Nxesi: Govt wasting millions on vacant properties | Fin24
 
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Nxesi: Govt wasting millions on vacant properties

Jul 16 2014 19:05

Cape Town - Millions of rand in taxpayers' money has been paid for government leases with the private sector for unoccupied properties, Public Works Minister Thulas Nxesi announced on Wednesday.

Introducing debate on his department's budget vote, Nxesi said the audit, conducted in collaboration with National Treasury, included a review of 2162 property leases.

"The DPW [Department of Public Works] has been paying rental to the tune of R5m per month for 108 properties that were vacant or unoccupied," Nxesi said.

"The DPW leased accommodation for government-user departments, but 12 properties were occupied by non-government tenants, at a cost of R1m per month."

The department identified almost 600 cases where lease agreements could not be found, resulting in irregular expenditure.

"The size of the actual accommodation of certain leased accommodation occupied by user departments differed from the occupancy as agreed in the lease agreement and paid for by the DPW," Nxesi said.

"The escalation rates of certain leased accommodation differed to the market escalation rates."

This resulted in the department receiving adverse audit findings eight years in a row.

Nxesi gave MPs a progress update on the department's turnaround plan.

"The department has overhauled SCM [Supply Chain Management] processes in the leasing environment and negotiated, with National Treasury, a special dispensation to fast track the re-signing of expired leases," Nxesi said.

"We were able to re-negotiate leases downward in 50% of cases."

Further savings would be made as the majority of property firms government did business with had agreed to a 5.5% ceiling on annual lease increases.

thulas nxesi  |  property  |  public works  |  economy
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