Tag Archive | COGTA

Pravin tackles COGTA intervention at local level

 COGTA getting somewhere with municipalities…..

pravin gordhan MTBSIt is quite apparent why the seemingly impossible task of integrating local, provincial and national government service has been given to minister Pravin Gordhan of cooperative governance and traditional affairs (COGTA). He seems quite determined that all provinces and municipalities have to deliver on their constitutional mandate.

His department of cooperative governance (DCOG) recently updated Parliament on the current situation, led by some opening remarks by the minister himself.   He went straight to the nub of the issue by stating that section 139 of the Constitution provided for intervention by the relevant provincial executive if a municipality could not or did not fulfil an executive obligation.

First steps

Whilst the Local Government Reform Act, passed in 2014, has helped considerably by refining local electoral areas nationally down to 137, whilst 95 municipal districts have been designated in most cases to correspond with electoral areas. Thus, more representative structures have been established although some suspected at the time this was an election ploy.

Stabilisation of local government was the key, said minister Pravin to parliamentarians, and the process of “Back to Basics”, one of the 16 SIP strategic items on the list of the National Development Plan, was the basis of the department’s 2015/6 annual performance plan. This to ensure municipalities performed in their dealings with local government at the coal face.

Minister Pravin said, “Local government plays a key role in determining whether people live with dignity and whether they are able to access economic opportunities, consequently contributing to the overall development of the country”.    Part of COGTA’s mandate, he said, was to understand and support the development of intergovernmental relations in all three tiers of government.

New Bill to make third tier accountable

vusi madonaselaVusi Madonsela, DG of DCOGTA, advised that they were “aiming to build accountability for performance in local government systems by setting and enforcing clear performance standards by March 2019. To this end a new Intergovernmental Monitoring, Support and Intervention (IMSI) Bill would be processed through Parliament.

The performance of municipal public accounts committees (MPAC’s) therefore in all “dysfunctional municipalities as well as municipalities with adverse and disclaimer opinions would be monitored and enforced”, he said.

Changing attitudes to debt

Madonsela also said, “The culture of payment for services would be encouraged nationally with campaigns” and part of DOCG’s task was to improve the ability of at least 60 municipalities to collect outstanding debt. He named other targets such as to strengthen anti-corruption measures by 2019 and to have achieved a full local government anti corruption tribunal systems working.

He also said DCOG would start with 12 districts to develop integrated development plans and eight cities and towns would also be supported and monitored in developing long term strategies and proper spatial development programmes.

Skills always the problem

Opposition members called on COGTA for better performance by local government training SETAs. Many institutions were conducting training programmes for councillors but in the process had found that many councillors literally have no skills or formal education. Madonsela responded by saying there were now regulations being passed to weed out unqualified persons and those with false CVs.

Minister Pravin agreed that some of the factors that led to dysfunctional local government structures included political instability and problems with service delivery and institutional management inability.  Councillors were nominated and appointed by their political parties, he said, and “perhaps it should be a conversation amongst MPs on how councillors should be appointed.”

Back to “Back to Basics”

The net result at the moment, said minister Gordhan, that one in three municipalities, according to a study conducted nationwide, were failing and the success of the “Back to Basics Programme” would now depend on inter-government transfers to bring in skills and changing the employment criteria to economic, tax and financial viability experience.

He concluded that his department was getting tough where municipalities had broken the law and some of the answers may lie in strengthening district municipalities with specialists and merging some municipalities.   Another option was to abolish local municipalities completely and in their stead, start again with district management areas but he did not elaborate on this.
Other articles in this category or as background
Municipal free basic services slow – ParlyReportSA
Local government skills totally lacking – ParlyReport
Electricity connections not making targets – ParlyReportSA

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Municipal free basic services slow

Welfare registers not being completed….welfare payments

Welfare support in the form of free basic services for poor households is totally dependent on all municipalities completing registers of those needing assistance but reports at this stage given to Parliament show that municipality support for the support system has been slow and only partially effective – transparency being one of the issues.

The department of co-operative governance and traditional affairs (COGTA) was briefing the portfolio committee on energy affairs on free basis services to the poor, a right inherited in terms of the SA Constitution.

Starts with electricity connections

The new municipal infrastructure support programme, backed by DBSA, is slowly coming into place, COGTA said, with the presidential infrastructure coordinating commission (PICC) in September last year confirming it was developing mechanisms for earlier free basic electricity programmes than the current slow programme.  Electricity supply was perceived as the main basis for upgrading standards in poor areas.

Chris Malehase of COGTA said 2012 statistics indicated that some 80% of municipalities had some form of register but payments were failing to be distributed because of the difficulty of establishing who was poor and defining exactly who was in any household.

Registers not comprehensive

Free basic services were introduced in 2000 on the basis that municipalities should follow a national framework policy to build their own indigent policies and by-laws to meet their responsibilities to the poor.    This meant building an indigent register, the components of a monthly payment of R277.78 in welfare being supplied by the state and made up of free basic water (R87.90), sanitation (R73.25), energy (R56.24) and refuse removal (R60.39).

Malehase said there was a contribution also provided for per poor housed for maintenance, the threshold for being “poor” being described as less than R2,300 a month.    Throughout the nine provinces, where 278 municipalities existed, 225 had maintained some form of indigent registers which were supposed to form the basis of such welfare systems, a process which collapsed in 2009.

Some 25% municipalities incapable

The process was now being re-built, Malehase said, the collapse having been caused by either dysfunctional municipal management or lacked of skilled capacity. He told parliamentarians that “progress to date” was that 60 municipalities were being supported in five of the nine provinces. Energy was described as 50 kilowatts of electricity free per month, but what happened to households that were not connected by Eskom was not made clear

Political and administrative support was sought at all levels but most of all political support had to be obtained at all levels of municipal administration. This was the difficulty, Malehase said. Current issues at the time were that no exit strategy was defined should the status of a beneficiary change and the impact on the quality of life of a beneficiary had not been measured. The scheme was “generally out of control”.

Eskom not answer for everything

Problems also existed with the relationship between Eskom and government inasmuch that government had reached the ceiling of its private debt to Eskom in providing relief and Eskom had difficulties is supplying electricity at current low levels of expense. Against the background of difficulties, COGTA was maintaining training and capacity building exercises with municipalities in an effort to ensure an “efficient and effective roll-out” of further supported areas.

In May 2012, due to the ineffectualness of the programme, the local government turnaround strategy was the key of a presidential proclamation to unbundle the previous programme known as “Siyenza Manje” and to ring fence all funds paid to municipalities for such welfare. The municipal infrastructure support agency or MISA was formed to give accelerated delivery to the programme. Whether some municipalities would accept this was the issue, said Malehase.

Training gains traction

The position was now improved, COGTA said,with 32 municipalities in 8 provinces (the missing province being Gauteng for structural and financial reasons) with 114 apprentices now trained on electricity matters in relation to the Eskom “ADAM” programme with a further 469 yet to be placed who were in training. 100 technical managers are to be eventually placed as skilled personnel and a further 100 engineering students also placed.

MISA and DBSA were now coupled in the programme, one of the sixteen presidential “SIPs” to develop South Africa, but throughout the parliamentary presentation by both COGTA and MISA, it became apparent that the “buy in” by municipalities was both a political and administrative issue and not all municipalities accepted or practised the programme in both a credible and transparent manner, Malhase said.

Refer previous articles in this category
http://parlyreportsa.co.za//justice-constitutional/spatial-planning-bill-ends-long-journey-in-the-parliament/
http://parlyreportsa.co.za//cabinetpresidential/aim-prc-report-connect-tiers-public-service/
http://parlyreportsa.co.za//cabinetpresidential/minister-says-need-for-legislation-on-land-reform-a-priority/

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Downwards spiral in electricity distribution can be reversed, say energy leaders

The tone was set for a three day series of public hearings amounting to a public workshop on the electricity distribution industry (EDI) when department of energy (DoE) confirmed that the rehabilitation of the industry needed R27.4bn to reverse a downward delivery spiral, bearing in mind the need for skills generally and the inability of municipalities to execute to deliver in terms of strategy.

However, the main players in the industry, including Eskom, were convinced that South Africa had the skills and ability to effect proper change.

Willie de Beer of Sanedi opened the meeting and warned that unless there was a satisfactory distribution and supply system, any amount of power stations and electricity generation programmes would be pointless if the electrical distribution industry, one of the largest employers in the country, did not revolutionize itself from within and carry out an overhaul.

The entire industry needed to be re-configured, he said, and the whole issue of the current developmental restraints facing the country needed to be looked at.

Firm management and leadership remained a key need, with effective controls in the revenue cycle being an essential requirement. Consolidated funding schemes for all parties, large and small, who are participants in the industry, had to be set up enabling the industry as whole to catch up technologically, de Beer said.

“It is within South Africa’s ability to carry out such an exercise”, he said, and added that the country “had the necessary years of experience and the people present to succeed.”

Prof. Nic Beute of Cape Peninsula University said a survey conducted on the EDI indicated that most planning had been done to develop the industry when the regional electricity distributor (RED) areas plan was mooted and the major requirement was then only the initiative to act and provide the finance and technological knowhow at lower levels at municipal distribution points to take the path forward.

Prof. Beute concluded by observing that DoE appeared to be “stuck in an analysis mode” and what was needed was a financial plan involving National Treasury and possibly Development Bank of South Africa (DBSA) to meet an already defined path and for them to come forward with the wherewithal to make past planning during the REDS exercise a reality.  Little had changed, he said, except time had been lost.

Ongama Mahlawe of the dept. of co-operative governance and traditional affairs (COGTA) said much of the problem lay with rural municipalities who had the biggest backlogs: the highest degree of finance gaps; lowest technical ability and were unable to attract and retain skilled personnel.

This was unlikely to change unless the economic picture changed, he said. “We have a situation where R49bn of the uncollected R76bn in rates taxes, including electricity fees, is owed by households.”

“With government deciding not to implement the REDs plan, Eskom remains servicing 46% of domestic customers, which revenue is lost to municipalities in any case.”  Last year, he said, only a certain number of municipalities had adequate budgets and maintenance came under the heading of discretionary expenditure.

GOGTA had, in the meanwhile, established a dedicated unit focusing on supporting municipalities on energy matters and had prioritised 108 “low capacity” municipalities. Under questioning, Mahlawe confirmed that no practical implementation had yet been carried out.

In an initial paper, DoE reminded all parties to the hearings of the legislative environment which stated that a municipality has the executive authority in respect of and has the right to administer local government matters regarding electricity and gas matters and that only NERSA could issue licences for the operation of generation, transmission or distribution facilities……and regulate prices and tariffs.

Ayanda Noah, head of distribution at Eskom said Eskom had adapted itself after the shutdown of the REDs approach. It currently had 311,831km of reticulation lines, 47 509km of distribution lines and 11 415km of underground cables and was working with a number of smaller municipalities’.

The group, she said, had broken itself into nine provincial offices and the record was that over the years since 1991, Eskom was now providing electrification to 4 million homes throughout South Africa since the inception of the electrification programme.

Going through a long list of problems that exist at municipal levels and despite their instituting recently a successful  “adopt a municipality” programme, Noah said that industry issues hampered Eskom’s ability to maintain and upgrade its own infrastructure programme given the wider industry issues and the many problems at national level, all of which eventually translated into major risk factors for Eskom.

She said that an approach had to be adopted, nevertheless, where Eskom had to consider its own interests as suspended and the national industry to dominate, she said. An approach had to be found where “the industry heals from within”, she commented. In Eskom’s view, transfer of assets was a last resort measure, Noah said

Looking back, the act of creating REDs Noah said this concept would not have really solved any of the underlying problems facing the industry.     The answer, she said may lie in “active partnering” such as was being instituted by Eskom and now being carried out with municipalities, since there were in fact only two players in the industry who could participate in the restructuring physically, that was Eskom and the municipalities themselves.

“Active partnering” was in her view a non-threatening approach, as opposed to the trauma of forced intervention to address service delivery issues. “There is no need for the industry to become paralysed since the answers lies within the industry itself”, she concluded.

NERSA, the electricity regulator, called for an alignment of financial year ends between all municipalities and the state departments involved: a central data system to gather all matters involved in generation, transmission and distribution and a multi-party agreement between state departments and all municipalities on compliance and audit issues.

DBSA said it had “huge” exposure to the electricity industry, particularly distribution, amounting to some R5bn. It called improved revenue collection and suggested pre-paid meters; that all revenue from electricity sales be “ring fenced” for maintenance and transparent tendering processes instituted with centralised controls.

Renewable energy sources as an alternative had to be focused on, DBSA said, and tariff structuring by municipalities needed to be reflective of the long-term picture in order to attract investment.

The present picture was “characterised by many of the municipalities having insufficient infrastructure to deliver energy services and a deteriorating quality of supply due to ageing equipment which required rehabilitation or replacement.

They quoted Dr W de Beer of Sanedi who had pointed out the fact that the infrastructure backlog is moving from not only a need for R27bn for maintenance but complicated an annual growth need of R2.5bn per year.

Capacity and skills in municipalities had to be strengthened by participation with a government programme, DBSA said. This must urgently involve a DoE-led rehabilitation plan of an immediate pilot programme; a project finance agreement for municipalities and the involvement of a detailed funding model between DBSA and National Treasury with COGTA, NERSA, department of public enterprises and DoE itself. A formal financing programme should be commenced at the soonest.

The South African Local Government Association echoed this call, pointing to the debilitating effect of electricity theft in informal townships and the need for meters to be installed on a user-pay basis in all households. SALGA said a “transmission group|” should be formed as a public resource to bring all stakeholders together and new electricity management systems by municipalities “conceptualised” immediately.

Not all municipalities were failing they said, and the plan called “ADAM” (whereby municipalities were re-capitalised on the basis that there was certainty in the future of any investment in them) should be re-vitalised and adopted with strong leadership from central government and the support of National Treasury.

A National Treasury spokesperson, in their paper, referred to the constitutional right of municipalities to apply surcharges in the form of a tariff base plus “a reasonable rate of return”.  A portion of this had to be set aside for repairs and maintenance (R&M), they said, but it was not prudent for government to legislate on the whole of the surcharge in the light of the law and also its use was known to be an important form of general revenue. Nevertheless, there had to be changes on this critical issue.

Currently, said Treasury, the integrated national electrification programme (INEP) amounting to grants to municipalities to create new connections and was primarily for poor households. The concern was that this was being diverted to refurbishment that could have been avoided if normal maintenance were undertaken.

A way had to be found, said Treasury officials, to ensure that R&M was undertaken on a programmed basis, that skills training programmes were brought to the all municipalities, both large and small and that the profile of the need for constant R&M from the funds generated by the sale of electricity became a high profile issue with both councillors and residents.

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