THE City of Tshwane is not yet free of the
disastrous smart meter contract it signed with Peu Capital Partners in
2013 and will be back in court on Tuesday for a new round of litigation
that, if it loses, could see it face revenue losses of R500m.
Only 12,900 meters were installed at a cost of more than R830m before the contract was cancelled. The city is liable to pay more than R1bn in ratepayer money to cancel the contract.
In the latest round of litigation, which began in 2013, nongovernmental organisation AfriBusiness and lobby group AfriForum are asking the High Court in Pretoria for an order to prevent the City of Tshwane from handing over the smart meter infrastructure to a new service provider. They also want to stop the city from paying Peu, pending a review of the contract, which they want set aside.
The metering system would have to be switched off if the application succeeds.
This would result in the metro losing about 55% of its electricity revenue, Peu Capital Partners director Christina Tshili said in court documents.
Tshwane would lose up to R550m over several months.
"These are losses on a scale that would completely cripple the city’s finances and lead to, among other things, the city defaulting on its financial obligations," she said.
The city cancelled its contract with Peu in May 2015, saying it could not afford to continue with it. Because the contract was cancelled, a new service provider would have to buy the meter infrastructure from Peu for R950m, Tshili said, while it had been valued at R3.7bn by auditing firm SizweNtsalubaGobodo.
AfriBusiness said in court documents it wanted to stop the city from paying Peu for the infrastructure.
Tshwane spokesman Blessing Manale said the R950m was for a new service provider to take over the contract. There had been no talk about a penalty payment and the City and Peu had agreed that the R950m would be for a new service provider to buy the infrastructure.
Manale said the residents could have had smart meters already and the municipality could have improved its revenue collection.
Instead, they have had to put everything related to the meters on hold as the litigation continues. "We regret that the matter is dragging on," he said.
AfriForum’s legal spokesman, Willie Spies, said the contract between Peu Capital Partners and the city was a "robbery of taxpayers", who have already paid more than R2bn since the city signed the contract.
"It (the contract) is so blatantly flawed and blatantly corrupt," he said. The city was plunged into a financial crisis as a result of the smart meter contract, he added.
In June, the auditor-general reported that Tshwane had spent R1.10bn irregularly.
In March, ratings agency Moody’s warned that Tshwane’s credit rating could be downgraded, flagging the metro’s high debt levels and the smart meter contract as credit risks.
Tshwane has been the centre of allegations of corruption and violent infighting in the ANC.
The city’s attorney, Mandla Nyalungu, refused to comment on the court case, saying its processes were still unfolding.
Only 12,900 meters were installed at a cost of more than R830m before the contract was cancelled. The city is liable to pay more than R1bn in ratepayer money to cancel the contract.
In the latest round of litigation, which began in 2013, nongovernmental organisation AfriBusiness and lobby group AfriForum are asking the High Court in Pretoria for an order to prevent the City of Tshwane from handing over the smart meter infrastructure to a new service provider. They also want to stop the city from paying Peu, pending a review of the contract, which they want set aside.
The metering system would have to be switched off if the application succeeds.
This would result in the metro losing about 55% of its electricity revenue, Peu Capital Partners director Christina Tshili said in court documents.
Tshwane would lose up to R550m over several months.
"These are losses on a scale that would completely cripple the city’s finances and lead to, among other things, the city defaulting on its financial obligations," she said.
The city cancelled its contract with Peu in May 2015, saying it could not afford to continue with it. Because the contract was cancelled, a new service provider would have to buy the meter infrastructure from Peu for R950m, Tshili said, while it had been valued at R3.7bn by auditing firm SizweNtsalubaGobodo.
AfriBusiness said in court documents it wanted to stop the city from paying Peu for the infrastructure.
Tshwane spokesman Blessing Manale said the R950m was for a new service provider to take over the contract. There had been no talk about a penalty payment and the City and Peu had agreed that the R950m would be for a new service provider to buy the infrastructure.
Manale said the residents could have had smart meters already and the municipality could have improved its revenue collection.
Instead, they have had to put everything related to the meters on hold as the litigation continues. "We regret that the matter is dragging on," he said.
AfriForum’s legal spokesman, Willie Spies, said the contract between Peu Capital Partners and the city was a "robbery of taxpayers", who have already paid more than R2bn since the city signed the contract.
"It (the contract) is so blatantly flawed and blatantly corrupt," he said. The city was plunged into a financial crisis as a result of the smart meter contract, he added.
In June, the auditor-general reported that Tshwane had spent R1.10bn irregularly.
In March, ratings agency Moody’s warned that Tshwane’s credit rating could be downgraded, flagging the metro’s high debt levels and the smart meter contract as credit risks.
Tshwane has been the centre of allegations of corruption and violent infighting in the ANC.
The city’s attorney, Mandla Nyalungu, refused to comment on the court case, saying its processes were still unfolding.
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