Antoinette Slabbert
2 minute read
10 Jul 2015
12:35 pm

Treasury warned city off PEU deal

Antoinette Slabbert

Former Minister of Finance Pravin Gordhan repeatedly warned Tshwane Mayor Kgosientso Ramokgopa in 2013 against the disastrous PEU smart metering contract.

FILE PICTURE: Former Executive Mayor of Tshwane Kgosientso Ramokgopa. Picture: Christine Vermooten

The DA in Tshwane yesterday made public correspondence between the City of Tshwane and National Treasury that strongly opposed the contract that has cost the city R1.4 billion so far.

Whistleblower

All of it was ignored. DA shadow member of the mayoral committee for finance Lex Middelberg said copies of the letters were leaked to the DA by a whistleblower. He claims Tshwane council members, including from the ANC, would not have consented to the contract if they’d known of treasury’s concerns. He says the R1.4 billion bill includes R400 million spent on a prepaid rollout in 2012/13 abandoned in the face of the agreement with PEU Capital Partners. Documents show treasury wrote to municipal manager Jason Ngobeni on May 17, 2013, about the lack of response from the city in providing treasury with information to review the contract under the Municipal Finance Management Act, two weeks before council approved the contract.

A week later, national treasury chief procurement officer Kenneth Brown wrote to Ngobeni about a conflict of interest with regard to PEU. He advised Ngobeni to put the project on hold and seek guidance from National Treasury. On August 29, 2013, treasury wrote supply chain management procedures were not complied with, the procurement model was not the most cost-effective, the costs were exorbitant and the risks biased against the city. The DA said Gordhan wrote to Ramokgopa, pointing out five points of non-compliance. He said the contract didn’t offer value for money since: the city would have to buy back the infrastructure at the end of the contract; the 19.5% service levy to PEU should be between 5% and 7%; and the increasing revenue collected would be absorbed by fees payable to PEU.

On May 15 this year, after the cancellation of the contract, treasury again wrote to Ngobeni advising him to “halt the payment of any settlement amount agreed with the service provider, pending the treasury’s detailed review of the procurement process”.

Advice ignored

This was also ignored and Tshwane concluded a termination agreement facilitating payments to PEU for six months. The DA is calling upon Ramokgopa and Ngobeni to resign for their part in “the greatest financial disaster in the history of any city of the country”.