Finance and Economic Opportunities
Question by:
Hon Nobulumko Nkondlo
Answered by:
Hon David Maynier
Question Number:
2
Question Body:
With regard to a reported City of Cape Town loan from a German Bank to upgrade sewage plants:
Whether provincial Treasury was involved and aware of this loan; if so, (a) (i) when and (ii) why was the money borrowed, (b)(i) why and (ii) how was this specific bank chosen, (c) what are the terms and conditions of the loan, (d) when was the money transferred and (ii) what are the details of how and on what has it been spent to date, (d) (i) what is the cost of the loan to the taxpayer and (ii) what is the repayment rates?
Answer Body:
- (i) The City of Cape Town’s requested comments from the public, National and Provincial Treasury on 31 August 2018 on the intended long term borrowing In terms of section 46(3)(a)(ii) of the MFMA, Provincial Treasury considered the request for comment on the long-term borrowing proposal and provided comments on 21 September 2018 to the City based on an assessment of compliance to the Municipal Finance Management Act (MFMA) and associated regulations,
(ii) The loan was raised and forms part of the capital funding mix to finance Waste Water projects in the Water Department included in the City’s 2018/19 Capital Programme approved on 30 May 2018.
- (i) and (ii) The City was approached by the German Development Bank to fund specific projects exclusively for the refurbishment and expansion of several waste water treatment plants in Cape Town.
- The debt is unsecured and was issued in three separate tranches between December 2018 and December 2019 at a fixed rate from 8.107 per cent. The maturity date of the loan is 15 November 2033.
- The first disbursement of loan was made in January 2019. The second and third disbursements were made in May 2019 and November 2019 respectively.
- Expenditure was incurred in line with the approved budget and regulatory framework. No irregularity was raised by the Office of the Auditor-General South Africa. Specific expenditure reports should be obtained directly, from the Municipality.
- The interest rate on the external borrowings is 8.107 per cent and the net interest accrual for the financial year ending 30 June 2020, was R10.276 million. As at
31 January 2021, the outstanding amount of the external borrowings amounted to R 1.116 billion.
Date:
Friday, February 19, 2021
