KAROO NEWS - The Dr Beyers Naudé Local Municipality recently disposed of the Graaff-Reinet airfield in order to pay off the pension fund debt that it incurred when the municipality failed to pay over municipal workers' pension fund contributions to the relevant pension fund since September 2019.
The airfield was sold for R15m plus Vat to a private company in which several investors have invested.
However, a portion of the airfield to the value of R1m belongs to SANParks, who had to approach Parliament for a proclamation to separate the portion from the park before signing it off to the municipality.
Since this process can take up to 18 months, the municipality decided to split the sale – the larger portion was sold for R14m and as soon as the proclamation process is completed, the remaining portion will be sold for R1m.
A media enquiry was sent to SANParks to confirm whether they have approached Parliament for the required proclamation. Their response will be published as soon as it is received.
Airfield was sold to a private company
Derek Light Attorneys and Conveyancers, that represents the private company, confirmed that the abovementioned investors aimed to secure private ownership of the Graaff-Reinet airfield and that the property where the airfield is based was subsequently purchased from the Dr Beyers Naudé Local Municipality.
"Historically, the airfield – the acquisition of the land and the construction of the aerodrome – was largely funded by the private sector for the benefit of the residents and visitors to the municipality," Light explained. "The conduct of the business of administering a licensed public aerodrome is onerous. It is costly and there are risks associated with operating an aerodrome that place a substantial burden on the municipality and its finances. It renders very little financial return and renders a useful service to those utilising the aerodrome."
He added that, in recent years, the maintenance and security of the aerodrome was mostly taken care of by the private sector and those using the aerodrome, at no cost to the municipality.
However, due to financial constraints, this could not be done effectively. "It is against this background that discussions were entered into between our clients and the municipality and ultimately the aerodrome was purchased after a public auction process.
"The return received by the municipality is market related and relieves the municipality of the ongoing financial burden associated with its upkeep and administration," said Light.
Regarding the terms of the agreement between the private company and the municipality it was stated that they consider themselves "bound to honour the confidentiality of the details of the transaction", which they hope will be concluded by early next year. "In the interim we can confirm that our clients will assume operation of the aerodrome from
1 December. It is the intention of our clients to allow controlled use of the aerodrome by the public, but it will now be a private aerodrome which will not be capable of being conducted as a commercial enterprise.
"The nett result is that this important facility has now been secured for the benefit of the community of Graaff-Reinet, but at no cost to the municipality and ratepayers," Light explained.
Community opposition to the sale of municipal assets
In addition to the sale of the airfield, the municipality sold parking plots to Montego for the amount of R1,5m and also received a proposal from the district's Development Agency to buy the old swimming pool.
After the municipality's intention to alienate 12 identified municipal properties was published on the municipal website on 11 December 2020, some members of the community opposed the sale of public assets without proper public participation. The twelve properties that the municipality intended to alienate included the Graaff-Reinet airfield, the Montego offsite parking and the old swimming pool.
The municipality explained that the decision to dispose of municipal assets that no longer generate any income but have become a financial burden was based on the financial position of the municipality.
Finances
In April last year it was reported that the total debt of the municipality was estimated between R360m and R400m. This amount was owed to various creditors including the Government Employee Pension Fund, Eskom, Sars, the Auditor General and Salga.
The report also attributed the poor financial position of the municipality to historical debt that was inherited through the amalgamation with municipalities (Ikwezi and Baviaans) and the failure of the national government to honour its promise to clear this debt. It was stated that the income generated from the sale of municipal assets will not be enough to cover the current debt but will cover the most urgent debt.
In August, concern was raised about the draft annual financial statements for the period ending 30 June last year, specifically that the creditor figures were unaudited and ranged from R401m to R554,2m.
This indicated an increase of R153m from the previous financial year. Eskom, with an increase of R135m – from R306m to R441 214m – was raised as particularly concerning.
The pension fund debt on 30 June last year was at R27 255 398m. It was reported that the amount owed to the pension fund was at R16m in June this year, but that it fluctuates monthly.
The municipality assured the unions and workers that the intention was to allocate proceeds from the sale of the airfield towards the pension fund. A media enquiry relating to the financial position of the municipality and the sale of municipal assets was sent to the municipality, but at the time of going to print no response was received.
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