Solly Msimanga. Picture: SOWETAN
Solly Msimanga. Picture: SOWETAN

The High Court in Pretoria has set aside a R2bn smart meter contract between the City of Tshwane and service provider PEU Capital Partners (PEU).

On Friday, Tshwane mayor Solly Msimanga said in a statement that a full bench had delivered the judgment on the case initially brought by lobby group AfriBusiness in 2013, arguing that it was irregularly awarded.

"When the Msimanga administration assumed office in August last year, we inherited a R2bn budget deficit, of which R1.5bn constituted irregular expenditure," Msimanga said. "The biggest of these irregularities was a tender for the supply of ‘smart’ pre-paid electricity meters and services by a company called PEU Capital Partners."

Msimanga said PEU was initially appointed on a tender to give advice to Tshwane on how to save money, but the deal soon turned into something completely different, by-passing competitive bidding processes.

"From the outset the DA had pointed out that the tender and the deal was irregular, and would punch a hole in Tshwane’s coffers. We later discovered that National Treasury and the finance minister agreed with our view," Msimanga said.

He said information pertaining to the tender was deliberately withheld from the public. The contract was voted through by the then ANC majority in council.

Msimanga said Tshwane initially paid PEU 19.5c for every rand of electricity that ran through its estimated 13,000 meters. The price was later reduced from to 9.5c. Msimanga said the City of Tshwane went into a termination agreement when legal action was threatened on the contract.

Tshwane would have paid R950m in terms of the termination agreement as a termination fee. The pay-out was interdicted, and the money was kept in a trust pending the finalisation of the court action.

This judgment declares all deals between Tshwane and PEU and its subsidiary, Tums, as unlawful. The court also ordered that the R950m be paid to the city.

Armand Greyling, law and policy analyst from AfriBusiness, said the application was initially brought against both the City of Tshwane and PEU, but after the change of administration to a DA-led coalition government in August 2016, the city changed it stance and supported AfriBusiness’ application.

AfriBusiness had argued that the contract did not adhere to proper tender and procurement procedures as prescribed by the Constitution and procurement legislation.

"We are extremely satisfied with the outcome in court today," said Greyling. "The City of Tshwane should never have entered into this contract with PEU."

He added: " The tax money that was saved can now be utilised by the city for other projects, to the benefit of citizens. As a business rights organisation we will continue to pursue a free market business environment and will also continue to fight matters where there is clear fruitless, wasteful and irregular expenditure by the state."

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