Letters leaked to the Democratic Alliance (DA) about Metrorail alleges that the public entity can not meet its financial commitments to its suppliers of goods and services, the party said on Sunday.

Spokesperson Manny de Freitas said the letters dated 13 January 2010, stated that Metrorail was experiencing cash flow challenges in meeting its financial obligations.

"This state of affairs is simply unacceptable considering that we exposed in December the blatant wasteful expenditure of R584 810.92 by Metrorail for a Women's Day celebration held in August 2009," he said.

By November 2009 this bill was also not settled.

'Squandering public funds'

"State-owned entities such as the SABC (South African Broadcasting Corporation) and Eskom have continued to squander public funds through wasteful and fruitless expenditure, corruption and financial mismanagement thus requiring bail-outs from the already burdened public purse."

"It seems as though such a situation may also be developing with Metrorail, a division of the state-owned Passenger Rail Agency of South Africa (Prasa)," de Freitas.

He also said the party will be submitting parliamentary questions to the Transport Minister in order to gain further clarity on the matter.

Prasa spokesperson, Tiro Holele, dismissed the DA's statement and what is contained in the leaked letters as not being the truth.

He said like many companies, Prasa was managing its cash flow tightly and it has implemented strict programmes to manage its cash flow.

Holele said service providers were being paid and the system of payment within 30 days after receiving an invoice applied.

"The DA statement was made out of context and it is informed by ignorance, malice, and especially in ignorance of the massive capital improvement we are making to the passenger rail system of South Africa," he said.