DA seeks urgent forensic investigation over PEU
The DA will be sending letters to two national ministers, requesting an urgent forensic investigation into the PEU prepaid smart metering contract.
Andrew Ngozo
Tshwane metro’s ill-fated PEU meter scandal is likely to cost the city’s ratepayers R2.3 billion if it does not terminate the contract with Capital Partners. This has prompted the DA writing to the ministers of Finance and Co-operative Governance and Traditional Affairs, Nhlanhla Nene and Pravin Gordhan respectively, requesting that they institute an urgent forensic investigation into the matter.
Speaking at the DA’s regional offices in Arcadia on Thursday, the party’s Tshwane mayoral candidate Solly Msimanga said before the agreement was signed the DA had warned that certain provisions of the contract would lock the city in with a single service provider indefinitely because the costs of cancelling the contract with PEU would be too great and prohibitive.
“The result is that the city is now forced to pay the penalty of exiting the contract in the form of service fees. These will amount to a minimum of R600 million payable over six months,” he said. “In addition Tshwane metro will have to pay PEU the market value of, and buy the prepaid smart metering infrastructure that has already been installed.”
Msimanga said PEU had pegged the cost of a complete rollout of the smart meters at R7 billion.
“An estimated 10% of the smart meters have already been rolled out. According to the terms of the contract, the City owes R700 million. Essentially what this means is that the City will have to pay over R1.3 billion just to get out of the contract,” Msimanga said.
If this fee were to be added to the original service fee or commission of R1 billion, “it in effect means that Tshwane ratepayers would have had to pay R2.3 billion which is the price of nine Nkandla’s just so it can extricate itself from the contract,” said Msimanga.
The DA said Tshwane metro did not heed the then minister of finance Pravin Gordhan and the National Treasury department’s warning in a letter addressed to mayor Kgosientso Ramokgopa and metro manager Jason Ngobeni expressly instructing them not to enter into the PEU contract. He said the DA was in possession of the letters.
Msimanga said the letter scheduled to be sent to the respective ministers on Thursday 01 October would also request the investigation of a decision by Tshwane metro leadership to enter into a contract with PEU.
At the time of entering into the contract, the metro had claimed that prepaid smart meters would improve the city’s cash flow, improve revenue collection, reduce debt impairment and do away with electricity theft.
Above all it was to save the metro 8% on the value of electricity sales which would then be spent on delivering services to residents. Msimanga said the opposite was true as the metro’s cash flow had deteriorated substantially.
“The result has been that service delivery expenditure has been cut by a massive R2.5 billion over the past year and debt impairment has gone up from 54% to 67%. Thus it is evident that not a single of the benefits from the PEU contract promised by the mayor has materialised,” said Msimanga.
“This is why it is critical that minister Gordhan and minister Nene institute an interdepartmental forensic investigation as a matter of urgency,” he said, adding that the ministers will have 30 days to respond to the DA’s letter. Failure would lead to legal action as a last resort.
Tshwane metro spokesperson Selby Bokaba dismissed the DA’s allegations as factually incorrect and misleading. “Contrary to the DA’s assertions, the city will not pay any penalties for the termination of the contract, but will ensure that the replacement service provider, which is yet to be appointed, will take over the systems and infrastructure already installed, at a price to be determined by an independent valuator,” he said, and added that the metro will continue to pay the service provider a reduced service fee until such a time as a replacement has been appointed.
Bokaba said the DA was not privy to a series of meetings and intergovernmental engagements on the matter. He said although collection efforts in the present restrained economy remained difficult countrywide, Tshwane metro continued to be the best-performing metropolitan municipality when it came to collecting revenue. “The assertions of the DA in this regard are therefore deliberately false – as always,” he said.
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