Dear Tshwane, you’re in breach of court order – PEU

PEU Capital Partners, through its legal representative, has accused the City of Tshwane of breach or contempt of court for its failure to indicate by Friday October 27 whether it will take over PEU’s controversial smart metering system.

Moneyweb earlier reported that a full bench of the North Gauteng High Court on October 13 ruled that the city’s smart metering contract with PEU is unlawful and set it aside. The ruling was based on flawed procurement processes.

The court further ordered the city to indicate within 14 days whether it would take over about 13 000 electricity meters and other infrastructure that PEU installed in terms of the contract.

Thereafter the parties would have until November 15 to exchange papers and submit heads of argument regarding a just and equitable remedy. A date has not yet been set to hear arguments on the matter.

On Friday ENS Africa, which represents PEU, wrote to the city’s attorneys, putting on record that should it fail to make its election on that day, the city “would be in breach/contempt of the court order and this, needless to say, prejudices our client’s preparation in this matter”.

However, member of Tshwane’s mayoral committee for corporate affairs Cilliers Brink, says the city disagrees with PEU’s interpretation of the deadline.

He says the city has no intention of acquiring the PEU infrastructure and will put that on record in its first affidavit dealing with the just and equitable remedy. The deadline for its submission and that of AfriSake, which was the applicant in the case, is November 1.

PEU has until November 7 to answer, whereafter AfriSake and the city have until November 10 to reply. By November 15, all parties have to submit their heads of argument.

This second phase of the litigation is expected to deal with the phasing out of the PEU contract in a manner that won’t prejudice electricity users. The level of PEU’s compensation for its continued service during this period might become a bone of contention.

Brink confirmed that the city has received the R950 million that the court ordered should be released to the city.

This money was held in trust in terms of an interim service and termination agreement (ISTA) that was also set aside on October 13.

PEU in May 2015 agreed with the previous ANC administration to reduce the original 19.5% commission it earned on electricity sold through the PEU system to 9.5%, with the difference to be paid into a trust account to pay for the city to take over the PEU infrastructure upon the termination of the agreement.

The ANC administration was on the verge of paying the money to PEU in June last year, but AfriSake obtained an interdict to prevent this from happening, pending the full review of the contract. AfriSake was very critical of the R950 million valuation of the infrastructure that was done on a going concern basis, rather than valuing the physical assets.

Brink said the return of the R950 million has reduced pressure on the city’s finances as it improved liquidity and strengthened its balance sheet. With improved financial ratios access to finance will also be easier, he said.

The city will however continue to spend according to its approved budget that is based on the priorities set out in its Integrated Development Plan (IDP) he said.

It is expected that civil claims might follow after the finalisation of the current litigation.

Briught to you by Moneyweb