KDM continues to underspend on budget

Underspending on critical infrastructure caused opposition parties to lambaste the state of KwaDukuza municipality’s financial operations at last Thursday’s special council meeting.

During the debate on the first quarter operational and capital budget assessment for the period July to September, the municipality came under heavy criticism for failing to spend grants exclusively apportioned by National Treasury for specific projects.

The report looks at how much departments have spent, compared with the planned spend.

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The municipality put forward an application to roll-over R6.6 million of unspent national and provincial grant allocations while national treasury sent instructions for the electrical department to hand back almost R1 million for changing their project scope without prior approval from the Department of Energy.

Both the electrical and civil engineering units have come under fire for spending a mere 6.6 percent of their annual budget to date, a shortfall of just over R50 million.

In previous years KwaDukuza municipality was one of three municipalities in KwaZulu-Natal that were liable for R1 billion (41 percent) of the total irregular expenditure incurred in the 2016-2017 financial year.

Last year, the municipality had to give back R15 million of grant funding to National Treasury.

The money was meant to be spent on electricity infrastructure upgrades.

The municipality’s first quarter budgeted operating expenditure for the 2019/20 financial year was R459 million. The actual expenditure as at September 30 was R347,685 million – a negative variance of approximately R111 million in expenditure.

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Put plainly, budget variances are any difference between an actual amount and a planned or budgeted amount.

This means funds allocated for infrastructure and other projects that are not spent, cause a ripple effect of maintenance-related problems.

Most councillors slammed the underspending and called on political intervention. Inkatha Freedom Party PR councillor Moosa Motala expressed grave concern and said underspending on projects was a trend that showed poor service delivery. Moosa called on the municipal manager to crack the whip on the unit heads that were not performing and were failing to deliver on their budgeted targets.

Democratic Alliance caucus leader Madhun Sing said his party had red flagged KDM on its first quarter assessment and performance.

“Under-collection of electricity by R58 million in three months is worrying,” said Sing who attributed the high rates of unemployment, cost of living and the slow economic growth as contributing factors to non-payment of essential services.

“Capital expenditure is also unacceptably low and this had been the trend for many years which results in service delivery being short-changed,” said Sing.

Sing warned council that more people would be looking to make arrangements rather than settling their account thus reducing the monthly cash flow of council.

The DA said the potential for more revenue was on the collection of fines and proposed a restructuring of the department with an emphasis on enforcement and collection.

ALSO READ: Irregular spending under fire at KwaDukuza municipality

In the first quarter only R3.8 million was realised out of R10 million – a shortfall of R6.2 million.

“Spending patterns have to be monitored closely. The new cost containment policy adopted by council must be adhered to at all times,” Sing said.

The DA appealed to the municipal manager and other executive directors to provide strategic leadership to the electricity unit pointing out that the department was collapsing.

Acting mayor Dolly Govender warned the various departments to plan accordingly and spend their budgets before the end of the financial year. Govender said she had seen red flags around the spending of some departments and appealed to them to be vigilant to avoid under-spending.

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