The Executive Committee of the eThekwini Municipality have tabled a debt settlement plan to recover the substantial amount of money owed by the Department of Human Settlements to Council.
According to the report the project debt on various housing projects undertaken on behalf of the provincial Department of Human Settlements (DOHS) has escalated to R3.9 billion as at 30 June 2017.
The report further states that the debt has 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 of claims being delayed due to unforeseen circumstances.
It states that the excess expenditure was incurred on the understanding that as this expenditure was in pursuant of the DOHS objectives, they would reimburse Council. In addition, the debt of R246 million is outstanding for remedial measures undertaken on R293 housing project on behalf of the Provincial DOHS.
“Several discussions were held with the provincial and national DOHS as well as with National Treasury with regard to payment of the debt,” the municipality says.
Proposed DOHS Debt Settlement Plan
The proposed DOHS Debt Settlement Plan suggest that the National DOHS and Treasury set aside R360 million annually for the next seven years of the Urban Settlement Development Grant (USDG) allocated to eThekwini Municipality for the settlement of the department’s debt subject to Council utilising R360 million annually of its own funds to augment the capital spend on infrastructure that would otherwise have been funded from the USDG.
“This is necessary so as not to compromise the anticipated service delivery outcomes of the USDG,” the municipality notes.
Further, it proposes that the National DOHS also set aside R40 million annually for the next six years of the Human Settlement Development grant allocated to eThekwini Municipality for the settlement of the R293 debt.