Municipality to borrow more than R50 million to fund various projects

The Merafong City Local Municipality has decided to borrow R51 300 000 to fund various projects.

During the special council meeting of 30 April, the council decided to take out a 10-year loan from Nedbank, one of the four service providers who tendered for the loan. At Nedbank’s stipulated interest rate of 9,94%, the municipality will have to pay back a total of R81 593 564.40 within the stipulated period.

According to the municipality, the extra money is needed for projects approved in the Capital Budget for the 2014/15 financial year. This is for the construction of new roads in Wedela (R3 million), Kokosi (R5 million) and in Khutsong (R15 million), and two bulk electrical infrastructure projects. The Fochville bulk substation is worth R7,9 million and an upgrade of Fochville’s main substation will cost R15 million.

The municipality says the two road projects in Kokosi and Khutsong are already under construction but need additional funding because internal revenue does not cover the total cost. The Wedela roads project has not begun, although long overdue, because of a lack of funding. Council also heard that the two Fochville bulk substation projects will upgrade the electrical capacity to provide for the current and future development. The Fochville bulk substation work will be implemented by Eskom, but the municipality has to pay its contribution.

The Fochville main substation upgrade is in the planning phase in the current financial year and implementation is to start in the next financial year to support the new Kokosi housing development, which has already been approved by the Department of Human Settlement. The official opposition in Merafong, the DA, through Mr Blackie Zwart, tried in vain to make its voice heard against the taking of the loan.

“This long-term loan increases the Council’s long term loan liability to R92 million, the repayments of which the Council can hardly afford. The Development Bank of South Africa has already warned council that its financial situation does not qualify it for another loan of this amount. While it declined the loan, it did offer to assist the council to improve its financial situation.

This offer seems to have fallen on deaf ears as the Council had not responded to this help,” Zwart complained.