DA, City of Tshwane trade accusations over prepaid meter contract

2015-10-01 19:47
(File, Sapa)

(File, Sapa)

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Johannesburg - The Democratic Alliance and the City of Tshwane traded accusations on Thursday over the metro's cancellation of its smart prepaid meter contract with PEU Capital Partners.

The DA fired the first shot, with MPL and Tshwane mayoral candidate for next year's local government elections, Solly Msimanga, claiming in a statement that the contract was cancelled after the city lost about R1bn in service or commission fees in the last financial year.

"Before the agreement was entered into, the DA forewarned that the provisions of the contract would effectively lock the city in with this single service provider ad infinitum as the costs of terminating the business relationship with PEU would be prohibitive," he said.

"Despite this, the City of Tshwane went ahead with signing the contract and it was then subsequently compelled to terminate the agreement."

According to Msimanga, this had led to the city being forced to pay the "agreed contract exit penalty", in the form of continued service fees, which would amount to at least R600m over the next six months - a claim denied by the metro.

R1.3bn to 'get out of contract'

"Additionally, the city will have to pay PEU the market value and acquire the prepaid electricity smart metering infrastructure that has already been installed," he said.

"PEU have valued the market value of a complete rollout of all smart meters at R7bn. An estimated 10% of the smart meters have already been rolled out, which means the city owes another R700m."

This meant, in Msimanga's view, that the city had to pay more than R1.3bn "just to get out of the contract".

In response, the metro said in a statement that, contrary to the DA's assertions, it was the metro's own decision to announce the mutual termination of the contract in May. 

The city would not pay any penalties for the termination of the contract, and would ensure the yet-to-be-appointed replacement service provider would take over the systems and infrastructure already installed at a price to be determined by an independent valuator.

It said the reason for the "mutual no fault termination" was a court matter brought by AfriForum, which had not yet been finalised.

"No valuation for that infrastructure is available, as the independent valuator appointed to obtain a fair valuation has yet to commence work," the metro said.

Figures 'wild guesswork'

"Any figures therefore mentioned by the DA in its media statement are nothing short of wild guesswork, and confirmation that the party is not entirely interested in the facts on the matter, but only conjecture and sensationalism."

While the city would continue to pay PEU for interim services until a replacement was found, the arrangement was necessary to not inconvenience some 13 000 consumers who already had smart meters installed. 

"Furthermore, since the interim services are less than what was originally required by the MSA, a reduced service fee will be paid for interim services," it said.

Msimanga said beyond the DA's warning to the city, former finance minister Pravin Gordhan and the National Treasury sent letters to Tshwane Mayor Kgosientso Ramokgopa and city manager Jason Ngobeni, instructing them not to enter into the contract.

The party would be writing to Gordhan to request an inter-departmental forensic investigation into the smart meter contract, he said.

Read more on:    da  |  city of tshwane  |  pretoria  |  local government

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