Chairperson, good morning to the leadership of the NCOP, my colleagues and those who are listening at home. We present to you the Lesawell petition which we received on 30 October, and which was referred to the committee by the Chairperson of NCOP for consideration and report.
The petitioner, Mr Michael Landsman, had filed a petition in his capacity as director of Lesawell, a local NGO, on behalf of the residents of Winburg and Makeleketla township of the Free State against the Masilonyana Local Municipality.
The petitioner seeks the intervention of the committee for the following: the evaluation of jobs for the entire municipality especially managerial positions and the mayorship; dams to be cleaned out and adequately maintained; the landfill site to operate without illegal dumping; pre- paid electricity meters to be installed to enable the community to buy pre-paid electricity directly from Eskom; the provision, in terms of administration, of the minutes of all meetings with the municipal manager to the petitioner;
the sport ground to be fixed and maintained; the road infrastructure to be maintained; the town hall to be fenced off; the initiation of forensic audits on all grants received by the municipality from 2014 until 2019; and the initiation of a forensic audit into insurance claims made by the municipality.
The committee held two meetings - one on
23 September 2020 and another on 30 September 2020. The committee made the following observations and key findings in relation to the various submissions made on the subject matter of the petition.
The petition indicates that, since 2016 the municipality had not submitted its annual financial statements to the Auditor-General of SA. As a result of its poor financial management, the municipality was placed under administration by the provincial government in 2018.
The committee noted that the requested financial recovery plan of the municipality, the close-out report, the preliminary forensic report and a number of court cases
about wrongful payments of monies meant for Eskom had still to be finalised.
The municipality had appealed before the Standing Committee on Public Accounts on 17 September 2019, where most of these were discussed. There were still capacity challenges in the municipality. It noted that, although it had not submitted its annual financial statements yet, it received its local government equitable share.
The SA Local Government Association, Salga, with the Department of Co- operative Governance and Traditional Affairs, and executive committee had set up a committee 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, in turn, impeded the ability of the municipality to deliver on its mandate. Salga together with the Department of Co-operative Governance and Traditional Affairs, was assisting the municipality as it was not fully compliant with the Spatial Planning and Land Management Act.
The SA Local Government Association had done capacity building training on the Municipal Accounts Committee and was helping the municipality to fulfil the section 57 appointments to vacant leadership positions and to strengthen oversight.
The SA Local Government Association submitted that the municipality is currently categorised by National Treasury as experiencing technical insolvency. This means that ratios of liabilities are higher when compared to current assets and it owes Eskom an amount of more than R80 million by the end of June 2020. It further owed a number of creditors including the SA Revenue Service, Sars, the Auditor-General of SA, etc.
The committee noted that collection levels are too low, and that the valuation roll is missing key customers.
The committee also noted that Eskom was not honouring the 1994 agreements which states that, where Eskom supplies electricity in the municipal space, it had to pay servitude fees and royalties to the municipally.
The committee made the following recommendations: The Masolonyane local municipality to furnish the close-out report indicating they are no longer under section 139.
In noting the dire financial administration constraint experienced by the Masolonyane local municipality requested the following: The Masolonyane municipality to provide the House with a forensic preliminary report relating to the financial status of the municipality; the Masolonyana municipality to provide the House with a detailed financial recovery plan and to provide the House with a detailed plan on filling strategic positions that would enable effective management and increase the oversight role; and the Masolonyana municipality to provide the House with an update on the engagement with Eskom with a view to settling the debt owed to Eskom.
Lastly, the committee referred the matters in the petition to the Select Committee on Public Accounts for further investigation into its financial position. I submit the report.
Question put: That the Report be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu- Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report accordingly adopted in accordance with section 65 of the Constitution.