Govan Mbeki Local Municipality: engagement with Mpumalanga & COGTA; with Minister

Meeting report

Introduction

The Chairperson said there was widespread negativity surrounding Govan Mbeki Municipality’s failure to meet its service delivery obligations to communities. The provision of electricity was a prominent issue causing some violent protests over service delivery, where municipal property was burned. Electricity interruptions were enforced by Eskom due to failure of the Municipality to service its debt.

The Municipality was categorised as dysfunctional. On 11 October 2018, the Mpumalanga Provincial Executive Council placed the Municipality under mandatory intervention according to Section 139(5)(a) of the Constitution, which provides for the development of a Financial Recovery Plan. The Committee was concerned support was only provided after severe damage already occurred. The Committee was also concerned about the capacity of Provincial Cooperative Governance and Traditional Affairs (COGTA) and the Provincial Treasury to utilise the Section 76 reports sent to it to detect early warnings.

The Auditor-General noted financial recovery plans led to no impact on the Municipality. This is because of its late approval, and the implementation of the plan. The intervention into the Eskom debt crisis was also late. Eskom rejected the Municipality’s repayment plan. The problem remains unresolved while people and businesses suffer. On 4 September 2020, Provincial COGTA told the Committee it was in the process of making a submission to the Provincial Executive Council to escalate the situation. Four months down the line, an intervention notice is yet to be submitted to the Minister.

COGTA on the State of Govan Mbeki Municipality

Mr Sam Ngobeni, COGTA, made two presentations to the Committee on Cooperative Governance on the state of Govan Mbeki Municipality. It is one of the dysfunctional municipalities in the Mpumalanga Province.  On 11 October 2018, the Mpumalanga Provincial Executive Council placed the Municipality under mandatory intervention in terms of Section 139(5)(a) of the Constitution, which provides for the development of a Financial Recovery Plan. In 2017 and 2018, the Municipality experienced violent service delivery protests at Embalenhle Township that resulted in the burning of eMbalenhle Municipal Regional Offices, Municipal Fleet, eMbalenhle Mall, Post Office and a filling station. The impact of the protests is still greatly felt and the Municipality will take time to recovery. The protest was caused by the electricity interruptions enforced by Eskom due to the failure of the Municipality to service their Eskom debt. The problem continues.

The presentation spoke to problems with governance and administration, financial management and service delivery. It outlined COGTA’s support and COVID19 interventions.

(Refer to attachment for full presentation)

South African Local Government Association (SALGA) Support to Govan Mbeki Municipality  

SALGA briefed the Committee on the support provided to the Govan Mbeki Municipality in the past three years. A number of meetings were convened with the Municipality both at technical and political level. The purpose of these meetings was to find out the exact challenges faced by the municipality. Most critical challenges were relating to:

            -           Electricity Supply

            -           Debt owed to ESKOM and Rand Water;

            -           Financial Matters, this includes Audits and Asset Management

SALGA spoke to municipal finance support, municipal capabilities support, municipal infrastructure services support, governance support and the approach SALGA suggested for support to municipalities before interventions.

SALGA proposed, emanating from the recent Electricity challenges in the Municipality, the SALGA Administrative team engaged the Technical Team of the municipality in the meeting held on 4 and 13 August 2020. The purpose of the engagement was to get more information on the challenges faced by the municipality in relation to ESKOM. The following way forward on the proposed support on various issues was forwarded in writing to the municipality and the municipality was expected to respond to SALGA on these proposed interventions before such can be implemented:

• Assessment of Financial Position: Within the context of the huge outstanding debts owed to ESKOM and Rand Water respectively, exacerbated by the declining revenue collection levels due to COVID-19 and the withholding of the equitable share allocation, it was recommended that SALGA, in partnership with National Treasury, assist Govan Mbeki local municipality to conduct a due diligence financial assessment  with a view to determine  affordable and sustainable e payment arrangements  for outstanding debts;
• Engagement with ESKOM: A meeting should be convened with ESKOM National office to discuss the outstanding debts owed to ESKOM with a view to agree on an affordable and sustainable  payment plan to resolve the challenges related to the Notified Maximum Demand;
• Engagement with Rand Water: A meeting should be convened with Rand Water National office to discuss the outstanding debts owed to Rand Water with a view to agree on an affordable and sustainable payment plan.
• Develop Action Plan: Having regard to the proposed interventions outlined in the state of Municipality report as presented by the Municipal Manager. An Action Plan should be developed, inclusive of key deliverables, related costs, relevant stakeholders to be approached for support, internal owners and related timeframes for execution of the deliverables.
• Introduce Self Assessment Tool: SALGA with the support of the municipality, pilot the introduction of Self-Assessment Tool (Early Warning System) which would enable the municipality to have a real time picture of municipal performance, identify red flags and implement appropriate action to mitigate against potential challenges.
• Pilot Advanced Asset Register: With a view to pro-actively address ongoing infrastructure maintenance, pilot the introduction of an Advance Asset Register, drawing lessons from the SALGA Building Integrated Green Municipalities Programme.     

Following the letter written to the municipality on 14 August 2020, no response was received from the municipality. Various meetings took place, between COGTA, SALGA, Provincial Treasury, the Municipal Infrastructure Support Agent (MISA), Provincial ESKOM and the municipality to discuss the ESKOM matters as well as the Development of Action Plan. Piloting the Self Assessment Tool (Early warning system) is depended on the response from the municipality’s willingness to have the project piloted in the municipality. Piloting an Advance Asset Register is also is depended on the response from the municipality’s to have the project piloted in the municipality.

(Refer to attachment for full presentation)

State of Govan Mbeki Municipality

Executive Mayor, Cllr Nhlakanipho Zuma, presented on the state of the Govan Mbeki Municipality. Govan Mbeki Municipality is the fourth largest economy in the Mpumalanga province and contribution to the provincial economy in 2019 was 12.7% and 47.2% to district economy. The comparative advantage of the municipality is in mining and manufacturing. Govan Mbeki has been identified amongst the struggling municipalities in the province in so far as meeting its service delivery obligations to the satisfaction of the consumers. Consequently, the municipality has been receiving support from Treasury, Cogta and Gert Sibande District Municipality (GSDM). The municipality continues to operate under difficult conditions as evident in the escalation of the debtors’ book.

The presentation addressed financial viability, revenue collection, debt, expenditure, creditors’ interest and monthly commitments. The post audit action plan was outlined. The presentation discussed irregular, fruitless and wasteful expenditure.

Consequence management:

-Municipal Public Accounts Committee (MPAC) concluded its investigation on the financial performance report for the first and second quarter of the financial period 2019/2020 as well as the midterm financial performance for the same financial period.

-Council suspended two Senior Managers in September and October 2020 and disciplinary processes are underway. 

-The Disciplinary Board is investigating three cases of financial misconduct. Council resolved to strengthen the Disciplinary Board through appointment of an Independent member as per the Terms of Reference while Treasury delegated an official to serve on the committee.

-The MEC tabled the section 106 report to Council on 6 October 2020 and Council at its extraordinary meeting held on 20 October 2020 and adopted the report.

-An action plan to address the recommendations of the 106 report was subsequently adopted by Council.

-Three Senior Managers and two then Acting Directors are undergoing disciplinary processes.

The presentation then addressed the MPAC, institutional capacity, internal audit and the turnaround strategy. The municipality said there is a need for government, private sector and community partnerships to support the revenue enhancement of the municipality and which required the following:

• National intervention on the charging of interest by Eskom and Rand Water
• Settling of government debt owed to GMM
• Local businesses who are Large Power Users to service accounts timeously
• Community partnership in creating a culture of payment of services

(Refer to attachment for full presentation)

Discussion

Mr C Brink (DA) said he was first alerted by the situation in Govan Mbeki Municipality in April 2020, at the start of the lockdown. A councillor told him the community was not just suffering from load shedding, but also power cuts stretching up to 12 hours during the daytime. It was not simply because Eskom was refusing to lift the minimum demand limit. It was also because of damage caused to municipal infrastructure from load shedding. If the network is poorly maintained, transformers blow up and lines break. Mr Brink said his colleague wrote to the MEC in April 2020, and did not get a reply. Mr Brink said he wrote to the Minister as well in June 2020, and also did not get a reply. He raised the matter with the Deputy Minister in Parliament, who said the Eskom Task Team would look into it. Since this was happening for over a year, and Govan Mbeki Municipality faced a power crisis which cannot be attributed to Eskom load shedding, he asked why it took this long for local government to intervene. It seemed like administrators were still not appointed. If the Province does not intervene with a municipality which fails to deliver on its executive obligations, the national government must step in.

He asked why national government took so long to intervene, given the failure of the province. It is not exactly clear if the administration process made any progress at all, including the appointment of the administrators. He asked when the Committee can expect the work of the administrators to take effect. A High Court judgement on the Klein Rivier Municipality in the North West, granted a residence association the authority to take control of the municipal water works. It is quite unprecedented for a voluntary association to take over government power, because of the failure of the affected local municipality. From discussions with colleagues in Govan Mbeki Municipality, one knows there are residents who are organising around a potential suit against the municipality. He asked what COGTA’s response was to this. This is a risk for government, in the sense of it disrupting the proper order of government and elections, but it is also the only solution many communities have to get the services for which rates, taxes, and service charges, are paid.

The Minister spoke on this, and documents from COGTA identified a goal to campaign against the culture of non-payment for municipal services in municipalities. A national campaign should have been launched last year. The culture of non-payment is a big part of the problem in Govan Mbeki Municipality, as it is not delivering. The Eskom crisis is unlikely to be solved. He asked Minister Dlamini-Zuma what government was doing to end the culture of non-payment by government departments. He also asked when the Committee will see the Bill on Intergovernmental support, Monitoring and Evaluation, as envisaged by Section 139 (8) of the Constitution, which is being tabled in Parliament. This would provide more clarity on what the responsibilities of provincial administrators are, in intervening in dysfunctional municipalities. Provincial officials said there is clearly a lack of political will to collect debt owed to the municipality. He asked if the new Executive Mayor, Cllr Zuma, his administration, or predecessor, lacked political will to do this. Regardless of the answer to these questions, he asked if Cllr Zuma now has the political will to do what needs to be done for the municipality to become financially stable.

Minister of COGTA, Dr Nkosazana Dlamini-Zuma, said it was quite frustrating at a national level, when looking at municipalities and how municipalities are doing. When looking at the Constitution, it shows the provincial executive, and not national government, needed to intervene to assist the municipality. It has many conditions for when national government can intervene. It is helpful to prepare a Bill which corresponds to Section 139, so there are parameters and clear indications regarding when the national government should intervene. It is very difficult for national government to intervene with municipalities, as it will do whatever it wants. National government has sometimes tried to intervene, after which the province comes up with some type of intervention. This means national government cannot say the province is not intervening. There needs to be legislation around this to make it easier for COGTA and National Treasury to intervene in municipalities affairs.

Executive Mayor Zuma said the Municipality was suffering a number of losses due to load shedding and voltage switched on and off. Some infrastructure in the Municipality is dilapidated and the Municipality is doing its best to renew this. Political will is for interventions or decisions to be taken by both Councillors, and those delegated by the Council with executive authority to intervene in challenges faced by the Municipality.  The Municipality is committed to resolving some of the challenges faced by it. It used 18.8 kilovolt-ampere (KVA), and was supplied with 18 720 in Bethal. This means a small margin is causing interruptions. Emzinoni is also experiencing a similar issue. Evander experiences issues in winter when the usage increases. Eskom withdrew 3 000 KVA on Embalenhle which left it with 34 000 KVA and the Municipality was then unable to supply electricity. These challenges will be resolved by the Municipality and Eskom.

Regarding roads, 903 kilometre (km) of roads are worked on, and 505 km are already tarred. Roads were resurfaced where required, to the amount the budget allows.

Mr B Hadebe (ANC) said it was a pity the head of provincial COGTA was not present, as his questions were related to this Department. He referred to Section 139 and the intervention in the Municipality. Section 139, Sub-section one, is very clear on when a municipality cannot fulfill an executive obligation, the province must intervene by taking any appropriate action to ensure its obligation is fulfilled.

The Provincial COGTA correctly applied Section 139 (1) (a), by issuing a directive. This directive describes in detail the failure of the obligation and State measures to address this. It was done by the provincial government, but it still experiences failure. The Constitution is clear, the Province must assume responsibility. The question is why this did not happen. Five months down the line there is still talk about serving a notice to the Minister. These actions and delays is what led to the continuous failure of the Municipality. Provincial COGTA must be held accountable for failing to execute the constitutional responsibility.  He asked why COGTA has not implemented Section 139 (1) (b), after witnessing the failure of 139 1(a). The Department is contributing to this failure and must be held accountable. The Auditor-General (AG) clearly said the reason the financial recovery plan did not yield positive results, is because of late intervention and implementing the plan. Other spheres of government are not excluded from intervening as per the Constitution.

Non-compliance cannot be tolerated. The Municipality stated clearly, the current status quo indicates a municipality failing to fulfill its obligation. This is a very profound statement which asks for a serious intervention. This Municipality should have been disbanded a long time ago. The financial recovery plan was imposed in October 2018, and has still not yielded positive results. Eskom debt is at R2.2 billion, Rand Water debt is at R355 million, while the revenue collection is only 63%. There are distribution losses in electricity of 60%. The Municipality failed dismally, and is classified as a dysfunctional Municipality. The Municipality cannot take all the blame, and the province must account. Two and a half years passed, and there is a financial recovery plan which failed. The Committee was told the intention to impose Section 139 (1)(b) is still in the pipeline, meaning it is a pipe dream. The Committee might even see elections without this being imposed. If the Committee is serious about its oversight roles and responsibility, it will not allow this to continue unabated. The Committee must act decisively, for the sake of those before it, to be the voices of the voiceless, and the poorest of the poor, who are not in a position to raise the issues on this platform. This needs to be done expeditiously.

He asked when the municipal turnaround strategy was imposed, how long it will last; and if it yielded positive results. The audit outcomes of 2017 and 2018 is an area of concern as it was a disclaimer. The audit outcome of 2018/19 is outstanding, and the Municipality is claiming it could not adjust to the changes of the new financial system. He asked if the Municipality was not given an opportunity to be trained in the changes which would take place with the financial system. Even if this is the case, external service providers were sourced to assist. He asked why the municipality is still unable to submit when it outsourced assistance; and which experience and expertise challenges it faced in the Finance Department, for it to resort to external service providers. The Committee heard the Council meetings were disrupted by Councillors who took an oath of Office. Council meetings were not held for quite some time. The Committee was not informed of consequence management on this. He asked which Councillors caused a disruption, and which actions were taken as consequence management.

Executive Mayor Zuma said the turnaround strategy of the Municipality yielded results, and forms part of its interventions. Since January 2021, the Municipality had an incremental increase of five percent on its revenue, which increased from 61% to 66%. There are other interventions currently in process. Some committees were recently established to deal with the challenges. The challenges dealt with include water issues of households in Govan Mbeki. Water can now be supplied to households without any interruption. Cable and pump theft occurs once in a while and affects supply to a specific area. This will be attended to in a reasonable time frame. Farm areas do not have water points and are drilling boreholes to supply water tanks.

The Municipal Infrastructure Grant of R4.6 million is used to drill 31 boreholes, and the project is almost complete. The Municipality’s backlog is due to its issues with Rand Water and establishing new townships. Land invasions often take place with communities illegally connecting to infrastructure. Water access is difficult to restrict. There are many sewer spillages and a master plan for the Municipality is in implementation stage. R400 million will be required for the interventions. It is constructing pump stations, installing sewer lines, and upgrading waste water treatment plants. Most houses in the Municipality have 99% access to water, but its capacity is limited in how water usage occurs and is affected by the waste plants constructed a long time ago, which only has a specific capacity for intake. The Municipality gets support from its private sector partners, and provincial and national government, to deal with this. Council meetings were only disrupted for one month in January 2019, due to disagreement. Members decided to engage in tedious activities or walk-outs, which caused the Speaker to remove certain Members from the venue. Once Members were removed, activities of Council could not continue, because of quorum.

Ms E Spies (DA) said she agreed with the Members who spoke before her. She observed the turnaround strategies, recovery plans, workshops, and interventions presented to the Committee. Above all of this, needs to be practical solutions. She said she was in local government for 14 years and has yet to see a municipality offered so much support for assistance to get out of the hole it is in, but no progress can be seen. This Municipality already held a few meetings, but no progress was made and it is almost the end of February. Based on the meetings and its outcomes, no real progress was made, because people are without electricity and water. She asked how on earth revenue collection from consumers can only amount to 60%. She asked if the Directors in the Municipality have performance management plans. She was not referring to Key Performance Indicators (KPI’s), or contracts, but plans. A simple example of a plan is when there is a water problem, and the plan has a solution such as a turnaround plan of five or six days to fix the problem. She asked what the turnaround plan is, and if the problem is not resolved, what is the next step. Internal systems are not in place to be followed. She said she may have overlooked the Wage Bill of the Municipality, and wanted to see this. The Municipality must have targets and timeframes.

The disclaimer status for audit outcomes was unacceptable. The software program is something the Municipality simply needs to adjust to. It needs to be applied and if it cannot be applied, it means the Municipality does not have a problem solving Chief Financial Officer (CFO). She said she looked at service delivery issues and is shocked at what she saw. She asked what the quality of the Section 80 meetings being held are. Surely, committees must be outcome driven. She wanted to know if the monthly supply chain management report interrogated, and how often it is done. She looked at the expenditure for corporate items such as embroidery, which costs over R800 000. These are unnecessary things which need cost cutting.

The Municipality must ensure this is implemented. It is a huge problem to have time lapsing between meetings held. Certain outcomes must be adhered to. The Mayor must look at this. The Committee wants to see change in the Municipality and cannot have calls from residents saying residents are without water or electricity for days, without anything being done.

Executive Mayor Zuma said the Municipality did not use consultants during the three financial years it received an unqualified audit. Due to migration of the financial system, the quality of work done was frustrating for employees, and the Council terminated the contract. Section 80 committees are sitting according to its schedule, but are performing its duties with certain constraints, such as backlogs on service delivery, and low payment rates which cause functionality issues for the Municipality. The Municipality is working hard to improve its cash flow to meet its commitments. Integrated Development Plan (IDP) targets involve a five- year programme which is renewable on an annual basis. There is a massive backlog on challenges prioritised by the Municipality within its IDP. The main IDP priorities are sewer spillage control, water access, and electricity.

Ms D Direko (ANC) said the Select Committee on Cooperative Governance and Traditional Affairs visited the Municipality in 2020. It raised serious concerns on the municipal debt, including extra debt which was very high. She asked the Municipality to explain its current cash flow issues in detail, versus the previous year’s cash flow. She asked if there was any improvement. The Select Committee raised concerns over R758 000 paid to external consultants to prepare the municipal financial statement. She asked what was done about this, because this is a large amount of money for the work the consultants were expected to do. The Municipality was advised to do a skills audit on the financial sector. She asked if the Municipality was able to do this, and if not, what the reasons are for this. She asked the Municipality to explain about an incident which left a 12-year old child disabled. The question was, why was the cable left unattended, and how did the Municipality deal with this situation. She also asked what the state of the Municipality’s service delivery is, if there are service delivery challenges, and what the plan is to deal with it.

Member of Mayoral Committee (MMC) for Finance, Cllr Sakhile Mahlangu, said the Municipality was able to rebuild some of the municipal buildings which burnt during the service delivery protests. These offices were opened, and a fleet of trucks were procured to replace the ones also destroyed during protests. The Municipality experienced difficulty in the past with calculations of its AFS timers, which adversely affected the Municipality and its systems. The Municipality was able to generate AFS timers despite the myriad of challenges it faces. The Municipality applied Operation Luthula, which largely focuses on communities. This should also assist the Municipality to maximise collection. COVID-19 halted this. Operation Luthula includes replacing faulty meters, but in some instances meters were bought. A billing system was introduced. People who are incorrectly billed must come forward to be credited for future utility services. There was a huge improvement in service delivery. The Municipality is still in a position to meet some of its monthly payments toward Eskom, and its water account. There are still difficulties relating to its historical debt. Political will for revenue collection was always there, and is the purpose of Operation Luthula. On consequence management issues, the City Manager (CM) and Municipal Manager (MM) were suspended.

Executive Mayor Zuma said there will be an internal skills audit for all employees. An independent body will provide services to do qualifications vetting.

Mr K Ceza (EFF) said he was concerned about people leading a sustainable life in the Municipality. He referred to SALGA using Steve Tshwete Municipality as an example for revenue collection. Indigent residents are billed R18 000 per month for unread meters and this is blamed on migration. The staff members attitude in the Municipality is negative, and staff bullied people. Municipal staff force people to pay without explanation, and without resolving these issues. These issues cut across all municipalities in South Africa. There are situations of unproven leaks due to aging infrastructure, which the Municipality bills people for. People who are unemployed are billed for this. He asked about ruling party members who often threaten members of Section 79 Committees, and asked what the Municipality will do about this. Contractors are claiming money for projects which were not done. Sewage plants are not working and pumps are missing. When these things are put on paper, it looks like the Municipality is doing something, especially when it requests funds. He asked the Municipality to explain some of the issues pertaining to using consultants. He wanted to know what total amount was spent on consultants versus on an internal audit; what investigative measures COGTA took to ensure municipal land, alleged to be sold to politicians, is retaken and redirected for its intended purposes in the Municipality. He referred to pictures shown to the Committee of transformers left on the streets. This is a clear show of a dysfunctional municipality and will result in it not serving the people. He asked the Municipality to clarify which buildings are family flats used by Govan Mbeki Housing Company (GMHC). He raised the Section 106 Report, and asked how many officials and political leaders were implicated in this report; what the consequence management for those individuals are; and what measures will be taken to address the situation. He also asked what the function of the National Energy Regulator of South Africa (NERSA) is on contractual tenders, and what its responsibility is. He asked what NERSA must do to ensure things go well in the Municipality. There is a serious sabotage in electricity supply. Certain individuals and officials will be connected, while others are not.

Executive Mayor Zuma said GMHC was a complex matter and the Municipality could not account for GMHC activities, as it was independent from the Municipality.

Ms H Mkhaliphi (EFF) said it was discouraging to hear the committee met with the Provincial COGTA on 4 September 2020, saying it was in the process of making a submission to the Executive Council to escalate the current intervention in accordance with Section 139, Subsection 1(b) of the Constitution. Five months later, the report from COGTA shows an intervention notice is yet to be submitted to the Minister.

The situation on the ground is very bad. Mr Ceza posted a picture on the Committee’s WhatsApp group showing electricity boxes in the Municipality are open, and there are cases where people are injured because of this. She said she has a picture of a woman injured because of the open boxes. No one from the Municipality wants to take responsibility for this. She asked the Mayor how service delivery issues would be solved. The only important issue seems to be dealing with Eskom debt. The people of Govan Mbeki believe this is an issue between the Municipality and Eskom. It was unacceptable for the provincial officials not to be present, as the Province is responsible to take over when the Municipality is not functioning. It seems as if the Committee is failing to do its oversight work. Since there is a new Mayor, the Mayor should provide a time frame for how these issues will be resolved, and prioritise the people of Govan Mbeki Municipality for service delivery. It was unacceptable for some leaders to gain access to electricity, but not others. People are suffering in the Municipality if the water level is reduced to 40%. The Municipality owes the Water Board millions, and this all goes back to how the people on the ground are affected. Those pointed out in the Section 106 Report remained in positions and are still enjoying certain benefits. She said there was no consequence management, and asked what the Mayor would do about this. Provincial COGTA must account for it.

Cllr Mahlangu said, when looking at the report from the previous year, it showed an improvement in irregular expenditure. Some issues Members raised relate to consequence management, and mismanaging resources. An administrative exercise was taken with officials who were implicated in the Section 106 Report. This report was received late last year and the process is ongoing.

Executive Mayor Zuma said a child was electrocuted while playing next to electricity lines. Community members damaged these cables. The Municipality consulted with a number of stakeholders to ensure the family is assisted. The family recently received furniture, which was donated through a collective effort. The Municipality is attending to the situation where some people are buying electricity connection. This is the reason the MM and Chief Financial Officer (CFO) were suspended and legal advice sought. An item was already sent to Council, and it was recommended the Mayoral Committee present a solution on how to deal with the conduct of irregular service providers.  

Mr G Mpumza (ANC) said the consolidated report from COGTA shows Govan Mbeki Municipality was classified as dysfunctional. He asked when the Municipality was classified as dysfunctional and what measures were taken to address this. The Mayor said there was R658 million spent irregularly, and he asked if this is because of non-compliance with supply chain policies and regulations. He wanted to know if the findings regarding the impact of the Municipality’s irregular expenditure, is binding. He asked if consequence management was effected adequately enough to send a message to the leaders in government and the Municipality to stop violating the law. The Report shows government and other state institutions owe the Municipality an amount close to R11.7 million. He asked when the government departments are going to repay this money. This debt should be paid by government departments immediately. He wanted to know how long this will take, as the Municipality had the R2.2 billion debt to Eskom, and the Water Board. This is cumulative debt. He asked what measures were taken to address the situation up until now, and asked if the 2.5% compounded interest was a provision in law, or if it is simply an administrative matter. If this is not stipulated in law, it is an administrative factor and is rendering municipalities to be in perpetual debt servitude to Eskom. The turnaround strategy of the Municipality should focus on real asset management by in-sourcing some capabilities, meter reading, and getting rid of disposable assets. This must be aligned with the approach towards building a capable local state, so internal capabilities are improved. The Municipality must strengthen contract and risk management.

Executive Mayor Zuma said the Municipality accumulated date from 2012 to the present time. The Municipality is challenging these issues using the proper platforms. It must use the services of a Municipal Manager, and follow processes when preparing contracts. The Municipality employed a contract manager to deal with contract compliance.

Minister Dlamini-Zuma said the Deputy President of South Africa, David Mabuza, chairs a committee which includes Eskom, COGTA, and other departments, to see how the municipalities’ debt to Eskom can be resolved. Some suggestions are discussed. It was suggested National Treasury look at departments who are not paying, and cut down on its budgets. The debt is huge, because of the amount Eskom compiles on the debt. There are discussions with Eskom to put aside the debt, and for departments to start paying up. These discussions are not concluded yet as the issues are not easy to resolve.

Cllr Mahlangu said during the past four or five months, the Municipality made payments toward its Eskom debt. The Municipality did not default on water issues with Rand Water. The Municipality paid the current account, but the administrative team felt the Municipality was not paying sufficient attention to its historical debt. This caused Rand Water to reject an arrangement on the repayment plan and a court ruled in favour of the Municipality.

Director-General at DCOG, Ms Avril Williamson, said the Municipality was declared dysfunctional in May 2018. It was done by the former Minister, at the time. There were 87 municipalities regarded as dysfunctional at the time. Five of the 87 municipalities declared dysfunctional were from Mpumalanga. Govan Mbeki Municipality experienced financial issues which escalated its municipal debt. According to Section 139(5), a financial recovery plan was recommended. The Department did not need to intervene according to Section 139, but supported the Municipality by looking at Section 154 in the Constitution. The Department coordinated with Provincial Treasury and Provincial COGTA on some of its finance related issues. It coordinated with the Department of Human Settlements on sewer spillages, and a pilot project on electricity. The pilot project is between the District of Gert Sibande, and also involved Eskom. The Department hopes the project is successful so it can be replicated. Support is provided through the Department’s District Development Model (DDM) Programme.

Mr I Groenewald (FF+) said his questions were already covered by other members.

Mr Hadebe referred to the inadequate political will to implement credit control policies, as indicated in the presentation. He said this was disappointing and asked for more details. He wanted to know who the officials are, who are unwilling to implement this.

Mr Ceza referred to the IDP and asked how many of the plans were achieved, and how many were not achieved. He wanted to know what the reasons are for this; and what the impact of the IDP programmes were in the community. Infrastructure relates to the total number of unqualified personnel in the Municipality. When a municipality collapses, one must ask how many qualified people it has, what measures are taken to attract more qualified personnel and skills to the Municipality; and what the rate of attracting such skills are.

Cllr Mahlangu said it was vital to get a clear historical account of the Municipality, from a financial perspective. There is a clear indication in the Report, of a decline in revenue collection. This must be located in a broader context. Govan Mbeki Municipality is located in a highly industrialised area, and there is a general decline in mining, given the job levels. This issue was later compounded by the COVID-19 pandemic. The Municipality engaged with industry role-players and entered into strategic partnerships.

Cllr Dan Nhlapo said good progress was made on challenges. A 20 megavolt ampere (MVA) increase was initiated, and an investment made in overhead lines to give the Mbalenhle community access to electricity, which was its main challenge. Following discussions with Eskom, the Municipality held meetings which set targets, such as constructing roads when overhead lines are built, and bringing in transformers. When the Municipality completes this, Eskom must move goal posts. Overhead lines to the value of R25 million were constructed. A permanent structure will be put up in an estimated time of six months. This is an area of concern, as no action was taken to date. There was engagement with the District to roll out the best practice model to do re-fencing, and ensure revenue is generated to service Eskom from the same revenue enhancement. There should be metering for every household and every unit which goes to metering should be specific so no one can complain of overcharging. This programme will conclude at the end of March 2021. If service providers are appointed, there will not be challenges relating to rotational load shedding in some towns.

Mr Ceza raised a point of order saying it was a Portfolio Committee meeting, and no one was wearing the regalia of the organisation it supported. Cllr Nhlapo should remove his jacket. Cllr Nhlapo should reply in detail, and stop giving generic responses.

The Chairperson agreed with Mr Ceza.

Cllr Nhlapo apologised to Members for his attire. He said incidences occurred with cables lying around, and electricity boxes opened due to community behaviour. Community members cut the locks on electricity boxes to create illegal connections, which exposes people to safety hazards. A young boy was electrocuted because he came into contact with a wire. There is political will to assist communities with service delivery issues.

Executive Mayor Zuma said there are two reasons for people receiving R18 000 bills. This was during the period when the billing system changed, in 2017. The system showed numbers were abnormal, which resulted in a termination. This matter was corrected with the appointment of a new service provider. There are no billing challenges currently. The Municipality is working on cutting costs by almost a million or more for meter readings per month. This should demonstrate the political will of Council. Contractors who did meter readings already received notices for contract termination. Unless bullying is reported, the matter cannot be resolved. If there are threats towards community members, law enforcement must play a role and community members must report this to the South African Police Services (SAPS). He was not aware of any threats made.

On incomplete projects one needs concrete evidence, and the Municipality is not aware of this. Investigations were done on the Municipality, and a detailed Report formulated. The individuals implicated in the Section 106 Report were charged, and disciplinary procedures followed. These individuals cannot simply be dismissed. A review was instituted against the Section 106 Report by some of the implicated companies. This matter is pending a court outcome.

The Chairperson asked Members for follow-up questions.

Mr Ceza asked about supply chain management in the Municipality.

Executive Mayor Zuma said impact involves a Section 79 Committee. The Finance Department was summoned on numerous occasions to appear before the Impact Committee. Some issues relate to supply chain activities. These issues must appear in the AG report.

Ms Mkhaliphi said the Committee appreciated the Municipality intervening in the electrocution of the child. She referred to a woman who was also injured by electricity, asked for a Report on how many people are affected by open electricity boxes; and asked what the Mayor was going to do to remedy the situation.

Despite the Municipality owing Eskom, it cannot have open electricity boxes which endanger people’s lives.

Executive Mayor Zuma said interventions were made on a daily basis, but the volume of exposed electrical equipment is reported daily. There are serious issues of cable theft, electricity theft, and the theft of metal materials which causes challenges. The Municipality’s electrical team is attending to these challenges. It is important to note the Municipality is faced with financial constraints and debt, it cannot respond with service delivery as it would like to. The Municipality’s budget is mainly depleted by bulk services and salaries which must be paid. This limits its maintenance budget. He said he was not aware of the old lady who was injured.

Ms Spies said she did not ask about consultants. She asked why a new financial system was used as a disclaimer for poor performance. A number of Section 79 Committees were established for oversight over Section 80 Committees. She asked if these Committees met, are functional, and if it has an impact.

Executive Mayor Zuma said Section 79 Committees convened and are doing oversight. Committees are engaged in interventions for challenges faced by the Municipality. The issues addressed by these Committees include the Financial Recovery Committee and the Budget Steering Committee, amongst others.

Mr Mpumza asked if the Municipality has an asset register which can be reviewed and updated.

Executive Mayor Zuma said the Municipality does not, and this was raised in the AG’s reports. This matter was addressed and the Municipality is in the process of finding a credible company to assist with compliance.

Mr Hadebe asked about consultants and the disclaimer of 2017 and 2018. He asked if the Municipality did not receive training on the use of the new system; and why it resorted to external service providers, but the Municipality’s audit remained outstanding, which means it did not get value for its money. He asked how much it cost to acquire the services of external service providers. The pictures shown to the Committee are very disturbing. He wanted to know what the turnaround time is to fix faulty electricity lines, and deal with the issues highlighted by Ms Mkhaliphi, where fatality is a huge risk. There cannot be a situation where people are suffering because of exposure to such danger due to the negligence of the Municipality. He asked what the duration for the Municipality’s turnaround strategy is, and when it will yield the anticipated results.

Executive Mayor Zuma said training is provided. Five companies were listed on the National Treasury system, which the Municipality had to consider to make appointments. The systems were Treasury approved. When the Municipality appointed one of the contractors, it was confronted with circumstances out of the Municipality’s control, relating to a financial system malfunction. The service provider was given time to correct the situation, but failed to do so. Council then took a decision to appoint another service provider to correct this. There is internal capacity to operate the system, but the system was faulty. The turnaround strategy involves the introduction of Section 139 (5) of the Municipal Finance Management Act (MFMA). Committees were set up to intervene on issues, and cost containment initiatives were established. The Municipality is involved in a cash flow management process. This means a Cash Flow Management Committee needs to deal with issues of prioritisation, for the Committee to be able to issue orders, prioritise who it pays, and when payments are made. There is no specific timeline for the turnaround strategy. The Municipality is working on changing the morale of communities towards paying its bills, by improvement in service delivery.

The Chairperson said she would reserve her questions for the evening session. The pictures came from community members who were victims of faulty electricity connections and transformers. She asked how many similar cases occurred but were unreported. She asked for a record of accidents which occurred in the Municipality since 2016, which is similar to the pictures the Committee saw. 

The meeting was adjourned until 19:00.