Mpumalanga’s once-thriving town is swimming in debt as well as indebtedness, which it blames on maladministration and collusion
The ailing eMalahleni Local Municipality in Mpumalanga faces the prospect of another round of devasting electricity cuts in April, following the interruptions it suffered last month to its power supply.
This comes after the provincial government this week blocked a R250 million land sale aimed at securing funding for the municipality to pay the more than R1 billion debt it owes Eskom.
eMalahleni Mayor Lindiwe Ntshalintshali said the municipality, which includes Witbank, was supposed to pay Eskom R277 million before the end of March, and the balance of the debt before the end of the year.
However, Mpumalanga Premier David Mabuza met with the mayors of the municipalities owing Eskom this week and, despite the municipal council having pledged its approval of the sale of the land – amid protests from the DA and the Economic Freedom Fighters – the deal was canned, making way for more power cuts for the town that used to contribute almost 42% of the province’s GDP.
According to Zibonele Mncwango, spokesperson for Mabuza, the premier and Ntshalintshali agreed to halt their plan to redirect R65 million in social grants meant for the poor, as well as the R250 million from the land deal.
“The premier was not happy [to redirect [these funds], so they are no longer part of the plan,” Mncwango said.
He declined to say how eMalahleni municipality would pay its Eskom debt, but said details would be available at a later date.
Amos Monareng, president of the eMalahleni Chamber of Business and Industry, said the town’s economy took a huge knock the last time Eskom imposed power outages for two weeks in February, and warned that another series of cuts would paralyse businesses.
The chamber has 80 business members.
eMalahleni is already reeling from the February 2016 closure of Evraz Highveld Steel and Vanadium, which resulted in thousands of jobs being lost.
This added to eMalahleni’s high unemployment rate. A Stats SA survey, conducted in 2011, put the jobless figure at 27.3% out of a population count of 395 466.
Eskom spokesperson Khulu Phasiwe said eMalahleni municipality had reached a payment arrangement with the power utility.
A down-payment had been made and unless the municipality defaulted, he said, the electricity supply would not be cut.
As a result of the power supply problems in eMalahleni, more than 6 000 community members, including businesses, are set to approach the High Court for permission to take over the municipality’s revenue account and settle the council’s most pressing debt.
The group, which calls itself eMalahleni Residents Against eMalahleni Municipality, established a presence on Facebook four weeks ago.
Earlier this month, it organised a community meeting at a local stadium, but officials stopped the gathering, saying correct procedures in booking the venue were not followed.
A spokesperson for Eskom said the group had approached the power utility for a meeting, but it had not taken place.
“Eskom’s supply licence, as granted by the National Electricity Regulator of SA, precludes it from supplying customers and supplying to areas for which a local municipality is licensed to supply,” said the spokesperson.
The group was established by Boitumelo Madiba, a local resident. He told City Press that the town’s deteriorating state was unbearable.
The troubled municipality, which has had three mayors in the past four years, is being run by Theo van Vuuren, who was formerly its administrator.
It has an annual budget of more than R2 billion and is allegedly owed R2.5 billion.
Ntshalintshali told City Press that the 6 000-strong group of activists had neglected to formally approach her office or even attend community meetings.
“Most of the people there have never been to our meetings. They must come,” she said.
Madiba fingered Van Vuuren, the municipal manager, as being the main problem, as he was initially brought in as the administrator when the municipality was placed under Section 139 administration.
Mabuza responded by saying that anyone with evidence of wrongdoing should approach the police.
Naritha Naidu, the DA’s caucus leader in Emalahleni, laid a charge of corruption last year against Van Vuuren, alleging financial misconduct on his part.
The municipality’s Eskom debt amounts to R454 million, but when interest and penalties are added, the figure totals R1 billion.
Ntshalintshali said the municipality had raised a number of issues with the power utility, including the payment terms and the amount of interest.
She said the Eskom debt had totalled about R100 million in 2013, when the municipality was placed under administration.
“That is where the problem started. He [the administrator] could not prioritise the Eskom account. He would pay service providers, pay other people and maybe a little bit to Eskom,” she said.
Compounding the municipality’s mounting problems is its state department debts, which total almost R1 billion.
“I have switched off [power supply to] the court; to the departments of humans settlements, land affairs, agriculture and health; and to schools and clinics. I have just threatened the hospital,” said Ntshalintshali, adding that the departments had so far paid less than R6 million in rates, taxes and electricity to the municipality.
Overall, the municipality is owed R2.5 billion and Ntshalintshali admitted the municipality itself had also played a part in the mess by failing to collect the funds. This had resulted in a number of businesses refusing to pay disputed bills, citing discrepancies.
She also admitted that corrupt officials had played a huge part. Some were suspected of colluding with property developers to omit new residential developments from the billing system. A number of municipal officials were recently arrested.
Ntshalintshali added that the land that had been put up for sale for R250 million had been zoned for a hotel development and was to be sold to the highest bidder.
The intention, she explained, was that once the deal was signed, the money would go straight to Eskom instead of municipal coffers.
She added that the land had been valued at R180 million in 2013. A recent valuation confirmed the same figure, indicating the possibility that collusion had occurred in undervaluing the land.
Municipality spokesperson Kingdom Mabuza said the identity of the potential buyer could not be revealed but would have been mentioned had the councillors requested so in the council meeting.
City Press has established that the potential buyer is a local consulting company with no track record and a sole director. It was registered just over a month before the municipality approved the sale.