DA to request meeting with Minister Gordhan on equitable share cut 

2 April 2015

I will today request a meeting with the Minister of Cooperative Governance and Traditional Affairs (COGTA), Pravin Gordhan, to discuss National Treasury's equitable share cut to 60 municipalities who have continuously failed to pay their bills. 

The equitable share cut may adversely affect the delivery of essential services in these troubled municipalities. The DA is of the view that Minister Gordhan should invoke a section 154(1) intervention in terms of the Constitution to lend support to these municipalities. 

Section 154(1) allows the Minister to direct the respective Provincial COGTA MECs to ensure municipalities institute recovery-plans and lend support by sending technical and financial advisors to these struggling municipalities. 

As at 31 December 2014, these municipalities owed Eskom R9 billion and Water Boards R3.6 billion respectively. 

National Treasury announced the withdrawal of equitable share to municipalities due to the failure of honouring their financial commitments in line with section 65(2) of the Municipal Finance Management Act (MFMA).

Section 216(2) of the Constitution permits National Treasury to stop the transfer of funds to any organ of state that commits persistent and material breaches of their financial obligations. 

The DA will submit our recommendations to Minister Gordhan to aid the recovery of these funds. This could be achieved in the following manner:

All revenue raised by municipalities through the resale of electricity should be ring-fenced for the payment of amounts owed to Eskom; and 

These funds could also be used for the upgrading and maintenance of electricity infrastructure. 

In this way, residents who pay their electricity bills are not penalised because the Municipality does not pay its bulk bill to Eskom.  The delivery of good quality services cannot be halted due to inefficient and incompetent Municipal management and political leadership.

Statement issued by Kevin Mileham MP, DA Shadow Minister of Cooperative Governance and Traditional Affairs, April 2 2015

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