Financial woes for the cash-strapped Emfuleni local municipality have gone from bad to worse after its banking account was blocked and attached by court last week.
The municipality in the Vaal failed to pay a company contracted to install smart water and electricity metres in a multimillion-rand agreement that was entered into in 2013.
The Beijing Fuxing Xiao Cheng Electronic Technology Stock Co Ltd and JV Ole Power Systems (BFX-OLE) entered into a contract with the municipality in 2013 to supply smart meters but claim it has not received a single payment from the municipality since.
In their joint court papers the companies made three claims: that they sent the municipality 23 invoices amounting to R30m which were never paid; that they spent more than R270m installing the meters which accumulated to R360m in contractual damages and that it suffered at least R100m in damages after the suspension of the rollout of the project.
Following the municipality’s failure to appear in court, a cumulative default order was granted for R504m, which included R11m interest.
The embattled municipality had its Standard Bank account attached, with the court ordering the sheriff to pay the company the full amount.
The municipality's lawyers were on Tuesday in court arguing against the order.
The municipality now said it may not be able to pay salaries of staff and councillors and also risks failure to meet other financial obligations such as water and electricity payments.
In a memorandum to staff, the municipality said it has been unable to access its primary account since October 2 but said October salaries would be paid.
“There has been social media messages circulating, which alleged that the municipality will not be able to pay salaries come the 25th October 2020. I would like to categorically dismiss these assertions as false because the municipality will be able to pay salaries for all employees and councillors on the 25th October 2020,” acting municipal manager Vincent Campbell said.
Campbell acknowledged that the blocking of the municipal accounts presented challenges for the municipality.
“This is a difficult time for the municipality and I am humbly asking all of you to be patient and continue to work diligently for the benefit of our communities,” Campbell said.
The DA’s Kingsol Chabalala said it was time Emfuleni residents removed the ANC from power.
He said it was obvious that the ANC was unable to run the municipality.
“Emfuleni will not be able to function properly without the attached and frozen bank account as this will have a huge impact on the payment of the employees and councillors’ salaries as well as the payment to Eskom and Rand Water,” Chabalala said.
“This clearly indicates that the ANC’s Emfuleni administrator is failing to rescue this municipality from its serious long-term cash flow problems.”
Chabalala said service delivery had collapsed in the municipality and that the freezing of the bank account would only make things worse.
The SA Municipal Workers' Union (Samwu) said the attachment of the bank account put the livelihoods of workers at stake and called for those responsible to face consequences.
Samwu Greater Vaal regional secretary Nkgobe Mphahlele said they had noted the promise by the municipality that October salaries would be paid.
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