Tshwane’s R1.2bn meter riddle

Pretoria - It remains unclear how much public money will be forked out as part of the termination of the smart pre-paid meters contract between the City of Tshwane and its service provider, PEU Capital Partners.

The city announced the termination of the contract on Tuesday, having already paid the service provider R830 million since the roll-out of the smart meters began in October 2013.

Regional and provincial DA leaders told a media briefing yesterday the city had asked PEU, despite it being partly at fault for the ill-fated deal, to present termination plans.

DA finance spokesman Lex Middelberg said there was proof that the city chose an option that would sink a R1.2 billion hole in the coffers of the metro by June 2017.

He produced copies of a presentation showing four exit options presented by PEU to the city.

The metro was believed to have selected Option 2B, which proposed the operation of the system at a service fee of 19.5c for every rand collected from the metering system, up to two calendar months after the signing of the termination agreement, envisaged to be May 31, according to the DA.

Thereafter, the service fee would be 13.8c until June 2017, to allow for the continued metering of customers and the availability of vending channels. This option would cost the city R1.2bn over two years to exit the contract, and each meter would cost R163 000, said Middelberg.

The DA has since called on manager Jason Ngobeni and mayor Kgosientso Ramokgopa to resign, saying they were warned before the contract was signed that it would bring the city to its knees.

In addition to the resignations, the DA wants the contract to be set aside from inception, meaning PEU should pay back all the money it had earned from the municipality.

The service provider would also have to reinstall the 12 900 meters that had already been installed at the time of termination as they were not prepaid.

As part of the exit plan, the city would acquire the metering infrastructure that had already been installed and additionally pay the market value thereof.

The city has described the call by the DA for its leaders to resign as laughable and without basis, saying they were doing a fantastic job.

“Our administration under the guidance of Ngobeni is on solid ground. The political leadership provided by the executive mayor and his team is admirable,” municipal spokesman Selby Bokaba said.

The city rejected termination proposals made by PEU which would result in a payment, he said.

Middelberg said that when the contract was initially tabled in the council, the executive mayor justified its approval on the basis that it was entirely “off balance sheet”.

It was stated at the time that the city would not incur any cost on account thereof, as it was self-funding from the cashflows of an agreed service fee.

But 14 months after the roll-out began, the storylines changed: PEU and the city also realised the meters were not standard-compliant as they did not have a client interface unit as originally agreed upon.

The unit would enable a consumer to monitor the actual electricity consumption on a display. Without it, consumption could only be checked over the internet, the DA said.

Ngobeni then wrote to the National Energy Regulator requesting exemption from the standards in December last year. “We submit that this is a major contributory factor to the cancellation. All meters already installed would have to be compliant with this standard, which means the entire roll-out had to start all over,” Middelberg said.

He disclosed that the party had proof that Ramokgopa and Ngobeni had been negotiating an exit arrangement with PEU since the beginning of March and requested the service provider to present termination options. He said the termination was to be announced by the mayor when he delivered the State of the Capital Address today. He said there may have been an about-turn.

He accused the city of unilaterally announcing the termination after becoming aware of the media briefing convened by the DA to reveal the terms of the exit.

But Bokaba said there was a council announcement a few weeks ago, mandating the city manager to explore ways of terminating the contract.

“We are locked in negotiations with PEU over the termination terms and after we have thrashed that out, we will present the details of the termination to the council for approval,” he said.

Asked whether it was normal practice to ask a service provider to present exit options, Bokaba said the city had been engaging PEU with a view to cancelling the contract and settling the matter amicably.

“They came with proposals which we rejected. You do not go into negotiations with preconceived notions; you explore all avenues and options in an open, free, transparent way, and ultimately take a decision that is financially prudent,” he said.

He refused to say if Ramokgopa was to address the matter in the State of the Capital Address, adding that the speech was embargoed until delivery.

ANC Tshwane regional spokes-man Teboho Joala said the ANC had the utmost confidence in the bona fides and service of the mayor and his administration.

Joala said it was not by fluke that the capital was named the best city to live in last year, with the executive mayor winning the best public service leader accolade a fortnight ago.

“We continue to have confidence in him and do not want to be diverted from the State of the Capital Address,” he added.

“The speech will focus on plans to extend social services to our people, create jobs for young people and address the infrastructure backlog created by the apartheid regime. The DA is merely attempting to divert people’s attention from all these.”

kennedy.mudzuli@inl.co.za

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