Total amount earned by Tshwane contractor could add up to R1bn

Tshwane and PEU give different versions. Huge obligations Tshwane mayor allegedly didn’t disclose.
Kgosientso Ramokgopa, Tshwane Mayor

The City of Tshwane’s smart metering contractor PEU Capital Partners issued a statement on Thursday disclosing that the City took on huge financial obligations as part of the terms for the cancellations of the agreement.

Mayor Kgosientso Ramokgopa did not mention these details at a media briefing on Wednesday and if PEU’s version is correct, it could cost the Tshwane rate payers millions of rands more.

In May the City announced the termination “with immediate effect” of the contract in terms of which PEU would have installed a smart metering solution, including 800 000 pre-paid smart electricity meters. The roll-out started in October 2013 and progress was much slower than anticipated.

At this stage only about 14 000 meters have been installed.

The company was to fund the roll-out and retain ownership of the system. It would be paid 19.5% of all revenue vended through its system for the eight-year duration of the contract.

The City at the time admitted that it had paid PEU R830 million up to May 12 2015.

Moneyweb revealed last week that multimillion rand daily payments continued in spite of the ‘termination’ in May. More than R50 million was paid to PEU in the first half of June alone.

At the briefing on Wednesday Ramokgopa said payments will be stopped at the end of June.

Moneyweb has calculated that the total amount earned by PEU since October 2013 will by then be just shy of R1 billion.

Ramokgopa said Tshwane will continue to pay PEU a reduced commission of 9.5% for a transitional period of six months. During this period the City is to advertise a tender for a service provider to replace PEU. This service provider will have to take over PEU’s meters, infrastructure and intellectual property and will also be paid a commission on the vended revenue.

The mayor said PEU will be allowed to bid for the contract.

What he did not say, which was revealed by PEU, is that in terms of the cancellation agreement the full 19.5% commission will still be deducted from the vended revenue. PEU will be paid the reduced 9.5%, but the balance will be paid into an escrow account “for the benefit of the City of Tshwane and subject to fulfilment of the terms and conditions of the termination agreement.”

It therefore seems as if the City has taken upon itself the obligation to buy the PEU infrastructure at an unknown amount that has not been provided for in the budget. The City will try to off-load onto a new service provider, but failing that, it will have to cough up.

PEU initially said this is a R7 billion project. It is not clear what portion of that relates to the infrastructure that Tshwane has to take over.

If Tshwane does not comply with this or any other, unknown condition, it may forfeit the balance of the commission held in escrow, estimated at R180 million. If the money goes to PEU, it will earn a cool R351 million in the next six months, over and above the R1 billion-odd it has already pocketed.

These estimates are based on the R1.8 billion Tshwane said it will earn from electricity sales in the next six months. Moneyweb’s information is however that payments to PEU are currently closer to R100 m per month.

The Tshwane City Council on Thursday hastily approved a report on the termination of the PEU contract. According to DA Tshwane Shadow MMC for Finance, Councillor Lex Middelberg, the report was the very last item on the agenda and was expected to serve around 19:00.

PEU issued its statement around noon.

Around 13:00, Speaker of Council Morakane Mosupyoe-Letsholo announced the item would be brought forward and it was subsequently tabled after lunch at 14:00. The DA, VF+ and ACDP voted against it, but the ANC used its majority to approve it, Middelberg said.

The termination agreement was not attached to the report and the content was in line with Ramokgopa’s statement at his press briefing, Middelberg said. It did not state that the City is liable to buy the PEU infrastructure. On the contrary, it stated that the City doesn’t have the money to do it, Middelberg said. Equally it did not mention the escrow account at all.

After learning of the PEU press release, Middelberg asked for the earlier approval of the report to be reviewed, but the Speaker denied the request on technical grounds, Middelberg said.

Business grouping AfriSake, which earlier brought a High Court application to review the award of the contract to PEU and have it set aside on the grounds of an allegedly flawed procurement process, on Thursday served its second lawyer’s letter in one week on the City. (The application is still pending.)

AfriSake demanded a copy of the termination agreement and warned the City that the termination without public participation is unlawful.

The group also alleges that the termination is an effort to “circumvent the court process and manipulate the outcome”.

AfriSake demanded that the City immediately stop payments to PEU, not proceed with the cancellation and allow the court process to run its course.

Middelberg earlier said if the court application succeeds, the parties will have to revert to their positions as if it never existed, which means payments to PEU may be recovered. The City is however opposing the application.

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Smart meters were just installed in Johannesburg too. In Vorna Valley the bills went up by up to 50% last month and some residents are saying a further 30% increase this month. The contract was awarded to a Vivian Reddy if I recall from an article some time ago.

You are correct its Zuma783’s mate Reddy who has the Joburg contract through his Edison Power. There are 2 types of smart meters one which is installed at your boundary box and only monitors usage and send a message to City Power via cell towers to record you usage – this is not a smart meter, in fact it is job destroying as your friendly meter reader is dispensed with. Then there are the supposed smart meters which should be integrated into your distribution board, and theses have supposedly the capability to isolate and switch off your geyser, stove or other high electricity usage appliances individually – I have yet to see one of these units installed. As to accuracy of the former equipment – they are horrendously inaccurate and residents should take daily readings (with the recording device which Edison frequently forget to hand over to the resident) I tracked my consumption for 5 months and had Edison replace my unit 4 times before I got accurate readings. I met with City Power and got them to reverse in excess of R 5,000 worth of frivolous overcharging

Yes, the mayors of Joburg and Tshwane are in fierce competition to see whose smart meter contract will cost the most. At this stage I’d say Tshwane has the edge, but I haven’t lost faith in the World Class African city to catch up and even surpass all expectations.

Ratepayers must stop paying.
Councillors will soon see their pay packets stopped.
Then we will see some action.

Find out what councillors do and what they represent before making unfounded statements. They do not provide service delivery. Here to make it easy for you
The Times, Holding Us To Ransom

There are times when I get very upset with people who attack the press and claim that they are biased, sensationalist and sometimes just uniformed and then resort to scaremongering
Take todays front page headline of The Times “Holding us to ransom”. Then the editorial inside and all sit back, clap hands on a job well done. If ever I have read a piece of uninformed and directionless piece of print it was today. That the writer one Olebogeng Moltahlhwa of the front page article and the editor do not have a clue what councillors first of all represent, what their functions and duties are, is quite clear
For the record councillors are members of the legislative arm of council, the law making and oversight body of local government. Councillors are the elected public representatives of communities demarcated in ward structures in municipalities and metros. I will stop here for the time being and refer to municipalities and metros so that we understand the distinct difference between the named parties. The latter named bodies are the vehicles through which government deliver, implement and provide service delivery to the communities at local level on behalf of national government. So by now a small light should have gone on that councillors and the municipality/metro are not one and the same
Councillors are lobbyists, they are the link between the communities and the municipality/metro with regard to needs, issues and demands of the communities who elected them. The same applies to the municipalities/metros where councillors again will be the carriers of information, developments, happenings in council and news on matters that will affect the daily lives of communities in terms of the services that they expect and are delivered to them. By now you should have noticed that not at any time did I say and or indicate that the councillors are responsible for the delivery of services to communities on behalf of the municipalities/metros
In todays advanced and highly technological world the old concept of a councillor being a retired pensioner who takes his dog for a walk at 10am, has tea with the mayor at 11am and then after strolling in the park makes it home to be in time for lunch is history. For a councillor to do just the basics of his daily routine he has to be aware of, have a working knowledge and be able to interpret and understand The Constitution, The Municipal Finance Management Act, The Municipal Systems and Structures Act, The standing Orders of Council, both the Codes of Conduct for Councillors as laid down by their Political Party to whom they are affiliated, and then that of Council. They have to have a basic understanding of and know of the different policy documents and by laws of the municipality/metro where they are working. In Ekurhuleni alone there are as many as 235 policy documents excluding a multitude of by laws. You have Finance Department, Roads Storm Water and Transport, IT, Corporate and Legal, Human Settlements, SHRAC, HR, Safety and Security, Real Estate, Social Development, Health, Waste and Refuse, Energy and Water, Environment, Marketing, Risk and Procurement. Internal Audit, MPAC, Public Transport and Entities and so on
In terms of statues oversight of all of these portfolios vests in Section 79 Committees and every councillor is allocated to a specific oversight portfolio committee by his party. Each party will have a chair person if in government and or a spokes person if in opposition for every portfolio. There are whips, ie councillors who are allocated groups of councillors for which the said whip will be responsible for conduct of the councillors and discharging their council administrative duties. You then have Chief Whips and deputy Chief Whips, Chair Persons and Leaders of political Caucuses, ie group of councillors per party who forms the management of the said caucuses. The governing party will allocate councillors to the posts of Mayor, Speaker of Council, Oversight Chairs, MMC’s ie members of the mayoral council who forms the executive of the council, the political arm/office of the council.
During oversight functions the oversight body made up of representatives/councillors from the political parties selected pro rata in terms of the number of councillors per party discuss matters that have been brought to council and have to either be ratified, rejected., referred back or be passed in order for the matter on hand to become binding on the municipality/metro for implementation. Have you perhaps noticed that still not at any stage did I indicate that the councillor must provide municipal/metro services to the community
Here I move away from council duties and will remind you that all councillors are required, expected and without fail be involved in promoting, building up and do all party political activities as directed. This will invariably take place at night and on the weekends because you are doing councillor work during the week. For myself I have easily averaged up to 45+ scheduled meetings a month. This will include compulsory council meetings, party meetings, meetings with residents and communities, workshops, site visits, project progress report back meetings, site establishment meetings for projects, ceremonial meetings, funerals, special events, budget meetings, ward committee meetings, community report back meetings, Community Policing Forum meetings, visits to schools, churches, community organisations, road closure AGM’s, Body Corporate AGM’s, School AGMs’, School Governing Body meetings, visits to old age homes, places of safety and so on
Now on to the paper work, reports to be written during oversight, reports to be written during site visits, reports to be written on you party political work, reports to be written for your bi annual assessment by your party to determine if you are fit and proper to represent the party and hold office of a councillor. Then if you hold any other office in the party or council more reports on your work there. I run 4 e mail accounts and have done over 14,000 emails in the space of 4 years as a councillor. This is in and out, remember you have to open and read the email and then it takes time where you have to supply info or provide comment, to make sure of your facts. Then the many dozens of phone calls, sms’s and whats app messages. This is where it gets interesting, time for family life and obligations. Non existent, you wife sends you and sms to find out if you have been home, the family dogs bark at you when you do make it home. Personal admin, finances, commitments, forgotten unless you have a dedicated spouse or partner that takes care of that on behalf of the family. Now you will notice I am merely listing everything, I am not complaining, this is a calling and it takes special people to see it through. We have no employment contracts that we can wave around in court when we have been wronged, we do not have access to the labour court or the CCMA, we do not have leave policies, we do not qualify for pay outs of unused leave. So it is general knowledge that politicians and in this case councillors are fair game to be insulted, wronged, abused, ridiculed by uninformed people. Being assaulted, yes that is correct, happened to me, 4 years on and no result from SAPS, death threats, threats of physical violence and intimidation is part and parcel of the job. Consider the councillors in previously disadvantaged areas who are held liable by an uninformed public that lack of and or poor service delivery is their fault. Their houses burnt down, assaulted and victimised. Now The Times you arrive here with this slanted and biased front page article and editorial to paint councillors as heartless money grabbing individuals and opportunists
The majority of councillors are dedicated, hard working and caring people, you have to be to survive. I happen to be the DA Spokes Person on Roads and Transport matters in Ekurhuleni and shadow MMC for the portfolio. I belong to many network bodies on roads and transport matters. My portfolio is governed by no less than 47 acts, statutes, policy and papers. I do not know them off by hart but have had to familiarise myself with their existence, application and provisions while doing my work. Most councillors will read up to 1500 to 2000 pages of agenda documents every month for items that are on the Council and Oversight Agendas for deliberation and approval. You travel many kilometres a month, your work area will stretch the entire municipal/metro boundary, in my case from Bedfordview to Nigel and beyond. You are required to speak in council, present motions, ask questions, participate in debate etc.

I wonder if by now you have realised that there is no such thing as a part time councillor, those that do their job are on duty 24/7 , our phones, well at least councillors from my party very seldom turned off. I have my own website and run a community help desk there, write articles, report on events and blog. If you have any idea what this entails then you will understand that i do not have much time left considering all the other things that I do. Begrudging me a hard earned salary is very unfair, a gross salary of R 34k a month and take home pay of R 18k surely cannot be deemed excessive. Part time engineer, accountant, social worker, electrician, plumber, consultant on family matters, environment expert, waste expert, cultural matters, detective, safety and security expert, water expert, supporter and driver of social issues, events expert, mediator for squabbles between neighbours and communities, punch bag, sponge, foot soldier, poster and leaflet distributor and again so on and on we can go.
You are a witness every day of the greed, wasteful expenditure, fraud, dissent, irregular conduct by officials and everything that hampers and prevents effective service delivery. The lack of accountability, transparency and the railroading of the constitutional rights of residents and communities face you every day. This impacts on you to no end.
Portraying us as hostage takers and being unreasonable with our demands, is probably the most insensitive and inconsiderate act perpetrated by the so called social watchdog ie the press
I will not even bother to go onto all the other things that councillors do, I think I have made my point

Is the spirit of LEADSA (where we try to do something about it ), is there actually anything that ANYONE can do about this?

Clearly leaving it up to voters to make the right choice is not working…
The government ignores the courts… but is there something people can support? Do? fund?

I want to know what can people do other than just vent on these various forums…..

Do any of these municipal officials like the mayor, municipal manager, finance mayoral committee members actually UNDERSTAND (comprehend) the very contracts they enter into? Are they sufficiently skilled in high finance matters? Most private companies/listed companies that administer budgets that size (and are accountable to shareholders) use contract experts to advise them.

Can the auditors please follow the (kickback) money?

Councillors are not worried about their official pay packets. Their alternative income streams are more than enough.

End of comments.





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