Landlords leasing properties to the Eastern Cape government face a bleak Christmas as the provincial public works & infrastructure department — the custodian of all state assets and leased properties — has no money to pay rent for the next five months.
The department, in correspondence to affected landlords this week, said “due to unforeseen circumstances out of its control” it would be unable to meet its obligation to pay rent, utility charges and “other commitments”.
The payment blackout, the department said, would take place between this month and March next year, with the department’s acting head of department, Nomalungelo Nomandela, saying it would be unable to honour its payment obligations until the beginning of the new financial year, in April 2025.
The province reportedly pays more than R200m a year in the Buffalo City Metro alone to lease office space for seven government departments using private properties.
The developments come after recent reports that the department had failed to pay some contractors and landlords since May, resulting in the health department’s supply chain unit unable to operate from its premises after Buffalo City Metro cut off its electricity due to nonpayment.
At the time, one long-term contractor, who did not want to be named, said: “There are about 190 of us [contractors] ...the department last paid us in May.
“They told everybody they don’t have money.”
The service provider said contractors had to lay off workers due to nonpayment.
However, the contractors had been barred from speaking publicly about their nonpayment plight, as they were “forced to sign non-disclosure agreements”.
In the letter dated November 25, Nomandela urges affected landlords “to make necessary financial arrangements to ensure that services continue as normal during this difficult time”.
“Please note that the department appreciates the effects that this predicament may have on your operations and apologises profusely for the inconvenience caused,” Nomandela wrote.
She urged the affected service providers to accept the nonpayment gracefully without considering any action against the department.
“We further plead with you not to impose any of the contractual and legal remedies available to you as we are humbly seeking your indulgence,” she said.
EFF MPL Simthembile Madikizela said on Thursday: “This is unacceptable.
“We condemn this lack of professionalism as this will collapse businesses already struggling due to the declining provincial economy.
“We call for the executive, headed by premier Oscar Mabuyane, to take swift action and ensure there is a clear intervention plan as no business can operate for five months without rental.
“This as most businesses are paying bonds for their properties and other rates.
“We feel if this unjust act is not dealt with, it will set extremely wrong precedence for other departments that are heavily relying on outsourced properties,” Madikizela said.
DA MPL Malcolm Figg said the situation was unacceptable.
“Previously we heard that security guards or the owners of the companies had to fend for themselves because public works doesn’t have money.
“I tried to get information from the head of department, but she wasn’t available today.
“I need to know how much money is involved ... I also need to know how many landlords are involved.
“They now are the ones that must foot the bill for public works who have planned poorly,” Figg said.
“People must be held accountable.”
In a recent portfolio committee meeting at the Bhisho legislature, Figg said, multiparty committee members were told that the accruals of the department were “climbing at a rapid rate”.
“The department owes the business sector monies they cannot afford to pay.
“We were told that they have about R4bn of accruals. What it means is that they wait for money that is allocated for the following financial year.
“They are now using cash for the next year to pay accounts of the previous year, and that is unacceptable.
“Landlords are providing the accommodation, and public works is not performing on its side and paying them.
“Basically, they are not honouring their contractual obligations. And that’s against the law,” Figg said.
ANC MPL and public works portfolio committee chair Makhaya Twabu said the nonpayment was crippling businesses, especially the SMMEs, their employees and families.
The department spokesperson had not responded to queries by the time of publication.
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