THE Nelson Mandela Bay Municipality’s precarious financial position was highlighted yesterday when it was revealed the metro had just 20 days’ cash reserves – well below its minimum 30-day target.
The quarterly financial report for July 2011 to the end of March this year, presented to the budget and treasury committee, also showed that personnel constraints had seen massive under-spending of the 2011/12 capital budget by the various departments. "It is to be noted that an amount of R608-million has been spent as at March 31 2012, compared with the approved budget of R1.4-billion. This represents a spending performance of 43.2% relating to the capital budget,” the report said.
The worst-performing departments in terms of spending included budget and treasury, spending 20.5% of its R55-million budget; housing and land spending 25% of its R90-million budget; and sanitation, spending R27% of its R116-million budget.
"How can we address service delivery when we don’t spend the money we have?” DA councillor Leon de Villiers said. "We claim most of the time we can’t deliver because we don’t have the money, but when we do have it, we don’t spend it.”
The report also said overdue consumer debts had increased by R73- million since June last year.
Adding to the metro’s cash constraints was an as-yet unexplained predicament which saw it losing about R8-million monthly on electricity, after paying R2-million more per month, but losing R6-million in sales. A previous report to the committee showed that from July to December the metro paid R12-million more for electricity, while sales were inexplicably down by R35-million – a trend which "is persisting as we speak”, acting chief financial officer Selwyn Thys told councillors.
A call by De Villiers for a report on what was being done to remedy the predicament was seconded by committee chairman Balu Naran (ANC), who said: "I couldn’t agree with you more. This matter has been discussed in depth”.
With regard to the metro’s low cash reserves, the report showed the municipality’s investment portfolio standing at almost R1.2- billion, but this dwindled to about R100-million, or reserves enough to cover the metro’s debts for 20 days, after discounting R1.1-billion in unspent government grants.
Detailing concerns over the low cash reserves, De Villiers said: "The minute you exclude the conditional grants, we are in deep trouble”.
Thys said the risks and challenges included low income from municipal land leases, municipal land sales and traffic fines.