It is no secret that the Tshwane Metro is facing significant financial challenges, but Mayor Cilliers Brink hopes that the new budget, in which expenses have been significantly reduced, will stabilize operations in the city.
“This will be of critical importance if we want to achieve any significant financial sustainability for the future,” Brink said during a media conference on the metro’s finances on Tuesday.
According to Brink, one of the major expenses is outstanding VAT payments that the metro owes to the South African Revenue Service (SARS) in connection with the controversial power meter contact that the ANC council entered into with PEU/TUMS in 2013 for the provision and management of smart meters.
“It was a contract that was illegal from the beginning and was forced by the council under the previous ANC administration.”
The contract was later declared unconstitutional and set aside.
“It was not until June 2021, when SARS issued a claim for an amount of R2.9 billion for an unpaid VAT liability, together with penalties and interest worth R1.8 billion, that the full implications of this unlawful contract and mismanagement became apparent. SARS effectively hit the city with a R4.7 billion liability. This was never formally disclosed to the political leadership at the time. Instead, the then CFO negotiated a payment plan with SARS.”
Currently, the metro pays R91 million per month and according to Brink, approximately R2.2 billion has already been paid to SARS.
“What we have unearthed is serious financial misconduct and misrepresentation. We will subject this entire process to a comprehensive forensic investigation. Total mismanagement of this liability blew a hole of R2.9 billion in the fiscus and a further potential R1.7 billion in fines and interest. Once we have completed this investigation, we will use it as the basis to approach SARS to try to reduce the fines.”
Eskom and Rand Water
“We do not deny our difficult financial situation, nor do we deny that we have an obligation to pay Eskom and other creditors such as Rand Water.”
The Tshwane metro owes Eskom more than R1.6 billion.
“We continuously provide payment plans to Eskom, which we do our best to adhere to. However, we are facing significant revenue pressures in the city. The same applies to Rand Water. We are constantly in discussion with the entity to ensure that we service our current account.”
Brink emphasized that the water shortage experienced in the city has nothing to do with any credit control or restrictions by Rand Water. “It is purely related to infrastructure challenges on the water supply side.”
The Tshwane metro is serious about reducing its dependence on Eskom, which is why the city will have published requests for proposals on the procurement of alternative energy before the end of September, said Brink.
Great focus on collection
“Our financial recovery simply won’t happen without improving our revenue. We have decided to launch an aggressive collection campaign to stop falling revenues.”
According to Brink, the target is to ensure that 1,000 defaulters are disconnected weekly. According to Brink, the focus is on those who owe R50 000 or more. From 12 to 30 June, more than 3,000 defaulters have already been disconnected.
“There is still a mountain ahead of us as we seek to stabilize the city’s finances, but I have made it my priority to ensure that we keep the public informed of what we are facing and what we are doing to taking the city forward.”