Emfuleni Local Municipality in serious financial trouble

Although it is well known that the Emfuleni Local Municipality (ELM) has been in financial trouble for number of years, the Auditor-General report indicating the financial position of the municipality as at 30 June 2014 describes a very concerning financial situation.

Considering the contents thereof as well as the fact that an Auditor-General report for the year ending June 2015 should also have been available to the municipal manager by the Auditor-General, we call on the municipality to indicate what action steps have been taken to resolve its financial crisis.

According to the AG report as at 30 June 2014, the municipality suffered material losses to the amount of R175 million (in the financial year 2012-13: R169 million) for water losses being 34% of the water purchased by the municipality and suffered a further loss of R278 million (in the financial year 2012-2013: R1.211 billion) for electricity distributed by the municipality.

These losses alone amount to a staggering R453 million!

More concerning however, is the remarks by the AG that the ELM incurred a deficit of R192 million during the 2013-14 financial year alone and that its liabilities exceeded its assets by R160 million.

As stated by the AG, these figures create significant ongoing doubt on the municipality’s ability to operate.

In short, it means that had the municipality been a private company, it would in all probability have had to close its doors or be in the process of doing so.

Underlying this literally financially bankrupt municipality, is the reliability of certain information provided by municipal officials to the AG in the course of its duties.

With regard to the reliability of information pertaining to the municipality’s duties to provide services for water, electricity and waste water management, the AG reported that the information issued by the municipality was not valid, accurate and complete when compared to the source information or evidence provided.

These are very concerning statements as it appears to be clear evidence that the administration of the ELM is not functioning as it is supposed to be.

It was stated unequivocally by the AG that the financial statements submitted by the ELM were not prepared in all material respects in accordance with the required legislation.

The municipal manager did not adequately exercise oversight responsibility

In fact, it was found by the AG that the accounting officer, being the municipal manager, did not adequately exercise oversight responsibility regarding financial and performance reporting and compliance with certain laws and regulations.

It is clear where the failures of the ELM arise: an inept ABC controlled council appointing an inept municipal manager running an inept administration.

I will be writing to the Municipal Manager asking what the municipality will do to turn this situation around.

Media enquiries:

Hendrik Schmidt MP

Constituency Leader: Emfuleni South

083 227 5658

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