Page 223 - UGU Dstrct Mun IDP Report '21-22

Table 6.1.3.1.1.2: Equitable Share per Local Municipality
Source: Ugu District Municipality Draft Budget, 2021
6.1.3.1.2 Institutional Component
To provide basic services to the households, the municipality must be able to run basic administration. Most municipalities should be able to fund their majority of administration costs with their own revenue. But because poor households are not able to contribute in full towards administration costs of the municipality, the equitable share includes an institutional support component to meet the municipalities halfway. The subsidy of equitable share towards administration costs is limited to 8.2% of the Equitable Share. Therefore, in 2018/2019 financial year, government will subsidise uGu District with only R35,741,914.00 (i.e. 8.2%) towards its Administration Costs. Any additional costs must get from its internal revenue. However, an additional subsidy of R6.6 million which does not form part of the Equitable Share Formula will be made available in 2018/2019 financial year to subsidise Councillors Remuneration. Any additional costs must come from internal revenue.
6.1.3.1.3 Community Services Component
This component from Equitable Share Formula, subsidises services that benefits communities rather than individual households (i.e. which are provided for in the basic services component). Such services include these services e.g. municipal health services, fire services etc.). Therefore, in 2021/2022 financial year, equitable share subsidy for uGu District Municipality towards these services is only limited to R53,612,871.00 (i.e. 12.3%). Any additional costs must come from internal revenue.
6.1.3.2 Municipal Infrastructure Grant (MIG)
The MIG allocation for 2021/2022 financial year will be R255 524 000. This means that the projects to be implemented during 2021/2022 financial year must be limited to annual allocation of R255 524 000. The amount of R255 524,000 must equate to the service providers appointed as well. Therefore, no commitment exceeding R255 524,000 must take place. The Project Management Unit (PMU) must manage projects with due diligence by ensuring the following:
i. Professional Fees for each project are limited to 14% of the total project costs;
ii. The variation orders are prevented as there will be no funds available to cover them;
iii. The initial scope of work is thoroughly analysed and checked to ensure that it cover all work to be performed;
iv. The MIG Implementation Plan is implemented in accordance with the Cash Flows per actual trench received;
v. The actual expenditure per project must not exceed the actual trench received per quarter;
vi. The budget for each project must be managed and monitored in accordance with actual cash allocation received per
trench per quarter;
vii. If needs be blacklist all non performers;
viii. Making sure that retentions are invested and not utilised in other projects;
ix. Ensure that consultant or engineer is held responsible and accountable for any deficiencies in the performance of the
contractors;
x. Discourages cessionary agreements; etc.
The 2020 Division of Revenue Bill as approved by Parliament together with the National Budget has broken down the MIG allocation to uGu District Municipality to be utilised or spent at minimum per Local Municipality as follows for 2020/2021 financial year:
Municipality
Water
Sanitation
Total
UMdoni
R36,593,000
R27,936,000
R64,529,000
Umzumbe
R32,346,000
24,694,000
R57,040,000
UMuziwabantu
R24,176,000
R18,456,000
R42,632,000
Ray Nkonyeni
R83,235,000
R63,543,000
R146,778,000
IDP REVIEW 221