The department of public works and infrastructure and the board of trustees at the Independent Development Trust (IDT) have agreed to expedite the entity’s exit strategy, kick-starting a process that will see the troubled state-owned entity dissolved by March next year.
This follows Public Works Minister Patricia de Lille’s decision in March to dissolve the IDT within the next year because of poor project management and performance, among other factors.
In a letter dated March 31 to the board, De Lille outlined the IDT’s exit strategy. This included an R84-million cash injection from the department to the entity to fund its operational cost shortfall over the next four months.
The department has provided the ailing entity with R500-million in bailouts over the past five years. De Lille initially told the board, which had requested a capital injection from the department, that the fiscal constraints the country is facing makes it difficult to justify any further bailouts for the state-owned entity.
But the department has now decided to provide the IDT with additional funding, which will be disbursed in tranches of R21-million a month for four months. The funding will provide a much needed injection to the IDT, which has been in a precarious financial position over the past few years.
The funding is subject to various conditions including the implementation of cost-saving measures such as halting domestic and international travel, no hosting of conferences, seminars, training or related events and that no consultants should be hired during the period.
The payments will be made to the IDT once “a detailed breakdown of all operational costs have been scrutinised and assessed by the CFO [chief financial officer] of DPWI [department of public works and infrastructure] or his nominee”, the letter reads.
The seven-member task team appointed by De Lille to oversee the exit strategy includes the IDT caretaker chief executive, Chris Lombard, and the department’s chief financial officer, Mandla Sithole. The team is responsible for developing the exit plan.
The parties have agreed to present the exit plan by June 15, subject to the approval by the interim board, De Lille and Deputy Minister Noxolo Kievet “before further budget approval [over and above the R84-million] shall be granted”.
Employees of IDT whose contracts expired at the end of March were given a four-month extension, with the option of renewal. The renewed contracts include a caveat recognising that the IDT is embarking on an exit strategy and will be dissolved within a year.
Additionally, the parties have agreed that all positions that become vacant over the next four months to July will remain unfilled and that no person will be appointed in an acting position over the course of the exit strategy except for the caretaker chief executive. It is not stated that this will apply after July until March next year.
The National Education, Health and Allied Workers’ Union (Nehawu), which has argued against the dissolution of the IDT pending a parliamentary process, says it has not yet been consulted regarding the exit strategy.
The union requested a meeting with De Lille at the end of April but Nehawu’s spokesperson, Khaya Xaba, said this has so far not taken place. Xaba said De Lille had only acknowledged the letter two weeks ago but has not provided the union with a date when the meeting can take place.
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian