The municipality is, however, still being crippled by massive debt, a shortfall in its road maintenance budget and more than a billion in unpaid government bills. During a sitting of the National Council of Provinces’ Select Committee for Economic Development, Trade and Industry, the acting Municipal Manager, Sello More, said the municipality’s financial health is fragile. OFM News’ Cathy Dlodlo reports that the city is owed more than R7,2 billion in outstanding service delivery debt.

Included in the outstanding debt, is the debt of the Free State Government Departments that amounts to nearly R2 billion. Businesses owe the metro R1.2 billion and the rest is owed by households across the metro. Meanwhile, the municipality has been rocked by service delivery protests and a reduction in the flow of bulk water supply due to its debt to Bloem Water. More said the city requires about R731 million to do regular maintenance on gravel and tarred roads, but for the current financial year, a mere R20 million was available.

Adding to the municipality’s woes are an ailing economy, load-shedding, credit-rating downgrades and low consumer and business confidence, said More. He said after a year under administration, the city is still not in a position to borrow Capital Expenditure funding. Committee members expressed concern about the municipality’s debt to Bloem Water and Eskom.

The metro’s debt service payments to the Development Bank of South Africa and Standard Bank loans, amount to R51,1 million and further adds to its financial troubles. The committee said the findings in the Auditor-General’s Report – which includes unauthorised expenditure of R1.3 billion, the non-adherence to tender procedures, and water losses worth R187 million – are worrisome and that it looks like the metro’s financial situation is going deteriorating instead of improving despite the provincial government’s intervention.

OFM News