Mashishing Civic Association calls for probe into municipal spending

One of the projects that will forever haunt the Thaba Chweu Local Municipality’s (TCLM) citizens is the Duma Substation. It was constructed for R450 million, while Eskom would have constructed it for R70 million. Several concerns were previously raised by various people and organisations about the cost of this 40MVA station project, which seems to benefit TCLM but creates a problem for its administration, looking at the financial status of the municipality. Many parts of Mashishing residential areas are experiencing power supply disturbances every day, yet 40MVA additional power stations are constructed. Who is fooling who here? Even when such noise was raised about the Duma Substation’s cost, the political and administrative leadership of the municipality chose to ignore this noise, because to them it was about the personal benefits to their own pockets this project came with. Section 75 of the Municipal Finance Management Act (MFMA) requires accounting officers to place some documents on the website of the municipality. However, the Mashishing Civic Coalition can confirm there is no single document relating to the Duma Substation on the municipal website. The project was seen as a public-private partnership (PPP) project, yet there is no PPP agreement. Section 120 of the MFMA clearly states what must be done and complied with before a municipality can enter into a PPP agreement. The Act indicates that a municipality may enter into a PPP agreement, but only if the municipality can demonstrate that the agreement will: a) Provide value for money to the municipality; b) Be affordable for the municipality; and c) Transfer appropriate technical, operational and financial risk to the private party. The Act also stated a PPP agreement must comply with any prescribed regulatory framework for public-private partnerships. The is aware that the project implemented by the Companies and Intellectual Property Commission was never registered with the National Treasury for compliance with all treasury regulations for PPP. We are also aware that no proper feasibility study was conducted to determine affordability by the municipality on the project and benefits to the municipality from the project. Hence the continuous struggles of the municipality to repay the money spent on the project by the Chinese company called CSSEC. When the former municipal manager, TMP Kgoale, joined the municipality in 2017, the first task he did was to assess the benefits of all municipal contracts. Duma Substation was one of the contracts that he advised the council to review, as it had many flaws which bound the municipality and were going to haunt the cash-strapped municipality for a very long time. The council took his advice and resolved to appoint a company to review the contract, however, such a process was disturbed when the municipal manager was suspended and eventually dismissed by TCLM.

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The Mashishing Civic Coalition is aware that part of the underlying reasons for his dismissal was “touching the Duma Substation contract”. After the appointment of the new municipal manager, Sphiwe Matsi, she was tasked by council to oversee the implementation of the review of the Duma Substation contract by appointing a legal firm, Phungo Inc, in 2018. R2 million was spent for this review process but to date, there has been no report submitted to the municipality regarding the review. Such reckless payment by the municipality results to the amount being seen by Mashishing Civic Coalition as irregular, fruitless and wasteful expenditure. We are therefore calling for an investigation into the conduct of the municipal manager and the chief financial officer of TCLM to account for the amount the municipality had spent without any delivery of the expected services.

TCLM: Provincial government requested to intervene

The Mashishing Civic Coalition will be engaging with the office of the auditor-general, special investigation unit, Hawks, National Treasury, the Department of Cooperative Governance and Traditional Affairs and the Presidency to conduct an investigation. We are calling for TCLM to hold the municipal manager and the chief financial officer accountable for their failure to submit a progress report on the review of the Duma Substation. Failure to do so will be left with no choice but to legally challenge the council to recover the money lost through this review process that has never yielded any results for the municipality. • TCLM had not responded to the allegations at the time of going to press.