in the incorrect account was R3.7m and the following steps have been taken:
- Rampai Attorneys has been appointed to recover the money.
- The case was moved from Bloemfontein to Johannesburg High Court due to challenges by merchants.
The application is currently opposed by various merchants from whom substantial purchases were made using the fraudulent Nedbank account facility at Standard Bank’s points of sale located at the merchants’ various establishments. Apart from Standard Bank, a total number of six merchants cited in the application are as follows;
- 2nd Respondent: Kosak (Pty) Ltd – amount of R305 000.00 in dispute. Entity had issued application against Standard Bank and has since indicated an intention to join the Municipality. However, no joinder application has been served on the office as they had previously advised the entity to do so at it their office. Entity has also not filed any answering papers in the application issued by the Municipality.
- 3rd Respondent: J A Freman Trading CC – an amount of R420 000.00 is in dispute. The entity had launched an application under case number 32792/17 in an attempt to force Standard Bank to release payment of the amount in its favour. This application was removed from the roll. The entity has been advised to file its answering papers in the application issued by the Municipality.
- 4th Respondent: Ozykamo Group (Pty) Ltd – amounts of R486 745.90 and R392 893.68 in dispute. Summons issued by the entity against Standard Bank under case number 46650/17 for payment of the above-mentioned amounts. The claim is still pending before court, subject to finalisation of the Municipalities application and entity has been advised to file answering papers in the application issued by the Municipality.
- 5th Respondent: Come Today Trading & Projects183 – amount of R165 000.00 in dispute. The entity has been advised to file answering affidavit in the application by the Municipality. This entity claimed not to have legal representation in previous court appearance and was advised to secure legal representation if it still intends to oppose the application by the Municipality. No answering affidavit has been filed by the entity.
- 6th Respondent: L& H Classic Panelbeaters – amount of R440 000.00 in dispute. Entity had indicated that it is in the process of filing a legal claim against Standard Bank and the Municipality. Entity was advised deliver its legal claim at our address for handling thereof upon receipt, however no claim has been received from the entity as yet.
- 7th Respondent: Kelvano Group/ Kelvano Fashion Traders – amount of R184 600.00 in dispute. The entity was served with papers and no reaction from the entity. From the searches, the entity was in the process of deregistration by the CIPC and could possibly be de-registered by now. No opposition is anticipated from this entity.
The Municipality dismissed claims that its vehicles are unroadworthy, but indicated that not all vehicles are unroadworthy. The process of getting vehicles roadworthy was delayed by systemic challenges at the testing stations in Winburg. The Municipality has appointed a service provider that will supply the Municipality with service delivery fleet and submitted a business plan to COGTA through the Municipal Infrastructure Grant (MIG) to procure yellow fleet.
The Municipality further reported that it is impractically impossible that every individual in Masilonyana can be charged the same rate, as business customers cannot be compared to normal household customers due to power differences that they draw and that will have variances in bills being charged for these customers.
The Municipality submitted that it has embarked on street and high mast repair projects.
Theunissen was the first town, this is due to high crime rate including murders that were registered. To date the Municipality has fixed a total number of 683 street lights and 31 high mast lights throughout all four towns and the maintenance is ongoing for both street lights and high mast lights.
Municipal employees are being provided with adequate Personal Protective Equipment (PPE) for the works they are executing and the post of the Health and Safety Officer with requisite qualifications and skill has been advertised and is due to close on the 12th October 2020.
Grievance .5 Service Charges
The Municipality reported that there has never been an incident where the service charges were increased twice in one year.
But indicated that the current machine cannot handle the pressure during printing of accounts. Stating that they are to resume talks with service providers for a specialized machine for printing of accounts. Stressing that it is difficult to keep up with the expenditure when they are not collecting for services delivered.
The Municipality emphasised that it is the consumer’s responsibility to pay their account for services rendered, as much as it is the responsibility of the Municipality to issue accounts, and the matter is being looked into to acquire a machine specifically for accounts. It was advised that consumers who want to pay accounts always request accounts at municipal offices and they make payment as required without challenges.
In addressing the issue of backlog, the Municipality submitted that the backlog on allocation of accounts was due to lockdown of offices and COVID-19 regulations, however the backlog has been addressed and will reflect on the next accounts. The allocation of payments is an ongoing process.
The Municipality stressed that the system is man-made and it is bound to experience challenges every now and then but most times accounts are prepared on time, the challenge then becomes printing and distributing them.t. Indicating that tariffs are the same for all towns of Masilonyana, and payments are influenced by how they consume the services this was due to Lockdown, the backlog of paid clearance certificates requests has been addressed, and those awaiting figures is currently underway as they were waiting for August billing to be completed.
Grievance No.6 Valuation of jobs
The Municipality reported that the previous Valuation Roll had challenges and COGTA had assisted with handling of process to ensure that issues were mostly addressed. The advert for the new valuation will be going out on tender before the end of October 2020 to ensure its implementation by 1 July 2021.
7. Submissions by the South African Local Government Association (SALGA)
Submissions on behalf of the South African Local Government Association (SALGA) was led by Mr Z Futwa, SALGA Provincial Executive Officer for Free State. The presentation was a high- level reflection of the challenges of the Municipality and the support given by SALGA.And indicated that the Municipality is in distress and currently experience the following challenges:
- Going Concern Problems;
- Institutional Systems; and
- Intergovernmental Relations Problems
SALGA reported that the Municipality continued to receive bad audit outcomes It has failed to submit Annual Financial Statements (AFS) for past two consecutive cycles while under s 139 Administration. There are also tensions between Council Communities manifesting through a series of public protests and petitions for a range of service delivery complaints and alleged transgressions and or unmet promises. Council passed unfunded budgets for the two years that it was unable to submit AFS.
Going Concern Problems
SALGA submitted that the Municipality is currently categorised by National Treasury as experiencing technical insolvency (ratios of liabilities is higher when compared to current assets) and it owes Eskom account more than R 80 million by end June 2020 and it further owes a number of creditors including SARS, AGSA etc. Collection levels are too low, while the Valuation Roll is missing key customers.
SALGA reported that the Municipality has unfilled vacancies in strategic section 57 positions including CFO to the Municipality, but lacks capacity in key areas of Engineering, Town Planning, and Finance. The service infrastructure is aging and it not properly maintained, the Municipality is not complying with the Spatial Planning Land Use Management Act No 16 of 2013(SPLUMA) and misses the opportunity to optimise on SPLUMA as a tool for economic development.
Intergovernmental Relations Problems
There are tensions between some sections of the community and Council resulting in public protests. There is no formal Post Intervention Support plans adopted by Council and Partners to help sustain the recovery project.
SALGA Support to Section 139 Intervention
SALGA submitted that it has participated in the technical Intervention Task Team and work streams until they became obsolete (no longer meeting and the intervention was reportedly lifted).
SALGA approached a Danish Water Organization to assist with capacity on pre-paid meter customization and conversion for Masilonyana and Matjhabeng. SALGA also approached the Free State Chamber of mines to offer technical support in water and sanitation plant management and maintenance for the Municipality. SALGA played a key role in supporting the Administration Team to engage suppliers, National Treasury and facilitation of the implementation of TASK JOB Evaluation system by providing capacity building to MPAC, SPLUMA implementation, Training of Councillors after 2016 Election supporting the Council with recruitment of senior managers.
SALGA further submitted that it has also played a key role in supporting the joint Administration to mediate relations between Mitigation Action Plans (MAP) and its strategic partners including among others National Treasury on withheld grants, Eskom on Debt Management, SAMWU and MATU and payment of 3rd parties. SALGA included the Municipality in the EU Funded support on public participation tools to deal with their challenges. SALGA is also supporting the Municipality in engaging with oversight structures like Finance MEC Budget Assessment Programme, PROPVAC visits on AG outcomes, Select Committees etc. Further soliciting complementary resources to help with municipal challenges part of the teams that approached DBSA, Danish Agent, Energy Agencies and Mines.
8. Submission by the Department of Free State Cooperative Governance and Traditional Affairs
Mr M Duma, Head of Department (HOD) of Cooperative Governance and Traditional Affairs in Free State, in his opening remarks confirmed that the Municipality was placed under administration in 2017 indicating that while it was under administration, National Treasury had implemented penalties against the Municipality due to its misuse of MIG funds. Thereafter the Municipality had come to an arrangement with Treasury to repay this debt.
Mr Duma, submitted that the administration was lifted by the Provincial Executive Council (Exco) to withdraw a Section 139 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. But indicated that the close-up report would be finalised once the Municipality received the forensic investigation report and addressed the following issues as follows:
Revenue Collection and Institutional Systems
The Municipal revenue collection was compromised by the non-availability of a valuation roll therefore a new value 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 Section 139 intervention on the municipal 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.
Mr Duma reported that COGTA 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. This had assisted the Municipality with the payment of salaries and the payments for service providers supplying chemicals used in cleaning extracted water.
The Municipality had been assisted by the establishment of SPLUMA to develop as a revenue stream. The municipalities were given full responsibility on rezoning and consent use is now one of the revenue streams of the Municipality.
It was reported that one third of the municipal 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. Highlighting that the total debt comprised interest charges incurred over 20 to 30 years. Bringing to the attention of the Committee that 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.
Mr Duma reported that the Municipality was also approached by fraudsters who claimed to be Eskom officials leading to money being paid into the wrong account. He assured that this matter was with SAPS and arrests would soon be made.
- Submission by the Free State Provincial Legislature Committee of Petitions
Mr J 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.
- Supplementary Submissions by the Petitions
Mr Landsman, reiterated on some of the grievance he had presented during the first petition hearing. But emphasised property rates, indicating that some businesses property rates were less than residential rates. Submitting that 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.
Further emphasising that the standard of the town is depreciating as result of lack of service delivery. Therefore, there was no link to the property’s valuation as to service rendered; residents were paying to live in a ghost town.
In closing, Mr Landsman is still seeking clarity on the consequence management for the audit results, to be included mismanagement of tax-payers money and the establishment of proper financial planning. He also indicated that he is not satisfied with the response of the Municipality as it lacked detail.
11. OBSERVATIONS AND KEY FINDINGS
The Committee made the following observations and key findings in relation to the various submissions made in relation to the subject matter of the petition:
11.1 The petitioner indicated that since 2016, the Municipality had not submitted its Annual Financial Statements (AFS) to the Auditor-General of South Africa (AGSA). As a result of its poor financial management, the Municipality was placed under administration by the provincial government in 2018.
11.2 The Committee noted that the requested 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 (not provided) of monies meant for Eskom still yet to be finalised.
11.3 The Municipality had appeared before the Standing Committee on Public Accounts (SCOPA) on 17 September 2019 where most of these concerns were discussed.
11.4 There were still capacity challenges in the Municipality. It noted that although it had not submitted its annual financial statements (AFS) yet, it received its Local Government Equitable Share (LGES).
11.5 SALGA, with COGTA and the Exco, had set up committees to assist the Municipality regarding the intervention. 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.
11.6 SALGA together with COGTA was assisting the Municipality as it was not fully compliant with the Spatial Planning and Land Use Management Act (SPLUMA).
11.7 SALGA had done capacity building training on the Municipal Public Accounts Committee (MPAC) and was helping the Municipality to fulfil the Section 57 appointments to vacant leadership positions and to strengthen oversight.
11.8 SALGA submitted that the Municipality is currently categorised by National Treasury as experiencing technical insolvency (ratios of liabilities is higher when compared to current assets) and it owes Eskom account more than R 80 million by end June 2020 and it further owes a number of creditors including SARS, AGSA etc. Collection levels are too low; Valuation Roll is missing key customers.
11.9 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.
Following extensive deliberations on the submissions made during the hearing on the petition, the Committee recommends as follows:
- The Masilonyana Local Municipality to furnish the House with its close-out report indicating that the section 139 intervention has been lifted.
- In noting the dire financial and administration constraints experienced by the Masilonyana Local Municipality, the Committee requests the following:
- The Masilonyana Local Municipality to provide the House with all forensic preliminary reports relating to its financial status.
- The Masilonyana Local Municipality to provide the House with a detailed Financial Recovery Plan.
- The Masilonyana Local Municipality to provide the House with a detailed plan on filling strategic positions that would enable effective management and increase its oversight role.
- The Masilonyana Local Municipality to provide the House with an update on engagement with Eskom with a view to settling the debt owed to Eskom.
- The Committee refer the matter raised in the petition to the Select Committee on Public Accounts (SCOPA) for further investigation into its financial position.
Report to be considered.
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