An electrical engineering company’s case to get an order to review and set aside a report by the Special Investigating Unit (SIU) has received a major boost after the department of mineral resources and energy indicated that it approved the price the company charged for the electrification of 20 000 houses in rural Limpopo.
The SIU found that Mphaphuli Consulting overcharged the Fetakgomo Tubatse Local Municipality by R73 million when it was appointed to work on the R326 million Operation Mabone project in 2014.
In its September 2019 report, the SIU said that Mphaphuli overcharged for the electrification of each household when it put the price at R16 000 per house. The SIU has since lodged a civil claim in the Polokwane High Court to recover the R73 million.
The municipality appointed Mphaphuli Consulting in 2013 based on its performance on a previous contract with the Vhembe District Municipality in Thohoyandou in 2011. In the Vhembe contract, Mphaphuli charged R10 499 to electrify each household.
However, when it was awarded the Fetakgomo Tubatse contract, the company charged R16 000 per household, which, it argues in court papers, was benchmarked against Eskom’s charges in the area and other factors such as geographical layout. It said this price was approved by all concerned departments and National Treasury.
The amount Mphaphuli charged was approved
The energy department told City Press that it had no problem with the amount the company was charging for the project.
“The cost per connection by the municipality was benchmarked and approved,” the department said.
The department added that it did not get involved in the appointment of Mphaphuli Consulting for Operation Mabone because all funded municipalities were expected to appoint service providers for projects funded under the National Electrification Programme according to schedule 5b of the Division of Revenue Act framework.
“In this regard, municipalities are required to submit monthly progress reports to the department, and the department’s officials also regularly go and physically verify implementation on the ground. Non-compliance by municipalities is dealt with in line with [the Division of Revenue Act] and contracts signed with the municipality,” said the department.
Mphaphuli Consulting owner Lufuno Mphaphuli also said in the court papers, which were filed on July 27, that the SIU should not have investigated his company because it was not included in the terms of reference of the presidential proclamation that called for an investigation into fraud, corruption and maladministration in the Fetakgomo Tubatse municipality in 2014.
Earlier this month, SIU spokesperson Kaizer Kganyago said: “The SIU has consulted with the relevant state officials of the state institutions. We interview people as per our investigations. The investigation of this matter by the SIU is as a consequence of the SIU, among other aspects, having interviewed certain officials of the municipality.”
Mphaphuli started having problems in 2016 when the municipality’s officials did not pay the company for work done on Operation Mabone.
In 2018, Mphaphuli attached the municipality’s assets and bank accounts when the council defied a Polokwane High Court ruling to pay R41 million for work done. The Fetakgomo Tubatse council lost the case on appeal in the Supreme Court of Appeal and was forced to pay the amount.
The council has so far not paid Mphaphuli R9.7 million for work done and approved by Eskom in 2019. To recoup this money, Mphaphuli has instituted a civil claim in the Polokwane High Court.