Three judges to hear review of Tshwane/PEU contract

Controversial smart metering contract under spotlight.
The saga surrounding the City of Tshwane's controversial smart metering contract with PEU has been ongoing since 2013. Picture: Moneyweb

Three judges will from Wednesday hear arguments before deciding whether the City of Tshwane’s controversial smart electricity metering contract and its subsequent cancellation agreement are unlawful and should be set aside.

They will also have to decide who should get the money in a special trust account created when the parties agreed in May 2015 to reduce the commission the city paid to PEU Capital Partners through its implementing agent TUMS. In terms of the agreement the balance of the original commission, that is 10c of the original 19.5c commission paid for every rand of electricity vended through the system, had to be paid into the trust account from then onwards. 

The previous ANC administration concluded the original agreement with PEU in 2013. PEU would finance and provide a smart electricity metering system for the city and be paid 19.5% of the revenue vended through the system.

Then finance minister Pravin Gordhan warned former ANC mayor Kgosientso Ramokgopa not to go ahead with the transaction and pointed towards flaws in the procurement and a lack of value for money.

Read: Dear Pravin, up yours

Industry experts stated that this was far above industry norms and represented huge profits. Ramakgopa in May 2015 conceded that the contract was unaffordable for the city. 

The Auditor-General later ruled the expenditure irregular.

Business grouping of the Solidarity movement AfriSake had challenged the original agreement early on. It was unsuccessful in obtaining an early interdict to stop the rollout of the system, but in July last year obtained an interim order to stop the city from paying PEU R950 million to take over the meters and other infrastructure. 

Read: Court stops R950m Tshwane payment to PEU

The court then ordered that the status quo remain until the full review is heard, which now commences.

The city government has changed hands and the Democratic Alliance has withdrawn the city’s earlier opposition to AfriSake’s application.

PEU has installed only 13 000 meters instead of the original plans to install 800 000. The 13 000 meters include 6 500 large power users and represents 55% of the city’s electricity revenue.

It is expected that the court will spend some time determining the value of the PEU infrastructure. During the interdict hearing, AfriSake questioned the basis of the valuation. AfriSake argued that the valuation was based on an income stream generated by the infrastructure, rather than the infrastructure itself.

In the mean time, Accenture has been waiting in the wings as it won the replacement tender. Everything has, however, been on hold pending the review hearing.

Read: Tshwane appoints Accenture to succeed PEU



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On what grounds could the DA administration have opposed AfriSake’s application as AfriSake has a sound argument. It basically saved ratepayers from suffering a huge rip-off.

The former mayor should be ordered to pay back some of the money from his personal purse strings.

End of comments.





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