Antoinette Slabbert
2 minute read
5 Mar 2015
3:00 pm

Prepaid meters cost Tshwane R355m

Antoinette Slabbert

The City of Tshwane contract with prepaid meter provider PEU Capital, which was supposed to be "cost-free", has already cost R355 million since July 2014, documents in Business's possession show.

Picture: Thinkstock

The amount far exceeds the R250 million budgeted for the project for the financial year. It was also the largest contributor to a 3% over-expenditure on Tshwane’s budget for the six months. With revenue 4.5% below budget, the city is down almost R1 billion for the six months.

Documentation suggests Tshwane paid PEU Capital an average daily amount of R4.6 million in February which is set to increase dramatically as PEU Capital, through its division Tshwane Utility Management (TUMS) rolls out more meters.

Tshwane did not respond to several questions from Business, but its communications office forwarded comments by a member of the Mayoral Committee for Economic Development, Subesh Pillay.

He blames a pending AfriSake court action for the slower than expected roll-out. He said “as a result of that we are not collecting revenue at the pace in which we thought and planned for”.

Pillay says Mayor Kgosientso Ramakgopa asked City Manager Jason Ngobeni to “see how we can get out of the contract, because as long as this is caught up in court action – which can last anything from two to three years – we will not be able to move and we are going to continue to lose revenue.

“The idea, however, is to find some sort of settlement with the company and find a way where we cannot lose money. The two-year period of the contract (for the initial installations) ends within seven months,” Pillay said.

The court challenge by AfriSake is on the grounds that procurement procedures were not followed. The application was dismissed when the court ruled it was not urgent, but will continue in the normal courts.

AfriSake attorney Willie Spies says no court date has been set. Spies says the pending court action has no bearing on the roll-out of prepaid meters.

DA councillor Lex Middelberg – a vocal critic of the contract – is concerned the contract was slanted steeply in PEU favour and if the city is within breach PEU can claim earnings for the eight-year term of the contract, estimated at about R27 billion.

Whole of Pretoria

The contract provides for PEU to convert the whole of Tshwane to prepaid meters. A total of 800 000 installations were envisaged, 429 474 to be done within the first two years.

PEU said 12 500 meters would be installed by the end of March “which is ahead of the agreed roll out plan with the City and encompasses the most technically complex installations”.