Vehicle rental company Afrirent has again threatened to ground the City of Johannesburg’s vehicle fleet due to non-payment of debt amounting to R87m.
On Tuesday CEO Senzo Tsabedze said the city has been in arrears as far back as October 2022. He said the city has not explained why it has not been able to meet its financial commitment.
“No one has explained what is happening. This is not the first time we have written to them threatening to suspend the use of our vehicles.
“When we wrote to them last year they owed R120m, and they paid a portion to avoid us retrieving our vehicles. We are going back to them because they have not made further payments, and if we include January’s bill, the debt owed to us reaches about R140m,” Tsabedze said.
The fleet, which consists of 2,700 vehicles, is a combination of specialised and non-specialised vehicles including trucks, sedans and buses. Of these 1,400 are used by the Johannesburg metro police department (JMPD), including the BMWs used on highways. Johannesburg Water uses Afrirent’s specialised trucks and bakkies.
Tsabedze expressed disappointment about the debt, saying they have never been owed so much money by the city.
“The most we have been owed in the past is about R30m to R40m early in the contract when we were starting out with the city.”
The contract between the city and Afrirent started in 2018 under former mayor Herman Mashaba’s tenure and was scheduled to end in 2021, after which the rental company was given a 12-month extension until November last year and another year on a month-to-month basis until they finalise the new tender.
“For us grounding the vehicles is the last option. By the time we suspend the use of the vehicles we have exhausted communication with the city. As long as they are using the vehicles, no one takes us seriously,” Tsabedze said.
The CEO said the JMPD is the only department to have made a part payment, with a promise to settle the balance by Wednesday. He said the rest of the city’s departments have not paid anything and have not made payment arrangements.
“We are a business. I need to pay the banks financing the vehicles, I have service providers who service the cars, I provide tyres for the cars. I can’t carry the city. I’m a business, I can’t carry government,” Tsabedze said.
“It is a principle more than anything. I would close shop if I had to cover government’s bill. I end up having to take money from my smaller businesses to finance myself.”
Acting city manager Bryne Maduka said there was no impact on service delivery because the vehicles had not been grounded yet. He said the city was doing its reconciliation to negotiate with the rental company to avoid the fleet being grounded.
“It is not just Afrirent experiencing this. There are other service providers who are owed by the city. The city is experiencing cash flow challenges, and these are based on poor revenue collection levels, the economic crunch experienced by everyone and credit management.
“We are going to look at our expenditure to see where we can cut to meet our financial commitments.”
Maduka claimed the fleet was non-specialised and wouldn’t compromise service delivery.
SA Municipal Workers’ Union (Samwu) leader Karabo Ramahuma said grounding the fleet would have a dire effect on city employees executing their service delivery duties.
“People executing duties using those cars, how are they going to perform? If the city the vehicles are part of a non-specialised fleet, why do they procure them? Does it not then count as fruitless expenditure?” Ramahuma asked.
“At the rate things are going, salaries might be next in danger. In November there was a threat about the city’s inability to pay performance bonuses. That meeting was stormed by a group of angry service providers who wanted answers about when they would be paid for services already rendered.
“The city has been operating on ‘taking Peter’s money to pay Paul’. It goes to show the R2bn Development Bank loan they sought [which was rejected by parties in council] was for operational activities and not infrastructure development. It is an abnormal situation,” Ramahuma said.
The office of the mayor declined to comment, saying this was an administrative function and there was no service delivery impact yet.
Official opposition leader Dada Morero said they received the news about non-payment which “clearly confirms what we have been saying since July 2022, that the city’s financial position is in a mess and likely to lead to the collapse of the municipality”.
The ANC caucus leader said because of the dire situation and complaints from many service providers, the city would not be able to meet its financial obligations of more than R6bn..
“It is correct DA mayor Mpho Phalatse should resign and allow the progressive ANC-lead coalition to take over and demonstrate expertise and skill in the area of municipal finances,” Morero said.
Phalatse is facing three motions of no confidence at the council sitting on Thursday.
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