CHAIRMAN’S EXECUTIVE REPORT

Treasury and Oversight Engagements

Port Alfred Ratepayers and Residents Association (PARRA)

Reporting Period: 2025/26 – 2026/27 Financial Year

The Port Alfred Ratepayers and Residents Association (PARRA) has, throughout the reporting period, undertaken an extensive programme of engagement with National Treasury, Eastern Cape Provincial Treasury and other oversight institutions concerning the deteriorating financial position, governance practices and service delivery failures within Ndlambe Municipality.

These engagements have not been motivated by political considerations but by an obligation to protect the financial interests of residents and businesses, promote lawful municipal governance and encourage compliance with the Municipal Finance Management Act (MFMA), Municipal Budget and Reporting Regulations (MBRR), National Treasury Circulars and the Constitution of the Republic of South Africa.

Our submissions have consistently highlighted what we believe are systemic governance failures, increasing financial risk and a continued pattern of expenditure decisions that prioritise discretionary spending over essential service delivery.

Despite repeated representations, many of the concerns remain unresolved, with several issues becoming progressively more serious.

1. Financial Sustainability

PARRA repeatedly raised concerns that the Municipality is following an unsustainable financial trajectory.

Key concerns included:

• rapidly increasing operating expenditure;
• declining affordability for residents;
• increasing pressure on fixed-income pensioners;
• deteriorating infrastructure despite increasing budgets;
• growing dependence on tariff increases rather than improved revenue collection;
• inadequate maintenance expenditure.

Treasury was requested to intervene before these trends create an irreversible financial crisis.

2. Electricity Tariff Increases

One of the most significant issues raised concerned the proposed electricity tariff structure.

PARRA questioned:

• the validity of the Cost of Supply Study;
• excessive increases in fixed charges;
• disproportionate increases affecting low-consumption households;
• additional SSEG charges;
• affordability for pensioners;
• lack of meaningful public consultation.

Our submissions demonstrated that many residents would experience increases significantly above inflation.

3. Water and Sanitation Infrastructure

PARRA consistently questioned the Municipality’s decision-making regarding water infrastructure.

Concerns included:

• repeated infrastructure failures;
• extensive water losses;
• sewer spillages;
• deteriorating pump stations;
• inadequate preventative maintenance;
• reliance on emergency water tanker operations.

Treasury was requested to investigate why substantial operational expenditure continued to be directed toward emergency tanker services rather than permanent infrastructure rehabilitation.

4. Procurement of Water Tankers

Specific representations questioned the financial prudence of purchasing and hiring additional water tankers while existing infrastructure continues to deteriorate.

PARRA argued that:

• tankers treat symptoms rather than causes;
• capital should prioritise infrastructure renewal;
• emergency expenditure risks becoming permanent operational expenditure;
• the approach is inconsistent with long-term financial sustainability.

5. High Rental Costs for Water and Sanitation Vehicles

Detailed concerns were raised regarding exceptionally high expenditure on rented:

• water tankers;
• vacuum trucks;
• sanitation vehicles.

Questions submitted to Treasury included:

• Why rental expenditure continues to increase;
• Whether value-for-money assessments were undertaken;
• Whether procurement complied with SCM legislation;
• Whether purchasing municipal assets would be more economical.

6. Travel Expenditure

PARRA specifically questioned expenditure relating to:

• Mayor’s travel;
• Speaker’s travel;
• executive travel generally.

The concern raised was that senior political office bearers already receive:

• official vehicles;
• fuel;
• maintenance;
• additional transport benefits;
• motor vehicle allowances.

Treasury was requested to clarify how further travel expenditure complies with principles of economy and value for money.

7. Discretionary Expenditure

Repeated submissions identified increasing expenditure on non-core functions, including:

• catering;
• conferences;
• advertising;
• publicity;
• entertainment;
• ceremonial functions;
• donations;
•  

PARRA argued that these expenditures should not increase while essential infrastructure continues to fail.

8. Consultants and Contracted Services

The Association questioned the continuing reliance on consultants despite significant employee costs.

Treasury was requested to determine whether:

• internal capacity exists;
• duplicate expenditure occurs;
• consultant appointments comply with Treasury guidance;
• adequate skills transfer occurs.

9. Employee Costs

PARRA highlighted concerns regarding:

• salary growth;
• organisational sustainability;
• vacancies;
• overtime;
• overall affordability.

Questions were raised regarding whether personnel expenditure remains sustainable relative to municipal revenue.

10. Infrastructure Maintenance

One of the most consistent themes in every submission has been inadequate maintenance.

Examples include:

• roads;
• stormwater systems;
• sewer infrastructure;
• water reticulation;
• electrical infrastructure;
• public facilities.

PARRA argued that deferred maintenance is substantially increasing future financial liabilities.

11. Irregular and Questionable Expenditure

Following analysis of budget documentation and expenditure schedules, PARRA requested Treasury investigate expenditure appearing to represent:

• poor financial prioritisation;
• possible wasteful expenditure;
• unnecessary discretionary spending;
• procurement concerns;
• inconsistent budget allocations.

These concerns were supported through detailed expenditure analyses submitted separately.

12. Sunshine Coast Tourism Funding

Questions were raised regarding the continued allocation of municipal funding to Sunshine Coast Tourism.

Treasury was requested to determine whether the funding complies with:

• MFMA;
• Treasury Circular 131;
• Municipal Budget and Reporting Regulations;
• Auditor-General guidance regarding transfers to external organisations.

13. Transfers to External Organisations

PARRA requested Treasury to review grants and transfers made by the Municipality to outside organisations to determine whether:

• measurable public benefit exists;
• proper monitoring occurs;
• performance reporting is adequate;
• funding remains justified.

14. Compliance with Treasury Circulars

Multiple submissions questioned compliance with:

• Treasury Circular 70;
• Treasury Circular 97;
• Treasury Circular 131;
• Treasury Circular 132.

Areas identified included:

• expenditure prioritisation;
• infrastructure funding;
• transfers to outside bodies;
• budget credibility;
• financial sustainability.

15. Auditor-General Findings

PARRA requested closer oversight where recurring Auditor-General findings continue over successive audit cycles.

Concerns included:

• repeat findings;
• inadequate consequence management;
• weak internal controls;
• procurement deficiencies;
• asset management;
• financial governance.

16. Public Participation

PARRA advised Treasury that many residents believe:

• consultation occurs after decisions have effectively been made;
• objections receive limited consideration;
• public trust continues to decline.

Meaningful community engagement remains essential to restoring confidence.

17. Affordability Crisis

Throughout all correspondence, PARRA stressed that Port Alfred contains a significant population of retirees and pensioners living on fixed incomes.

Successive tariff increases, combined with deteriorating services, have created a growing affordability crisis.

Residents increasingly question why they are expected to pay substantially more while experiencing declining service delivery.

18. Requests Made to Treasury

PARRA requested Treasury to:

• conduct detailed financial oversight;
• review expenditure priorities;
• investigate discretionary expenditure;
• assess infrastructure funding;
• evaluate procurement practices;
• review compliance with Treasury Circulars;
• investigate transfers to outside organisations;
• assess financial sustainability;
• intervene where necessary under the MFMA.

Conclusion

The matters raised by PARRA represent more than isolated concerns. Collectively, they indicate a pattern of financial decisions that, in our view, places increasing pressure on municipal finances while failing to address the core responsibility of providing sustainable basic services.

Our engagement with Treasury has consistently sought constructive intervention rather than criticism. We have provided detailed financial analysis, legislative references and practical recommendations aimed at strengthening governance, improving accountability and ensuring that limited public resources are directed toward the maintenance and renewal of essential infrastructure.

PARRA remains committed to working cooperatively with National Treasury, Provincial Treasury, the Auditor-General, COGTA and the Department of Water and Sanitation in pursuit of transparent, lawful and financially sustainable local government.

We have respectfully requested that the concerns outlined in our various submissions continue to receive active consideration and that appropriate oversight mechanisms be employed to safeguard the long-term financial viability of Ndlambe Municipality.

Submitted by:

Ren Mouton
Chairman
Port Alfred Ratepayers and Residents Association (PARRA)

Date: August 2026