Mangaung Metropolitan Metro’s debt to Bloem Water initially stood at R1.1 billion before the discount was announced. The Mangaung Metropolit...
Mangaung Metropolitan Metro’s debt to Bloem Water initially stood at R1.1 billion before the discount was announced.
The Mangaung Metropolitan Metro’s debt to Bloem Water has been written off by R400 million following intensive negotiations between the respective parties. The Free State water board told the media on Friday 11 December 2020, that Mangaung which includes Bloemfontein, Wepener, Dewetsdorp, and Botshabelo will from February 2021 onwards repay the outstanding R715 million in R20 million tranches.
Mangaung Metro’s debt to Bloem Water initially stood at R1.1 billion before this discount was announced. Furthermore, there shall be an “interest charge moratorium on the settlement amount debt”, implying that the outstanding amount remains capped at R715 million.
Bloem Water stresses that Mangaung is bound to comply to the deal made, not indicating what the consequences are should the only metro in the country under administration fail to make the payments.
“The signed Settlement Agreement is final and there shall be no deviation on it. The Agreement will be issued as an Arbitral Award and will further be converted into a High Court Order. It was also agreed that both parties will be equally liable for the Arbitrator’s costs” Bloem Water on its latest settlement agreement with Mangaung Metro.
WATER INTERRUPTIONS
Last week Bloem Water got the ball rolling in imposing water interruptions to parts of Mangaung Metro. The water board has repeatedly claimed throughout much of 2020 that Mangaung along with Kopanong and Mantsopa local municipalities collectively owe it over R 1-billion in debt.
Bloem Water’s Maruping Rapudungoane told The South African that the ongoing debt has affected Bloem Water’s financial standing and forced management to retrench staff and withhold bonuses amongst other measures.
The frustrated water board chastised municipalities in the country for defaulting on their financial commitments to creditors with impunity. Further adding that the Department of Water and Sanitation’s decision not to increase annual water tariffs for all water boards has placed them in a financial predicament.
The service provider is now forced to deny employees salary increases, bonuses, and placed recruitment on a moratorium just to stay afloat.
Rapudungoane says in stark contrast, Mangaung like other municipalities has implemented tariff increases, staff salary increases, and bonuses, an indication that it is managing from a financial perspective. But is Mangaung really doing well?
MANGAUNG: ARGUABLY THE COUNTRY’S MOST TROUBLED METRO
Mangaung was placed under administration a year ago, following Deputy Finance Minister David Masondo’s call for Free State Premier Sisi Ntombela’s intervention. It is the only metro in the country to be placed under administration.
The call for intervention came whilst Mangaung was reeling from two downgrades by credit ratings agency Moody’s, which was deemed to be a reflection of the municipality’s weak and declining liquidity position and meant there was a high risk the municipality will not be able to fulfill its obligations.
This was evidenced by Bloem Water dragging the metro to the Free State High Court for its mammoth water bill, in addition to the permanent closure of the Bloem Zoo in early 2020.
In August 2020, Mangaung Metro Mayor, Olly Mlamleli was ousted in her third no-confidence vote. The first failed attempt at removing Mlamleli, was proposed by the EFF in 2018, while the DA submitted the second attempt. Both of these were not by secret ballot – an issue that was raised by opposition parties.
The DA’s Mokgadi Kganakga said at the time that 31 councillors voted for her removal while 28 against and 8 spoilt their votes. Kganakga lauded Mlamleli’s removal as she saw her as the source of the metro’s increasing debt to various service providers to the tune of roughly R 6.5 billion.
Mangaung Metro’s debt to Bloem Water initially stood at R1.1 billion before this discount was announced. Furthermore, there shall be an “interest charge moratorium on the settlement amount debt”, implying that the outstanding amount remains capped at R715 million.
Bloem Water stresses that Mangaung is bound to comply to the deal made, not indicating what the consequences are should the only metro in the country under administration fail to make the payments.
“The signed Settlement Agreement is final and there shall be no deviation on it. The Agreement will be issued as an Arbitral Award and will further be converted into a High Court Order. It was also agreed that both parties will be equally liable for the Arbitrator’s costs” Bloem Water on its latest settlement agreement with Mangaung Metro.
WATER INTERRUPTIONS
Last week Bloem Water got the ball rolling in imposing water interruptions to parts of Mangaung Metro. The water board has repeatedly claimed throughout much of 2020 that Mangaung along with Kopanong and Mantsopa local municipalities collectively owe it over R 1-billion in debt.
Bloem Water’s Maruping Rapudungoane told The South African that the ongoing debt has affected Bloem Water’s financial standing and forced management to retrench staff and withhold bonuses amongst other measures.
The frustrated water board chastised municipalities in the country for defaulting on their financial commitments to creditors with impunity. Further adding that the Department of Water and Sanitation’s decision not to increase annual water tariffs for all water boards has placed them in a financial predicament.
The service provider is now forced to deny employees salary increases, bonuses, and placed recruitment on a moratorium just to stay afloat.
Rapudungoane says in stark contrast, Mangaung like other municipalities has implemented tariff increases, staff salary increases, and bonuses, an indication that it is managing from a financial perspective. But is Mangaung really doing well?
MANGAUNG: ARGUABLY THE COUNTRY’S MOST TROUBLED METRO
Mangaung was placed under administration a year ago, following Deputy Finance Minister David Masondo’s call for Free State Premier Sisi Ntombela’s intervention. It is the only metro in the country to be placed under administration.
The call for intervention came whilst Mangaung was reeling from two downgrades by credit ratings agency Moody’s, which was deemed to be a reflection of the municipality’s weak and declining liquidity position and meant there was a high risk the municipality will not be able to fulfill its obligations.
This was evidenced by Bloem Water dragging the metro to the Free State High Court for its mammoth water bill, in addition to the permanent closure of the Bloem Zoo in early 2020.
In August 2020, Mangaung Metro Mayor, Olly Mlamleli was ousted in her third no-confidence vote. The first failed attempt at removing Mlamleli, was proposed by the EFF in 2018, while the DA submitted the second attempt. Both of these were not by secret ballot – an issue that was raised by opposition parties.
The DA’s Mokgadi Kganakga said at the time that 31 councillors voted for her removal while 28 against and 8 spoilt their votes. Kganakga lauded Mlamleli’s removal as she saw her as the source of the metro’s increasing debt to various service providers to the tune of roughly R 6.5 billion.
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