The KZN Transport Department has called an immediate halt to major road works in the province.
|||We’ve run out of cash, is the message from the KwaZulu-Natal Transport Department to consultants and contractors as it called an immediate halt to major road infrastructure projects in the province.
The department attributed its cash flow crisis to unexpected costs in fixing flood damage and too little disaster funding from the national Co-operative Governance and Traditional Affairs Department.
The Transport Department suspended payment to its service providers with immediate effect.
Department head Chris Hlabisa advised businesses that suspended “head office road infrastructure projects” would be resumed in March, and payments in April.
The Mercury has seen correspondence from Hlabisa, dated mid-January, in which he tells them to tell their service providers that work should be suspended immediately “to avoid any additional costs being incurred by the department”.
Apart from floods, which Hlabisa said had ravaged KZN since 2008, he cited minimum funding as a reason for the suspension of projects.
“We are mindful of the fact that there will be costs related to the suspension for contractors and, in terms of the General Conditions of Contract, will be prepared to accommodate standing time as a means of compensation,” he wrote.
Hlabisa said departmental funding had to be used for disaster relief projects. As a result, the department was overcommitted on its current budget, leading to over-expenditure which was not budgeted for in the 2011/12 financial year operational plan.
However, the department’s spokesman, Kwanele Ncalane, said there was no cause for alarm as the department was not cash-strapped and had not suspended construction for “negative” reasons.
He said the department was not in a position to accumulate over- expenditure and the decision was made to prevent overspending and maintain the clean audit received in the last financial year.
While maintenance programmes would continue, projects like roads linking SA to other countries and the Sani Pass road, which were expected to run into the next financial year, had been suspended.
Strategic
The department was focusing on roads damaged by floods, including those in Msinga, and which were strategic for the movement of people and the province’s economy.
Ncalane said Hlabisa had warned MPLs during a briefing to the legislature’s transport portfolio committee last year of a projected shortfall of R874 million just from fixing of flood damage.
ACDP MPL Jo-Anne Downs blamed the decision to suspend certain projects on financial mismanagement, saying that, although the Transport Department had not received the full amounts requested from the Co-operative Governance Department, there should always be enough money for “some leeway” in the budget. Many businesses, especially emerging contractors, would suffer because of the department’s decision.
“These guys can’t sustain a three-month lay-off and three months of non-payment; it will drive them out of business.”
Downs said the department’s Zibambele road maintenance project, a poverty alleviation project in which households were paid to maintain sections of road, would also suffer.
However, Ncalane said the project would proceed as usual.
The Mercury understands that the 2008 floods caused damage to transport infrastructure amounting to R1.1 billion. The 2009/10 floods cost R312m, but the Transport Department only received R250m from the Co-operative Governance Department.
DA MPL Radleys Keys, a member of the transport committee, said the department’s decision had delayed several projects – and several contractors had complained of being paid late.
Some projects were suspended in December.
“I don’t see how blaming it all on the floods adequately explains the situation,” he said.
Keys said the department had underspent in the first two quarters of the financial year and overspent in the last two, which pointed to poor planning. - The Mercury