DA questions the proposed rebuilding of Mkhondo Municipality

Bosman Grobler MPL

DA spokesperson for cooperative governance and traditional affairs

The DA is in possession of documentation put before the Mkhondo Council during April and July 2014.

These documents, which have been accepted by council, proposes that the municipality sell Erf 58 and Erf 844 to Sinosa Energy and Construction (Pty) Ltd for the amount of R8 000 000.

On conclusion of the sale of property, Sinosa will design, finance and develop new offices for the municipality.

The municipality will then enter into a lease agreement with Sinosa to rent the new offices for a period of 12 years, at an amount of R825 600 excluding VAT per month.  Furthermore, the lease agreement includes an annual escalation of 8%.

The financial implications of this proposal are astounding. The cost of the new municipal offices is based on a capital cost of R82 560 000 and taking into account the annual escalation, Sinosa will benefit with more than R130 398 196.00 profit after the 12 year period.

The proposal also makes no mention of the town hall being rebuilt.  The municipality will then have to rent premises in future for any meetings or functions, a further cost that should be avoided.

Another troubling clause in the proposal is that the ownership and title deed of the new offices will be transferred to the municipality at the maturity of the lease period.  The DA begs to question at what cost the buildings will be “transferred” back to the municipality and who will be responsible to ensure that this process in fact takes place.

The DA took the initiative to do company searches on Sinosa and uncovered further discrepancies.  Sinosa has many variations registered, all with different registration numbers.  The original proposal was in the name of Sinosa Energy and Construction (Pty) Ltd.  The follow-up proposals were under the name Sinosa Properties (Pty) Ltd with a different company registration number.  How thoroughly could council have looked into this proposal if they did not even question the various names that the company is trading under?

The fact that Mkhonto Municipality’s unemployment rate is at an all-time high of 48.5%, should council not rather be making use of local contractors instead of a company based outside of Mpumalanga?  There are no viable reasons as to why the current municipal buildings could not be upgraded instead of selling the ground and rebuilding.

The DA has formulated questions to the MEC for clarity on this matter (Click here for questions).  With municipalities struggling to survive and to provide basic services, this extravagant and totally unrealistic spending once again shows that the ANC government is pre-occupied with non-essential projects and services, often to enrich a closed group of cronies, instead of delivering essential services in a municipality and overcoming unemployment.