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The Democratic Alliance (DA) in Mafube Local Municipality has examined the Financial Recovery Plan (FRP) and findings of the National Treasury. Deep concerns have arisen regarding the FRP's dependency on the reinstatement of electricity supply and management services by the financial year 2025/26.

On 11 May 2022, the Free State Executive Council invoked Section 139 (5) (a) and (c) of the Constitution at Mafube Local Municipality, necessitating a financial recovery plan developed by the Municipal Finance Recovery Services Unit of the National Treasury, in line with the High Court Order. According, to the FRP the decision to outsource electricity sales to Rural Maintenance (Pty) Ltd falsely raised concern, prompting the municipality to initiate financial and technical due diligence.

The National Treasury's findings in the FRP incorrectly revealed that the municipality did not receive value for money from the Electricity Management Contract (EMC) with Rural Maintenance (Pty) Ltd. It claims that inadequate monitoring led to errors in royalty escalations and unfulfilled Eskom Bulk Supply Account payments, accumulating a debt of R140,429,779.43 by 30 June 2022.

In truth, depreciation expense on the electricity network increased by 3.22% between FY2020/21 and FY2021/22 whilst royalties decreased by 4.49%. Based on the Debtors Age Analysis as of 31 January 2023, the municipality owed Rural Maintenance (Pty) R 57 871 818.91 for the municipality’s own electricity consumption and ESKOM R57 489 402.75 for the historical bulk purchases debt.

National Treasury's critique extended to the 25-year EMC lease, claiming it severely handicapped Mafube's revenue stream, plunging the municipality into financial distress. Should the EMC with Rural Maintenance (Pty) Ltd be found to be non-compliant with the SCM policies, regulations, and national legislation, the treasury recommends that the municipality approach the High Court for its immediate termination and assumes the function to sell electricity by the FY2025/26.

The termination of the EMC lease and the assumption of electricity functions by the municipality would lead to a potential increase in electricity costs for the community. This could further exacerbate the financial distress faced by the municipality and hinder its ability to provide essential services to its residents.

Moreover, the National Treasury observed that financial constraints, limited capacity, and skill shortages hindered the municipality from fulfilling its functions. In light of these challenges, the DA questions Mafube's ability to regain control of electricity management and supply. We urge Thomas Mkhaza, leader of the Provincial Intervention Team, to collaborate with Rural Free State in finding the best solution for the community.

RFS contests the Treasury Report, asserting its commitment to community service. They remain committed to providing services for the community and are frustrated not to be allowed to do all they can to reduce the burden of poor electricity continuity. The way forward includes a solution by means of a 14MWh Lithium-Polymer Battery installation—short-term energy storage to store renewable energy and grid power as contractually available in times that fall outside of loadshedding hours—this energy can then be utilised to minimise loadshedding.

Issued by Suzette Steyn - DA Councillor Mafube Local Municipality