DA condemns city’s debt settlement plan with DOHS

PHOTO: Stock image/Pixabay

THE Democratic Alliance in eThekwini opposed a proposed Department of Human Settlement’s debt settlement plan for monies owed to the eThekwini Municipality at a recent full council meeting.

According to a report presented to the executive committee, the project debt on various projects undertaken on behalf of the Provincial Department of Human Settlements (DOHS) escalated to R3.9-billion, as at 30 June 2017.

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“The debt culminated over several years as a result of R2.52-billion of expenditure being incurred on projects that were in excess of the approved subsidy as well as R1.4-billion in claims being delayed due to unforeseen circumstances. Although the R2.52 billion rand of excess expenditure was not covered by the contractual arrangements concluded between the DOHS and eThekwini municipality, the city went ahead and spent the money claiming that it was essential and necessary for the completion of the project.

“The excess expenditure was incurred on the understanding that as the expenditure was in pursuant of the DOHS objectives of housing delivery, the DoHS would reimburse eThekwini municipality,” said the DA PR councillor for Wards 13 and 15 and the DA eThekwini Economic Development and Planning Committee Whip, Marlaine Nair.

In addition to the R2.52 billion debt, an additional amount of R246 million is owed to the city for remedial measures undertaken on the R293 housing project on behalf of the Provincial DOHS.

 

According to the DOHS debt settlement plan, which was approved by majority vote at the full council meeting, the National DOHS and Treasury will:

– Set aside R360 million annually for the next seven years of the USDG (Urban Settlement Development Grant) allocated to eThekwini municipality for the settlement of the DOHS debt, subject to the municipality utilising R360 million of its own funds annually to augment the capital spend on infrastructure, that would otherwise have been funded from the USDG.

– The National Department of Human Settlements will set aside an amount of R40 million of the Human Settlement Development Grant (HSDG) allocated to the eThekwini Municipality annually for the next six years for repayment of the R293 housing project debt.

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“The Democratic Alliance is deeply concerned that over the next seven years grants earmarked for housing in eThekwini will now be used to service the Provincial Settlements debt, which means that this arrangement will put eThekwini’s housing delivery backlog further on the backfoot,” said Nair.

“What is even more concerning is that eThekwini municipality has agreed to utilise R360-million of its own funds annually over the next seven years to build houses, despite recently taking out a R1-billion rand loan while already servicing a loan for R8.4-billion.The Democratic Alliance strongly condemned the city’s borrowing trends and implored the city to put more effort into recovering outstanding debts, especially this humongous debt owed by the Provincial Department of Human Settlements,” she said.

 

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  AUTHOR
Lloyd Mackenzie
Journalist

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