Mangaung metro’s power utility was put on blast at the special council meeting held at the council chambers on Tuesday (1/10) because it could not pay the debt owed to the municipality.

An agreement was signed by the municipality and Centlec after a total amount of assets of R1.3 billion was transferred by the municipality to the power utility. Centlec had to make payments to the municipality every five years – the first payment was due on 30 June 2015.

It was noted in the meeting that nine years later, no payment has been made by Centlec.

“The first payment of R267.8 million was due on 30 June 2015 but was not paid. The second one was due on 30 June 2020 and was not paid either, the next one is due on 30 June 2025. A deferral is now requested,” said Manguang Municipality DA councillor AF Bothma.

“The reason for the deferral is that Centlec cannot afford these payments as they have been making losses and haven’t made a profit to actually honour their agreement. We also acknowledge that, and agree that a deferral must be granted,” he said.

A total of 79 councillors voted in the recommendation that the Centlec problem should be dissolved before or on 25 February 2025.

During the 2024/25 budget special council meeting, mayor Gregory Nthatisi announced that Mangaung has allocated R3.46 billion to meet its loan obligations and settle related debts.

The substantial amount was earmarked for settling the Eskom bulk electricity account, Vaal Central Water Bulk account, and other essential bulk services. Loan repayments amounting to R155.2 million were included in this allocation, and efforts to enhance revenue collection strategies will cost R69.5 million.

“The municipality also owes the power utility, the total amount due to Centlec is R1.2 billion which reduces the much-needed cash flow problems of the metro, which is a big concern of mine.”

Speaker Lawrence Mathae and City Manager Sello More. Photo: Mangaung Metro Municipality/YouTube screenshot

“We need cashflow in this municipality and this is going to hamper that.”

“The Centlec debt to the municipality is currently on the council agenda and the council just resolved on a process where due diligence needs to be applied or followed between the municipality and Centlec and that this process concluded on or before 25 February 2025,” power utilities spokesperson, Lele Mamatu, said.

Last year, the Auditor-General of South Africa, Tsakani Maluleke, reported that the financial position of 70 out of 241 audited municipalities was so dire that there was significant doubt about their ability to operate in the future. Mangaung and Tshwane metros were specifically highlighted, responsible for 10% of the local government budget and service delivery to 9% of the country’s households.

OFM News/Zenande Mpame mvh/cg