Court interdicts City of Tshwane from paying R950m for cancelled smart meter contract

2016-07-05 17:56

Pretoria - The High Court in Pretoria has granted an urgent application by business rights group Afrisake to interdict the City of Tshwane from paying R950m to a service provider tasked with rolling out smart electricity meters across the city.

Judge Bert Bam told the court on Tuesday that he deemed the application urgent and said that after reading through the heads of arguments provided by the legal teams, he had become concerned about the matter and wanted it dealt with in an expedient manner.

"The more I read the papers, the more I became concerned about what happened," Bam said.

He added a paragraph to Afrisake's application, ordering them to approach the deputy judge president within three weeks for a date on the review hearing on the matter.

In May last year, the City announced that it was terminating its smart metering contract with service provider PEU.

The original intent of the Security of Revenue Project (SoRP) was to install smart meters for all consumers in Tshwane, both commercial and residential.

Spanner in the works

At the time, the City said the termination decision was largely based on the negative financial and economic impact of the project on the City.

Since the roll-out of the project, which began in October 2013, the City had paid the service provider more than R830m.

During the period, just more than 12 000 meters had been installed for large and small power users.

The City accused Afrisake of throwing a spanner in the works by applying for an urgent court interdict and a review of the SoRP in 2013. It said at the time that this impeded the speedy roll-out of the meters, undermining the benefits for the city and rendering the project financially and economically unsustainable.

The review application brought by Afrisake was still in front of the High Court.

Afrisake at the time had claimed that PEU had no experience in the installation or management of electricity infrastructure in towns or cities and said its contract with the City of Tshwane was an example of "blatant corrupt municipal transactions".

The decision to terminate the contract was a confirmation that it was right about its illegality, it said.

On Tuesday, Afrisake spokesperson Willie Spies said Bam's order was a "win" for the organisation.

City going 'deeper into debt'

"If we [had not been] successful, then that payment would have been made today or tomorrow. We stopped that and we are very glad about the outcome. 

"We have seen excessive wastage of taxpayers' money in this contract.

"The illegality of the arrangements that were made between the City and this contractor was done in a way to create the impression of legality and to create the impression of a valid sale and a valid service delivery agreement. That is not at all the case," Spies said.

He said the City was already in debt as a result of the agreement and would end up going deeper into debt by making the payment.

The deputy judge president, whom  Afrisake has three weeks to approach for a date on their review application, was expected to issue the legal teams involved with directives for further filing of papers and heads of argument.

"Once that has happened and once a date has been set for the main review application, then the merits and the substance of this whole contract will, and I am quite convinced, be successful there," Spies said. 

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