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- The KwaZulu-Natal municipality has only 27 days' cash on hand, preventing it from paying creditors - including Eskom and Umgeni Water - on time.
- In May, the municipality went cap in hand to the National Treasury, begging for R400 million to pay its Eskom debt.
- When a municipality has only a few days of cash on hand, it can't pay service providers on time, or at all.
The broke KwaZulu-Natal Msunduzi Municipality, which came under criticism for its plans to give Royal AM a R27 million sponsorship deal, has only 27 days of cash available.
According to regulations, the National Treasury's benchmark for the municipality's cash-on-hand days is 90. When a municipality has less than that, it's at risk of failing to pay debt timeously, or at all.
ACDP councillor Niemand Reinus said the municipality had only seven days' cash, but municipality manager Lulamile Mapholoba disputed this and said it was 27 days.
Mapholoba admitted the municipality faced a cash crunch.
As of May, it owed Eskom R400 million.
Reinus said:
Opposition councillors have questioned the municipalities' priorities after it emerged that the council would fund "billionaire" Shauwn "Mamkhize" Mpisane's club, Royal AM, with a R27 million sponsorship deal.
The DA recently put the municipality on "terms", threatening to take it to court over the deal.
Msunduzi Mayor Mzimkhulu Thebolla previously told News24 the deal would be paid out in tranches.
Pressed about whether the municipality had handed over the first payment to Royal AM, Mapholoba said he would "check later".
At the time of writing, News24 had not received an update from him.
Mapholoba said: "We have the following strategies to collect revenue: Operation Qoqimali, voluntary financial plan and the use of debt collectors. We are now close [to] 30 days [of cash in hand]. We have payment arrangements with Umgeni Water and Eskom. We are also implementing cost containment measures."
READ | KZN's Msunduzi municipality aided illegal electricity connections valued at R111.5m - AG
Although he claims the municipality is doing its best to collect revenue and make payments to Eskom, the number of illegal electricity connections in the municipality is said to have shot up.
News24 recently reported that more than 21 000 households were illegally connected to the electricity grid in the municipality, and the Auditor-General said the municipality was "aiding" the illegal connections, at an estimated cost of R100 million.
But now the illegal electricity connections are said to have jumped to 25 000, meaning that revenue losses are higher.
"I had a chat with the electricity department and they informed me that it is no longer 21 000 prepaid meters but ... 25 000," Reinus said.
Mapholoba didn't respond to a query about the increase in illegal connections.
He previously said the municipality was addressing the issue.
