TCM turn around strategy

LYDENBURG – Thaba Chweu Local Municipality (TCLM) recently provided Steelburger/Lydenburg News with its turnaround strategy.

The Mpumalanga Department of Cooperative and Governance and Traditional Affairs (Cogta) conducted an assessment on the finances of TCLM in terms of Section 131 (2) (a) of the Municipal Finance Management Act, No 56 of 2003 (MFMA). The results of the assessment identified significant financial problems within the municipality.

The MEC of Cogta and the MEC for finance consulted the mayor of TCLM, Mr Michael Ncongwane, in terms of Section 136 of MFMA. Following that process the respective MEC’s resolved to provide support to the municipality in terms of Section 105 of Municipal Systems Act. The intervention resulted in the appointment of an acting municipal manager, Mr Godfrey Nkosi, supported by a team from Ehlanzeni District Municipality, Cogta and provincial treasury.

The support in the municipality was announced by the MECs to be for an initial period of three months from October 1, 2013.

According to the report, the intervention team adopted the following approach to reach financial sustainability within the municipality: It would identify the key strategic focus areas that would be separately addressed from the detailed turnaround strategy to achieve quick wins, address all people issues to indicate the importance of leadership in an institution, and identify all reporting channels internally (for example, portfolio committees, management committees etc). It would also assess capacity of the municipality to deliver on its mandate (organisational structure), address financial viability issues (budget, cash flow) to address the deficit and urgent areas of service delivery (technical, social and community services) and consolidate a comprehensive financial recovery plan based on the results above.

The plan would also aim at identifying the officials who would implement the turnaround strategy in all departments were positions were vacant, identify officials who would act in those positions until the positions were filled, and report the impact of the intervention to the MECs of Cogta and finance.

The strategy would include looking at various service focus areas like fleet management, electricity accounts, electricity distribution and water-related issues.

The report states there is a lack of municipal fleet resulting to the hire of fleet from the service providers. 13 bakkies are currently being hired. “Required intervention will assist TCLM to participate on Mpumalanga Provincial Government’s RT contract in order for the municipality to procure fleet which will assist in reducing the cost of hiring vehicles which amounts to R22 000 per vehicle per month. A review of the fleet management rental contract will be conducted as it is an unauthorised expenditure to the municipality.”

The aim will be to replace the hired fleet with that of their own. With regard to resources the plan states, “We currently do not have resources but we believe that the R220 000 paid per month to the service providers could be redirected into procurement of our own fleet.”

Regarding the electricity accounts and issues it states, “Some properties do not have electricity meters and buildings are constructed without electricity being billed. Data cleansing and installation of electricity meters should be conducted. The task team will follow up on the data cleansing report.”

Relating to water problems in and around town, the plan is said to address properties that do not have water meters and buildings which are constructed without water being billed. “Installation of bulk water meters should be done to enable the determination of distribution losses.”

The plan will also aim at combating distribution losses. “44% of distribution losses of electricity contribute to the increasing Eskom debts.”

The said strategy will include an electricity distribution audit and household meter audits.

Another worrisome factor that will be addressed is that of the existing electrical infrastructure.

“The electricity network is in a state of disrepair with high deferred maintenance. An upgrade of the existing infrastructure should be done in order to meet future demands.”

Bridged electricity meters were also addressed. According to the report there are currently some 109 bridged electricity meters due to the shortage of meters. “Meters should be sourced and electricians should install standard estimates for all faulty meters.”

The Rooidraai issue is also raised in the report. “Lydenburg substation is overloaded. This overloading results in power failures. The proposed plan is to commission Rooidraai substation to de-load the existing Lydenburg substation and development of a payment plan for the outstanding amount of the service provider.”

According to the report the administration team has compiled a workable turnaround strategy that, if adequately implemented and monitored, will enable the municipality to recover from its distressed financial position to resume effective service delivery that was in place before the distressed financial position emerged.

“To ensure success of the turnaround strategy support of the following cannot be over emphasised; general staff of TCLM particularly junior officials, councillors support in council chamber and within the communities they serve, as well as associations or business organisations within the Municipality, Cogta and provincial treasury’s resources where the municipality cannot afford to internally appoint the resources required. The effective working relationship between the mayor and municipal manager is essential to ensure stability at top management and in communities of all wards around TCLM.”