It’s amazing how fast time flies by and you don’t even realize it. It has been 23 months since Mr Theo van Vuuren was appointed as administrator of the struggling Emalahleni Local Municipality.
Just one month short of two years, he will bid the municipality goodbye.
Formally the intervention period will come to a close on March 31 and the Provincial Government will further guide the way forward and support the municipality after the intervention period.
In April 2013 the municipality was dysfunctional and service delivery nearly came to a near standstill. All main services fell apart, whilst the municipality was characterised by labour unrest and its financial position reached critical proportions with an inability to pay creditors.
One of the first things Van Vuuren did was to adopt a strategy, or as he is so often quoted his short-, medium – and long term plan.
This included stabilising the municipal delivery capacity, executing municipal functions in a way which will build sustainability and building on the long term a strong enabling environment.
Based on progress made with the intervention strategy the intervention was extended from its original six months four times.
According to Van Vuuren, the municipality is functioning again and a more constructive relationship between management and staff has been restored, with the local labour forum operational.
Of course his Facebook page has opened up a communication channel between the municipality and residents.
This proved to be a success story that deserves a huge round of applause. Residents however hope that the Facebook page will continue after Van Vuuren is gone.
“I believe that the municipality should retain the communication platforms established during the intervention period. The management style of a new accounting officer may however be very different from mine. However at this point in time I am engaged in discussions on the future management of especially the Facebook page.”
As service delivery challenges are overwhelming, a crisis management strategy was employed to create efficiency and effectiveness in respect of attending to delivery problems. The biggest issues in this respect was the uncoordinated and wasteful manner in which service delivery happened, the lack of equipment, abdication of management and disorganised staffing arrangements. Through attending to the vehicle plant, mobilising sufficient vehicles, reviewing the shift system and instilling a management culture, this situation has improved significantly.
A five pronged service delivery programme was also introduced to address the most burning issues in the community, ranging from cleaning the environment to restoring law and order. Positive community involvement in these programmes has been experienced and large parts of the municipality are starting to show the results of this approach. The addressing of the underlying causes to the situation is proving more difficult and despite limited funding but specifically a strong management leadership and council support, this process has gained momentum.
In respect of financial stability, the municipality has launched a process of revenue enhancement and cleaning up its creditors and debtor’s books. Progress has been positive, although the process to instil a culture of payment and to re-establish the data base is slow. One of the biggest challenges is the need to verify and install meters to all users.
At present the municipality is operating on a negative cash flow of R14-million, although improving.
The cleaning up of the creditors also has made progress. In April the identified creditors were R389-million, including Eskom.
Van Vuuren said, “During the stabilisation process a further R114-million of previously undisclosed creditors were identified. In addition contingent liabilities of R336-million were also discovered. Furthermore, it was discovered that Municipal Infrastructure Grant (MIG) and loan funds were used to pay for operational expenditure, amongst others Eskom. Partial corrections were made in 2012/13 to pay MIG projects but this resulted in the Eskom debt for May and June not fully paid, resulting in an increase of a R100-million in Eskom debt by end of June 2013. During 2013/14 an amount of R70-million of MIG funding previously used for operational expenditure was corrected and the outstanding creditors were reduced with R247-million and at year end, June 2014, total long term creditors (including Eskom and contingent liabilities) were reduced to R580 million.”
One of the biggest headaches is the R550 million owed to Eskom.
A letter of demand on arrears accumulated since October 2014 was received by the municipality on March 6.
“To meet the requirements the revenue enhancement process, focusing on outstanding business and government debt, was accelerated and the municipality aims to cover most if not all of this arrears during March. This however remains a critical outstanding issue requiring Provincial intervention,” Van Vuuren said.
The debtors situation December 31 was R1.4-billion. This increase was as a result of non-payment plus penalties and additional charges (three years) been levied on customers. A serious problem in reducing debtors due to continuous high levels of illegal usage and connections has been experienced. To make matters worse more than R400-million of accounts were irregularly closed during previous financial years. The initial attempts by external service providers to recover debt did head little results and since January 2014 the municipality embarked on its own debt collection, especially through its Operation Luma.
The strengthening of the revenue stream was a key priority during the intervention period. The first phases of this strategy focused on the installation of water and electricity meters and more than 20 000 water meters have been installed. However, the incomplete customer base, poor data quality, culture of non-compliance and insufficient champions to drive these processes only achieved a limited level of success in the first 16 months.
Since January a revised action plan to address outstanding debt, focusing on outstanding debt from businesses was introduced. As a result the payment rate went up from a first six month average to 91% during February and indications are that this approach will make inroads on the outstanding debt with a target to reduce it to 50% by the end of the financial year.
A change in the internal processes and issues such as record keeping has been slow and this contributed largely to the Disclaimer Audit finding received again for the third consecutive year. However, progress towards audit outcomes remained limited throughout the intervention. Even with an intensive approach poor record keeping, supply chain systems and managerial non-committal led to the third successive Disclaimer outcome. Decisive action was taken to address staff failures in the above and in total 40 staff members were disciplined.
A revised and improved audit remedial process was launched since January and internally a dedicated managerial responsibility overseeing a technical audit steering committee is in place. Positive is that the Audit Committee is in place and is playing a much stronger oversight role than before.
The basis has been laid for rapid formalisation of the informal areas. With assistance of the Province additional resources are being channelled to provide bulk services to new areas and to develop new stands at mass. The biggest challenged experienced was the limited funding available to purchase and develop land.
The Department of Human Settlements has accelerated its support and more than 500 Reconstruction and Development Programme (RDP) houses were built during the last six months and access arranged to potentially 8 000 new stands which will address the bulk of the western areas settlement needs.
Progress has been made to improve the road conditions despite the setbacks experienced due to the heavy and prolonged rains. Gains made earlier in the period have been lost in this respect. Encouraging is that community based programmes have gained momentum to clean and repair areas and that internal capacity, supported by the Expanded Public Works Programme (EPWP) is now deployed on issues such as road and storm water repairs on a daily basis.
Improvement of waste removal and cleaning up of illegal dumping areas have been positive and with assistance from private sector large scale clean-up programmes have been launched in areas such as Phola, Rietspruit, Ackerville and KwaGuqa.
The aged and insufficient infrastructure base remains the biggest challenge to the municipality. It must be recognised that the current gearing capacity of the municipality to obtain capital funding is still limited and the municipality will remain totally dependent on grant transfers to address the vast backlogs in infrastructure development.
“The municipality succeeded to proactively register projects for the new financial year and we can expect to see a fast track roll out in this respect over the next year. MIG expenditure during 2013/14 reached 100% and for 2014/15 it is ahead of schedule. In addition R82-million allocated to the municipality by the provincial government for infrastructure development have been committed and will be fully spent by the end of the financial year. This expenditure together with Rand Water is addressing the main issues of purification capacity and distribution of water and the distribution, treatment of waste water. To fully bring water, sanitation and electrical infrastructure up to date will cost more than R4-billion,” said Van Vuuren.
“We succeeded to stabilise the municipality and to create a platform from where it should rapidly move to a point of full functionality. The future direction and carry through on programmes launched will be in the hands of the municipal political and administrative executives. I sincerely believe that with the necessary commitment they will be successful,” Van Vuuren concluded.
