THE government plans to have a special entity up and running by April next year to tackle a R495billion backlog in municipal infrastructure.

Minister for Cooperative Governance and Traditional Affairs, Sicelo Shiceka, said yesterday the exact structure of the "special purpose vehicle" had still to be decided, but that it should be in place before the start of the next financial year.

He said his department had conducted a scientific audit of the backlog among the country's local authorities and had come up with the figure, which is more than 10 times his department's total annual budget.

Shiceka said the new entity would coordinate spending by other departments responsible for aspects of municipal services such as water, sanitation and roads and would centralise the procurement of major supplies to ensure competitive pricing.

He said a significant part of the problem so far had been that departments tended to function in silos without proper coordination.

Shiceka said he would be meeting the ministers of finance and of energy to discuss new and sustainable sources of revenue for municipalities, which currently rely on government grants for the bulk of their funding. Part of the discussion would be about ways to reduce the reliance of local governments on electricity surcharges to cover their operating expenses.

He said the current distribution of government funding to local authorities was flawed because it was based solely on numbers and did not take account of historical backlogs, spending capacity, geography or any of the myriad factors that contribute to keeping poor communities poor.

"Intergovernmental fiscal relations are based on outdated approaches."

Shiceka said he would also be looking for a revision of the current practice on unspent funds

At present, provinces return money they cannot spend within a financial year, which has in the past led to funds earmarked for the under-developed Eastern Cape being reassigned to the relatively well-off Gauteng.

He said his approach would require the Treasury to show that it had offered support to under-resourced provinces or municipalities to help them get the job done before taking back funds allocated for capital expenditure.