The City of Tshwane is set to pay R950 million to get out of a contract to supply smart electricity meters, a project that could have cost R11 million a year to self-manage.
This is according to a report in the City Press, citing court papers filed in the North Gauteng High Court in Pretoria, which state that the city will have to pay the contractor before a new council is elected.
The paper noted that the cancellation fee is over and above a sum of ‘at least R2.2 billion’ that Tshwane has already paid the contractors, PEU Capital Partners, because it sold electricity at a loss, according to the DA.
PEU was appointed to roll out more than 800,000 smart electricity meters, a vending platform and related systems over two years, starting in October 2013. The contract included the management of the system for a period of eight years.
The company was also to receive 19.5% commission on all electricity sales through the system.
Judge Neil Tuchten granted an interim interdict against the cancellation payment and the matter will be heard on July 5, City Press reported.
However, supplementary court papers filed by business rights group AfriSake, included a memorandum by Umar Banda, the acting chief financial officer of the city, to outgoing mayor Kgosientso Ramokgopa’s executive committee.
“In it, Banda admits that the project would never have delivered the expected benefits and could not be expected to deliver them in the future,” the paper said.