Months after leasing out a R25m transformer to a private company, the cash-strapped Nelson Mandela Bay municipality wants to splash out R37m on two new ones — even as it scrambles to reshuffle grant funding to avoid losing millions of rand to the National Treasury.
On Thursday, the council voted on the R88.59m budget amendment, with 54 councillors voting in favour.
A total of 45 voted against the amendment.
However, the recommendation required a resolution supported by a majority of the council’s full complement, meaning at least 61 votes.
The budget amendments are taken from various stalled projects in the informal settlements partnership grant (ISUPG), where spending as of December 31 stood at 49.5%.
In total, the metro was allocated R377.88m for the 2025/2026 financial year.
However, during the meeting it emerged that the national department of human settlements has threatened to withhold the third tranche due to underspending.
According to a report by human settlements executive director Tabiso Mfeya, of the R243.42m transferred to the city, only R143.91m had been spent.
Speaking during the meeting, at this point seven months into the financial year, Mfeya said the city needed to move quickly, because if the money was not spent, the metro would lose it.
“We have already received a letter from the national department that has an intention to withhold the third tranche, and we have to respond to that by looking at projects that are contracted, that are performing, where we take money to and those, of course, that are not performing for various reasons,” Mfeya said.
“The biggest one in this financial year, and I need to be open and frank about it, and it comes up for the first time that before we could implement projects of water and sanitation, mainly in areas that already have a population, Dedeat (department of economic development, environmental affairs and tourism) said to us, when we already have contractors ready to hit site, that we’ve got to submit a 2GG application.
“Essentially it’s an application that requests them to give us a go-ahead to implement projects. It has delayed us.
“There are many projects all over the show that we have not been able to start because of that issue.
“Then you see money being transferred from those projects that are not performing to the ones that are.
“Of course, there’s the obvious Walmer issue, where people have refused to allow us to go onto the site.
“I need to emphasise that only projects that are in the business plan can be implemented.”
Mfeya reminded the council that in the previous financial year, the city lost R241m in unapproved grant rollover.
He said the adjustment was done to avoid that.
“We are trying to avoid getting to the point where we apply for rollovers, meaning that we want to spend all of what we have.”
DA councillor Rano Kayser questioned whether Mfeya was confirming that the report was drafted by the department of human settlements, threatening to withhold grant funds.
“What is that amount because you’ve raised it? If [human settlements] wrote that letter, it means we’ve failed in project management.
“If we were successful or on par with project management, you would not have an item that would divert funds from one ward to the other.”
Responding to Kayser, Mfeya said yes, but added the report had been in the works since December.
“The letter only came last week, and this item was drafted in December because of looking at performance trends within the projects that are in the business plan,” Mfeya said.
“I want to indicate that sometimes you have issues that are beyond your control in implementing projects that will cause you to rethink whether you still want to stick with a big budget.
“It’s not poor planning; in fact, again, it’s agility that you should have if you’re in the business of implementing projects.”
Once successful, the budget can be adjusted in favour of the following projects:
- Joe Slovo substation: R37.05m;
- Mabandla substation: R1.56m;
- Neighbourhood parks: R5m;
- Bayland connections: R5m;
- Joe Slovo road construction: R19.97m;
- Khayamnandi road construction: R20m
According to the report, the department of electricity and energy allocated R46m to undeclared informal settlements.
Bayland received R6m, which was deemed insufficient to complete the project.
The approved ward capital budget was not in line with the approved business plan for the undeclared informal settlements capital projects.
For the Mabandla substation, the report states that the initial plan was to reuse the existing 66/22kV transformer protection panels.
However, testing revealed that the panels were outdated, with most tests failing due to age-related deterioration.
“The decision was taken to procure new HV transformer protection panels. The additional amount required for the panels is R1.56m.”
The city also wants to establish a new substation in Booysen Park and Joe Slovo.
“Purchasing of new transformers which are required to introduce a new point of supply into the Joe Slovo area and to facilitate two factors, namely, San Souci and Redhouse substations, which are feeding housing developments way beyond their design area,” the item stated.
“To facilitate the expansion of further BNG housing projects in the design supply area around Booysen Park substation.
“The cost for the two transformers, which should supply a 63 MVA power, is R37.05m.”
Kayser criticised the city’s planned spending of R37.05m on the two transformers while it leased one out.
“This R37m could’ve gone to various wards.
“If we take people seriously, how do we buy two transformers when we voluntarily gave a transformer away, while people do not have access to sanitation.
“What is happening with this item is that human settlements failed to spend the money.”
Bay mayor Babalwa Lobishe has come under fire for leasing the R25m transformer to a private company, a decision that has now been taken to court for a legal review.
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