The DA is concerned about the State of the City of Ekurhuleni’s Finances after Eskom demands payment of R1.5 billion in Outstanding Debt
Media Statement by Cllr Fanyana Nkosi, DA Spokesperson for Finance
Date: 5 October 2023
Release: Immediate
Type: Press Statement
The Democratic Alliance (DA) is concerned about the state of the City of Ekurhuleni’s Finances. On the 28th of September 2023, the DA tabled an urgent motion requesting a debate on the state of the City’s finances to ascertain the City’s current financial position, review its current financial strategy, and rescue the City from financial collapse.
While we celebrate the fact that the motion led to a decision to have a Special Council convened in the next two weeks to debate the state of the City’s finances, we are concerned that the City might be in a much worse financial position than we initially anticipated. On Wednesday, 4 October 2023, Eskom issued a media statement singling out the City of Ekurhuleni for not meeting its payment obligations.
Although the DA initially reported that the City was sitting with just over R3 billion in outstanding payments owed to creditors, we fear that the City’s creditor bill may be more than we have anticipated. In their media statement, Eskom stated that the City owed just under R1.5 billion far more than the R254 million that was reported in the Annual Draft Financial Statement tabled in the Finance Oversight Committee Meeting held on 12th September 2023.
In addition to this, the Annual Financial Statement also revealed outstanding payments to Rand Water amounting to R117 million, ERWAT, the City’s very own entity, amounting to R117 million, and just over R2.5 billion owed to outsourced contractors.
Eskom stated that the payment patterns of the City of Ekurhuleni have deteriorated to concerning levels and that it was concerned about the City’s entrenched practice of setting its account late over the past six months. The entity further revealed that it had explored all avenues to recover what is due to the organisation and that the City has failed to fully honour its payment obligations as required per its electricity supply agreement.
In the media, over the past week, EFF MMC for Finance Cllr. Nkululeko Dunga stated the City does not owe Eskom or Rand Water, despite bulk services being the highest debt that the City incurs on a month-to-month basis.
This therefore brings into question whether the City of Ekurhuleni has been meeting its payment obligations to its other creditors as mentioned above, as Eskom states the contrary.
These outstanding payments are already putting considerable strain on the City’s ability to function and are now starting to affect service delivery, with infrastructure failure and lack of maintenance becoming the order of the day.
With the City’s cash on hand being reported at R438 million, less than 0,13 days, the DA is concerned that the City may soon face bankruptcy if it does not change the trajectory of its credit control and expenditure patterns.
This is why we have called for an urgent debate on the state of the City’s finances. We need to work as a collective, beyond party lines, to strengthen credit and expenditure control and improve revenue collection in the City. The motion also requests that the current financial strategies be reviewed, a turn-around strategy be presented by the next Council Meeting, and a monthly status report be tabled in every Council Meeting to provide an overview of the state finances in the City up until the financial position of the City has improved/ stabilized.
The DA is on a mission to rescue the City of Ekurhuleni from financial ruin following years of financial mismanagement and maladministration under the ANC. Although short-lived, during its tenure, the DA was determined to ensure the long-term financial well-being of the City by implementing amongst other things, numerous budget cuts, cost containment measures, stricter expenditure and credit control measures, a debt rehabilitation programme, and revenue collection and service disconnection programmes to collect outstanding monies. We are concerned that despite the interventions implemented during our tenure, the City’s finances have continued to deteriorate at a rapid rate. It is therefore incumbent on us, as representatives of different political parties, to improve the City’s performance, and prevent any further financial losses, and the likelihood of the City being placed under administration.
We look forward to the debate on the financial state of the City and will ensure that concrete solutions are presented in Council to save the City from financial ruin.
Cllr. Fanyana Nkosi
DA Spokesperson for Finance, Ekurhuleni
063 649 7044
