The eThekwini Metro in KwaZulu-Natal, run by a coalition comprising the African National Congress (ANC), Economic Freedom Fighters (EFF) and the Inkatha Freedom Party (IFP), is on the verge of losing more than R800 million in transport and township infrastructure grants due to failure to spend the money.
On February 14, the National Treasury wrote to City Manager Musa Mbhele asked him to motivate why a portion of the R3.2 billion grants – totalling R880 million – should not be stopped owing to underperformance by the metro.
In the letter, the National Treasury’s Ogalaletseng Gaarekwe told Mbhele that the national government intended to reduce the allocations of the Public Transport Network Grant (PTNG), the Neighbourhood Development Partnership Grant (NDPG), and the Urban Settlements Development Grant (USDG) because the eThekwini Metro only spent 40% of the allocations by the end of December 2024.
The PTNG is a grant in South Africa that helps fund public transport systems and eThekwini was using it to fund the Go Durban project which stalled due to a dispute with the local taxi industry.
The NDPG was introduced in 2006 to fund infrastructure development in previously marginalised areas like townships.
The USDG is a grant given to metros to help them improve the quality of life for households by supporting the development of sustainable human settlements.
Due to unspent budget, the National Treasury wants to reduce eThekwini Municipality’s R900 million PTNG grant by R700 million, cut the R152 million NDPG allocation by R18 million, and take R53 million from the R1.4 billion USDG allocation.
“The National Treasury hereby proposes that a portion of the 2024/25 allocation to your municipality in respect of the Public Transport Network Grant (PTNG), the Neighbourhood Development Partnership Grant (NDPG), and the Urban Settlements Development Grant (USDG) as gazetted in the 2024 DoRA be stopped due to underperformance of the grant allocation(s).
“This letter serves as formal notification by the National Treasury of its intention to stop the above-mentioned allocations in terms of section 18 of the 2024 DoRA and section 38 of the MFMA,” Gaarekwe said in the letter.
However, the National Treasury added that reducing the allocations due to underperformance would not affect eThekwini Metro’s future allocations.
“Acting on the above, the National Treasury hereby informs you of the intention to stop an amount of R771.4 million from your 2024/25 PTNG allocation of R921.4 million, an amount of R18.5 million from your 2024/25 NDPG allocation of R152.6 million, and an amount of R53.3 million from your USDG allocation of R1.4 billion in terms of section 18 of the 2024 DoRA. This decision will not in any way affect future allocations to your municipality,” Gaarekwe added.
Mbhele and the municipality were also asked to explain the shocking under performance to the National Treasury.
“Your municipality is requested in response to motivate to the National Treasury on the following: Why is expenditure reported as at 31 December 2024 below 40 per cent.”
Mbhele and the municipality were further asked to make a commitment that the allocated funds are committed and that they will be fully spent by the end of the financial year (30 June 2025).
This means eThekwini had to commit that the municipality will not request a rollover against the funds proposed to be stopped.
ActionSA in the council is up in arms over the matter and the party’s caucus leader, Zwakele Mncwango has written to eThekwini Speaker, Thabji Nyawose, asking for a special council sitting to discuss the matter.
EThekwini Municipality Spokesperson Gugu Sisilana admitted that the National Treasury informed the metro of its intention to reduce hundreds of millions in grant allocations. However, she denied that eThekwini failed to spend all the grant money.
“Importantly, we can confirm that this notice may apply to the Public Transport Network Grant (PTNG) and should not impact other grants mentioned. There is adequate information to demonstrate compliance with the Division of Revenue Act (DoRA) conditions and to justify the retention of the other Grants,” Sisilana said.
She further said the municipality acknowledges National Treasury’s concerns as outlined in the 2024/25 mid-year expenditure report, submitted in terms of the Division of Revenue Act (Act No. 24 of 2024) and the Municipal Finance Management Act (Act No. 56 of 2003).
“The identified challenges relate mainly to the current impasse with the transferring officer
responsible for the Public Transport Network Grant, which has affected grant compliance and performance reporting in respect of the Go!Durban project.
“We remain fully committed to resolving these issues in close collaboration with National Treasury and the transferring officer to ensure compliance with all relevant legislative requirements. To this effect, the City leadership is engaging the Ministry of Transport regarding the Public Transport Network Grant and related projects such as Go! Durban,” added Sisilana.
