Tshwane metro says budget cuts won’t affect service delivery

Even though it has improved its revenue collection to above 90% over the past four months, the Tshwane metro is still facing tough economic times and thus plans on further budget cuts.

Recently, the municipality manager called on department heads to review their budgets and identify non-essential projects to be cut.

These cuts should not exceed 50%, it said.

Currently, the metro’s operating budget stands at R39-billion.

Consistent downgrades by Moody’s, the international rating agency, over the past months also crippled the municipality’s new construction and renovation projects after it could not secure an R1.5-billion long-term loan.

Tshwane acting chief of staff Jordan Griffiths was, however, confident that the proposed further budget cuts would not affect core service delivery.

“We have zero intentions of compromising core service delivery and operations in the municipality,” he said.

“That is why the savings are being derived from non-essential areas so that we can focus on the core services in the city.

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“We take fiscal management seriously. Since returning to the office, we have focused all our efforts on stabilising the City’s financial position.”

One of the ways the metro intended to accomplish this was the installation of prepaid meters as well as the implementation of strict credit control measures to stabilise revenue collection.

More than 160 000 households were earmarked for the installation of pre-paid metres in the next three years.

“We have been having regular engagements with institutional investors and development finance institutions and banks to ensure we communicate to them how we are stabilising the city’s finances,” he said.

Griffiths dismissed claims made by the ANC this week that the metro has not paid service providers over the past three months as they struggle with funds.

“We have made it a top priority to ensure we do not default on any of our debt obligations. A commitment that we delivered at the end of the last financial year in June 2021 much to the praise of the City’s major lending institutions,” he said.

“The ANC’s claims are baseless, which is why they have not been entertained by the media. Since returning to the office, we have prioritised service delivery, fixing thousands of streetlights, potholes, water leaks and electricity outages.”

The ANC also claimed the municipality used money meant for water supply in townships, for payment of service providers to prioritise buying a substation for Wapadrand, which had power issues after a fire broke out last week.

Griffiths maintained that the funds allocated for Wapadrand’s refurbishment would come from insurance.

Upon returning to the office in late October, mayor Randall Williams said the metro was facing financial troubles after incurring a deficit of R4-billion during the administrators’ tenure last year.

Williams said they would cut the budget. First in line was the catering services in November, last year.

Griffiths said a leading driver of the deficit was the dropped levels of revenue collection last year, while economies around the world experienced the negative impact of the coronavirus outbreak.

Mayoral spokesperson Sipho Stuurman said the various departments were still busy reviewing budgets for possible cuts.

“Once the departments have made all their presentations, we will consolidate this and give a figure of how much we have been able to save through this process.”

In February, the metro announced residents and businesses (including embassies based in the city) owed them about R17-billion.

The metro plans to recover this money in the pre-paid system for households that have arrears in their accounts by deducting 60% of the electricity purchase towards the debt. The remaining 40% would go towards the actual purchase of electricity tokens.

According to Moody’s, in the absence of a sudden sharp increase in revenue collection, Tshwane was expected to close the 2021 fiscal year in June with a cash deficit of more than R1-billion.

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