<\/p>\n
The finances of the state-owned Independent Development Trust (IDT) came under scrutiny as the entity is engaged in a balancing act of managing social infrastructure projects while grappling with mounting debts and litigation issues.<\/p>\n
This happens as state institutions, for which the IDT conducts infrastructure projects, do not pay up and impact on its revenue generation and the allocations from the Department of Public Works and Infrastructure is inadequate amid the budget cuts.<\/p>\n
During a meeting of the select commitee on public works and The Minister in the Presidency, deputy director-general Adam Mthombeni said the IDT was a going concern.<\/p>\n
\u201cWe need to support them on solvency and liquidity so that they deliver their mandate. IDT is a critical entity to add value on our mandate of the delivery of social infrastructure,\u201d Mthombeni said.<\/p>\n
He said the entity had experienced going concern status since 2012 due to exhausting the R2 billion endowments it received in 1990.<\/p>\n
Mthombeni identified a host of challenges contributing to this predicament, including a declining project portfolio at the provincial level, inefficient project execution, and corporate governance issues that have led to significant operational deficits.<\/p>\n
Mthombeni said IDT\u2019s, which charged management fee at rates that were way below the market, failure to put into effect a business case for long terms sustainability resulted in the entity relying on government funding.<\/p>\n
\u201cThe department has been providing financial support since 2012\/2013 and has to date provided over R700 million for operational costs shortfalls and development of a business case for long term financial sustainability.\u201d<\/p>\n
A total of R343 million was pumped into IDT since the 2020\/2021 financial year.<\/p>\n
Mthombeni the department was now unable to assist IDT even though they were able to project their funding requirements.<\/p>\n
Mthombeni said the board of directors was appointed in 2021 and was able to conclude a turn around strategy for the business.<\/p>\n
\u201cBy the end of 2023\/24 IDT\u2019s portfolio has grown from R2.7 billion in 2021 to R9 billion since 2015\/2016. The IDT requires R6 billion to break even based on its 200 staff complement,\u201d he said.<\/p>\n
Mthombeni said the R6 billion was not adequate to address IDT\u2019s going concern status.<\/p>\n
\u201cThe IDT cannot realise the revenue from the entire portfolio of R9 billion as many projects are in the planning phase and (management fee) charges come into effect during the implementation stage,” said Mthombeni. <\/p>\n
Since 2021 the entity maintained the qualified audit opinion and was being supported to obtain a clean audit opinion. <\/p>\n
The annual report for 2023\/2024 was to be tabled in Parliament after a dispute over the Auditor-General\u2019s report was resolved.<\/p>\n
However, Mthombeni said they noted lack of project management and financial management system that were not fit for purpose.<\/p>\n
\u201cWe are busy assisting the entity in terms of repurposing it, working with cabinet, the National Treasury and the presidential state owned council to help finalise the status of IDT and be supported appropriately,\u201d he said.<\/p>\n
IDT chairperson Tebogo Malaka said they faced high litigation cost from actions by service providers who sue them for non-payment.<\/p>\n
\u201cWe have not been able to pay service providers due to delays by clients not paying us. We work with clients to ensure that we pay service providers,\u201d she added.<\/p>\n
Chief financial officer, Londoloza Somgwevu, said their total expenditure on legal cost for the year was R47m.<\/p>\n
\u201cIf we were to avoid R47 million as IDT we would have made provision of R40 million. The litigation costs do have an impact on our bottom line,\u201d Somngwevu said.<\/p>\n
He told parliamentarians of instances where departments would not pay them towards the end of the financial year and yet they continued to implement their projects.<\/p>\n
\u201cWhen they run out of funds, we don\u2019t stop implementing projects,\u201d Somngwevu said.<\/p>\n
He said at the end of March last year, IDT owed creditors for more than 12000 invoices that could not be paid within the 30-day deadline.<\/p>\n
The entity billed R281 million against R376 million operating expenditure.<\/p>\n
The deficit for the year was R.782 million and had R53.419 million at the end of March 2024.<\/p>\n
mayibongwe.maqhina@inl.co.za<\/p>\n","protected":false},"excerpt":{"rendered":"
The finances of the state-owned Independent Development Trust (IDT) came under scrutiny as the entity is engaged in a balancing act of managing social infrastructure projects while grappling with mounting debts and litigation issues. This happens as state institutions, for which the IDT conducts infrastructure projects, do not pay up and impact on its revenue […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[2043,6237,17398,16485,11289,17840,10204],"class_list":["post-233640","post","type-post","status-publish","format-standard","category-politics","tag-financial","tag-funding","tag-idt","tag-inadequate","tag-litigation","tag-mounting","tag-turmoil"],"yoast_head":"\n