Statement by the mayor of KwaDukuza for the Fourth Quarter (April - June) Budget and Performance Assessment Report

KwaDukuza mayor Lindile Nhaca this morning, delivered the fourth quarter report covering a number of strategic areas of service delivery, the financial standing and performance of the municipality.

The purpose of section 52(d) report offers an overview of the municipality's financial performance, empowers the council with the necessary information to make informed decisions and recommends monitoring tool for financial viability.

The mayor delivered her report during a full council at the KwaDukuza Town Hall, "I firstly wish to thank the finance team and all contributing business units for their hard efforts in preparing this report, as well as the wisdom and guidance of the budget steering committee.

The period under review coincided with the 2024 General Elections which were a great successful and we congratulate all the parties that have constituted the government. With this stride, South Africans have once again proven that their belief in democracy is sacrosanct.

 

During this period, we realised a number of milestones where the council approved the 2024/2025 final budget at the occasion of the State of the Municipality Address. I used this platform to reflect on the 30-year landmark since the establishment of the democratic government and what we have achieved as a local council.

 

It was also during this period where we hosted a number of successful social and sporting events including the 100% homebrew Music Festival, the 2024 Ballito Pro Presented by O’Neill, the Open Street event and supported the hosting of the Kunye event. We also hosted a series of youth events during the month of June in tribute to the youth of 1976 - who stood side-by-side in defiance of apartheid laws.

 

We realised the completion of the Mavivane Transformative Riverine Management Programme (MTRMP) which was launched in October 2022. The programme was implemented in Ward 16 and 19, as part of leveraging our local response to climate change resilience and job creation. 

 

Semi-rural communities like Nyoniyamanzi in Ward 16 were some of the beneficiary areas. Thanks to the R1.7 million grant funding from KZN EDTEA, KwaDukuza Municipality was able to create hundreds of temporary jobs.

 

In terms of government infrastructure development and investments, I wish to inform the house that the KZN Department of Public Works, working together with the Department of Health have appointed surveyors for the Driefontein Clinic in Ward 21 and the municipality has already granted consent to commence with development.

 

So as the Madundube Clinic for Ward 27, we are on track and currently finalising land exchange. Land Surveyors will be on site soon and the provincial government will be further communicating the state of readiness for the two projects. 

 

Importantly, we officially launched the KwaDukuza Museum at the occasion of the International Museums Day on 18 May 2024. In addition, we successfully handover the KwaDukuza and Ballito Taxi Ranks for construction.

 

Ladies and gentlemen, I also wish to remind you that under the period under review, we managed to fill the Director: Civil Engineering post during a Special Council meeting held on 05 May. We are more than grateful for this accomplishment as it positively reflects administrative stability. Mr. Thembela Telford Nxumalo who filled this critical position has swiftly taken charge and assured us that the department is under capable hands.

Accordingly, the municipality is under some pressure in spending government grant funding, and this is a result of grant conditions and SCM processes which have strained our capacity to spend and deliver on time.

Nonetheless, the majority of the projects have been awarded and completed on the Municipal Disaster Response Grant with two projects still in the tender process, which are the ‘Pedestrian Bridge in ward 07 and ‘Yellowwood Road Phase 2 in ward 16’.

The roll-over of R171 million was considered during the November Adjustment Budget, catering for R782m. Approximately R77 million in savings has been identified from the completed projects, and an application for re-prioritization has been submitted to the transfer agent. We are engaging with NDMC for possible rollovers.

The council has spent R 667 million of funded capital projects which is a negative variance of 41% from the total capital budget allocation.

The main driver for underspending is the slower than anticipated expenditure on the R782 million Disaster Response Grant funded capital projects.

 

To date only R 430,5 million has been spent on the total disaster funded projects in the 2023/2024 financial year.

 

For the 2019 Disaster Recovery Grant, R 9,7 million was spent on the total allocation of R 19,1 million. You will recall that this allocation was for the Restructuring and Refurbishment of damaged infrastructure that occurred during the 2019 floods.

The grant expenditure is seemingly slower than anticipated due to delays in the approval of disaster related capital projects, which were only approved on September 2023 by the PDMC. However, all the projects listed have since been awarded. Two projects have been completed with three under construction.

On the Municipal Disaster Recovery Grant, a total of 28 of the 30 projects have been completed, with two projects under construction. A total of 11,5 million has been spent on the R 23,3 million roll-over.

Madam Speaker, the Hulette Bridge in Ward 2 and the Mnyundwini Bridge in Ward 9 have experienced significant delays for a number of reasons relating to challenges with community protests, labour disputes, interference by business forums, flooding and security issues.

A roll-over request of approximately R13,3 million will be officiated to complete the Hullete Bridge in Ward 2.

We are however happy that the KwaMfanomdala Culvet Project that was widely reported on in the media is finally completed, and it surprises me greatly why the media and critical opposition parties have remained mum about this project. We will await the Auditor-General to undertake an assessment and provide feedback, but I wish to express my confidence that this bridge is intact.

On our MIG funded projects, we achieved 100% expenditure.

For Internally Funded Civil Engineering Projects, a total of R12,8 million was spent of the R18,2 million allocation. For the unspent allocations, we have requested roll-overs into the 2024/25 financial year to cover the development of the Lindelani Creche, Nonoti Beach Road Access and Retaining of Lloyd Housing Project.

Fellow members, I must emphasise that we need strong oversight on projects that are problematic. Although I will be visiting a number of projects that have been completed for oversight assessments, I will also be extending an invitation to you fellow members. I will continue to emphasis quality output, and this is what we should all strive for.

Ladies and gentlemen, we congratulate the accounting officer and his team for commissioning the biometric Staff Attendance Register which was implemented from the 1st of July.

We according give credit to the electricity department under the stewardship of Mr. Sibusiso Jali for commissioning the Supervisory Control and Data Acquisition which is known as SCADA. We attribute this success to all members of the portfolio committee who were led by the Speaker of council at the occasion of the launch two days ago.

 

The impact of SCADA might not be immediate but it will yield a significant results in a long term with constant upgrades to the network.

 

SCADA and the biometric Staff Attendance system are both part of the Senzalula programme which is aimed at making services of the municipality easily accessible in a manner that is convenient, smart and fast.

We want to promote a sense of unity of purpose within the institution whilst promoting a democratic culture, promote economic growth, and enhance productivity and the SCADA system has maintained these promises.

 

Moreover, energy losses remains the biggest threat to our revenue. Although we are making significant progress, there are still greater gaps and challenges.

Energy losses for the period under review show that there is R314,5 million which translates to 25.09 % total losses of electricity purchases where the industry norm for energy losses is 6-12%. The municipality’s energy losses surpasses industry standards by twofolds, posing a substantial risk to its fiscal stability. Such unsustainable losses jeopardise the authority's financial health.

The Fourth Quarter electricity billing was R 1,2 billion whilst the Eskom Bulk invoices totalled R 1,1 billion.

The following measure are being considered as mitigation plans:

We are encouraged that the appointment of a project management service provider for the non-electricity revenue losses funded through Vuthela project is to be appointed.Part of their responsibilities will be to deliver the following:

-      Identify, Audit all formal Electricity Resellers within Estates, Commercial Business Parks, Shopping Centres as well as informal Electricity Resellers within Ward 10 and 19 within Residential rental units and Cottages)

-      Repair, replace Formal and Selected Informal Electricity Resellers metering equipment or meters in the case of Small Power Users 

-      Implement Automated Meter Reading (AMR)/Smart Metering on Formal and Selected Informal Electricity Resellers; 

-      Develop and facilitate signing of Service Level Agreement contract with all Formal Electricity Resellers;
- Develop and Implement Electricity Meter Management System; and community engagement.

2.   Since its commissioning, the SCADA project will help monitor power flow in substations to determine the areas where major losses are based. 

3.   Electricity agents have already attended training on Smart Metering.

4.   Meter inspections, auditing and replacements are ongoing where 21 100 meters have been audited and 608 meters have been replaced. 276 MD metering point have been included on automatic Meter Read System (AMR).

We will continue to bemoan the extent of energy losses on such occasions. I encourage you all fellow members to join me in supporting operations on the ground for energy loss and the measures that we are putting in place.

REVENUE 

We also note that there is a R132,3 million negative variance on revenue which is informed by Operational Revenue, Electricity Revenue, Rental of Facilities and Equipment amongst other factors.

EXPENDITURE 

On Operating expenditure, the municipality also achieved a negative variance of approximately R308 million in expenditure from R2,6 billion that was budgeted for in the 2023/24 financial year.

Factors leading to this variance includes Employee related costs, Irrecoverable Debts Written Off, Debt Impairment, Bulk purchases amongst other factors.

Consumer debtors amounted to R 371 million and this indicates an increase of R 30 million since 30 June 2023. It must be noted that the majority of the debt under this category is over 150 days.

The effects of a slow recovering economy, increasing costs of basic services and living expenses, high unemployment rates and recent natural disasters in KZN, have had a lasting effect which have contributed to the slow recovery of old debt. 

With the current economic uncertainty and increases in living expenses that the country is facing, it is unlikely for the consumer debt to see the significant decrease within the next financial year. 

For the financial year 2023/24, various revenue enhancement initiatives were carried out such as inspection of faulty meters, back-billings for electricity, refuse & consumer deposit review and implementation of the rating code for unauthorized use, saw an increase in overall revenue which accounts for the increase in overall debt during the year.

Council has approved a Debtors Incentive Scheme that is effective from 11 September 2023 to 26 June 2024.

Write-Offs have been processed after the capital amount outstanding by the debtor has been settled in terms of the Incentive.

A total of R5 million has been written off as at end June 2024. The write off processed is inclusive of the Debtors Incentive Scheme and all other write-offs approved by Council.

Ladies and gentlemen, KwaDukuza Municipality’s reserves are approximately 2,3 month cash availability which is an increase compared to the June 2023 closing coverage of two months cash availability. Close monitoring of the collections during the financial year is necessary to ensure that we remain financially viable. As at 30 June 2024, we have a budget that would take us for an average of three months.

 

With reference to my presentation, your attention is drawn on the report before you, I hereby confirm that I am not aware of any additional impending financial problems or risks facing the municipality and that there is no other information considered to be relevant.

 

Madam Speaker, I also wish to confirm that the budget is indeed being implemented in accordance with the service delivery and budget implementation plan and related service delivery agreements.

 

With these remarks, I hereby present KwaDukuza Municipality 2023/2024 Section 52(D) Fourth Quarter Budget and Performance Assessment Report for consideration and approval as is set out in the item.

 

Thank you.