Metro faces likely R80m write-off

Municipality struggles to recoup funds spent on RDP structures from provincial department

The Nelson Mandela Bay Municipality could be forced to write off more than R80-million at the end of June as it is battling to recoup funds used to build and fix RDP houses from Bhisho.

The municipality’s housing revolving fund stood at R208-million by the end of December, with councillors saying the city would have no choice but to write off some of the money owed by the Eastern Cape Department of Human Settlements.

The housing revolving fund, which is set at a limit of R100-million, is used to pay contractors while the municipality waits for payment from the provincial government.

At a municipal public accounts committee meeting yesterday, councillors said it was shocking that the city had written off R81-million on the housing revolving fund during the 2015-16 financial year.

The same amount could be written off as irrecoverable at the end of the current financial year.

Over the years, the department refused to pay, saying houses had not been built to national standards.

It also said the city had failed to submit invoices as proof that the department owed it money.

ANC councillor Rory Riordan said a full report should be given to the committee to explain how the city wrote off so much money.

“If you look at the statements, it said the housing revolving fund was R109-million, but we wrote off R81-million during the same year (2015-16),” Riordan said.

“This is a scandal, this committee must get a full report on this.”

Budget and treasury head Retief Odendaal said the fund was a concern for the city.

“I had a meeting with national Treasury [officials] last week and officials were deeply concerned about how we are dealing with the housing revolving fund and the way it is spent,” Odendaal said.

“Unfortunately, the department [human settlements] is not paying. “Currently, there is about R80-million that we have to write off as irrecoverable in that it is not coming.

“Contractors did not build houses to national standards and we are going to have to do that write-off.”

He said the fund stood at R208-million now.

Human settlements executive director Nolwandle Gqiba said they had met officials from the provincial Department of Human Settlements on Monday to discuss, inter alia, the housing revolving fund.

“Budget and treasury should put pressure on them to honour their side of the bargain,” Gqiba said.

DA councillor Morne Steyn said the city should not have a housing revolving fund in the first place.

“The point is that we should not have a revolving fund,” Steyn said.

“My proposal is to amend the recommendations to say Nelson Mandela Bay engages with the department and to eliminate the fund as soon as possible.”

But ANC councillor Makhi Feni disagreed, saying the fund dealt with service delivery issues.

“To say let us do away with it is not going to assist,” Feni said.

“We must not move beyond the set amount of R100-million.”

Human Settlements provincial spokesman Lwandile Sicwetsha said they only paid municipalities on value created in building houses.

“The department no longer deposits tranches of money into the housing revolving fund,” he said.

“It only pays on value created on site – that value must adhere to national building standards. If those standards are not met, there will be no payment.”