The Matjhabeng Local Municipality is under mounting financial and legal pressure after the National Treasury partially suspended its equitable share allocation while a coalition of residents and ratepayers threatened court action to stop the municipality’s proposed Economic Summit.

The developments have intensified scrutiny of a municipality already battling massive debt, a financial recovery plan, and ongoing concerns over governance and financial management.

The National Treasury announced on Tuesday 7 July that Matjhabeng is among 69 municipalities whose equitable share allocations have been partially suspended to enforce fiscal discipline.

The Treasury said the action, taken under Section 216(2) of the Constitution and the Municipal Finance Management Act, was aimed at addressing persistent financial mismanagement.

Reasons cited include recurring unauthorised, irregular, fruitless and wasteful expenditure, unfunded budgets, overdue payments to Eskom and water boards, unpaid statutory deductions and a failure to act against officials responsible for financial misconduct.

Matjhabeng currently owes more than R1,58 billion to Eskom and over R6,84 billion to Vaal Central Water (VCW), raising concerns about the long-term sustainability of electricity and water services.

The mayoral candidate of the DA, Piet Botha, warned that withholding the equitable share could have severe consequences for residents.

“The equitable share assists indigent households who cannot afford municipal services,” he said.

“If these funds are withheld, service delivery will inevitably suffer. Officials may not receive salaries or overtime, and creditors may remain unpaid.”

However, Botha said there was hope the matter could soon be resolved. He said the Matjhabeng speaker, Cllr Bhekumuzi Stofile, who is also the president of the South African Local Government Association (Salga), met with the minister and National Treasury officials on Tuesday.

“He advised that the matter is about 80% resolved and is hopeful it will be concluded favourably within the next day or so,” Botha said.

According to Botha, the Treasury accepted that the municipality had responded to the initial notice regarding the proposed suspension and had submitted proof that third-party obligations (including medical aids, pensions, provident funds and taxes) were up to date. While Eskom and the VCW had not been paid in full, partial payments had been made.

He said the Treasury would provide the municipality with a list of outstanding compliance issues, including the establishment of an audit committee, municipal planning tribunal and disciplinary board, which are expected to be addressed at the next council meeting.

Meanwhile, a coalition of concerned residents, ratepayers and political representatives has issued a formal pre-litigation notice demanding that the municipality suspend its planned Economic Summit, scheduled for the end of July.

The group alleges there is no publicly available evidence that the summit was approved through the municipality’s integrated development plan (IDP), municipal council or approved budget, and questions whether procurement processes have commenced without lawful authority.

The coalition has demanded that the municipality produce council resolutions, budget approvals, procurement records and other supporting documents within three days.

Failing that, it says it will approach the High Court for an urgent interdict and refer the matter to oversight bodies, including the Auditor-General (AG), National Treasury, and the Free State Provincial Treasury.

At the time of publication, the Matjhabeng Local Municipality noted that a formal statement would be issued in due course.

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