R950M TO GET OUT OF METER CONTRACT
Tshwane could have chosen to manage its own smart electricity meters at a cost of about R11 million a year, but instead insisted on paying 70 times this amount to a contractor – and is now paying R950 million to get out of the contract.
This payment will be made shortly before a new council is elected, business rights group AfriSake alleges in court papers filed in the North Gauteng High Court in Pretoria.
This cancellation payment is over and above an amount of “at least R2.2 billion” that Tshwane has already paid to the operator by selling electricity at a loss, according to the DA.
The smart meter contract awarded to PEU is the albatross around the neck of Kgosientso Ramokgopa, the embattled mayor of the capital, who the ANC has replaced as its mayoral candidate.
The contract, meant to give Tshwane better credit control, started in October 2013. PEU was to receive 19.5% of all electricity charges as commission in terms of the contract. Finance Minister Pravin Gordhan had already warned that the PEU contract was not sustainable in a letter addressed to the city on September 13 2013, but Ramokgopa only announced that the project would be cancelled in May last year. Judge Neil Tuchten granted an interim interdict against the cancellation payment and the matter will be heard on July 5. But supplementary court papers filed by AfriSake this week included a memorandum by Umar Banda, the acting chief financial officer of the city, to Ramokgopa’s executive committee. In it, Banda admits that the project would never have delivered the expected benefits and could not be expected to deliver them in the future. According to the memorandum, Tshwane also channelled electricity it bought from Eskom for its own use through the PEU system, which meant it paid for its electricity twice. The city of Tshwane and PEU have yet to respond to the supplementary court papers.
COSTLY Kgosientso Ramokgopa