Business grouping AfriBusiness will submit an urgent application to the North Gauteng High Court at 9:00 on Wednesday to prohibit the City of Tshwane from paying another R950 million in terms of its irregular smart metering contract with PEU Capital Partners.
According to AfriBusiness attorney Willie Spies, payment is imminent.
This follows after city mayor Kgosientso Ramokgopa refused to respond to a question by DA shadow MMC for finance Lex Middelberg at a council meeting on May 30 about the payment that he then said was scheduled for July 1. Middelberg wanted to know what the impact of such payment would be on the city’s budget, since no provision was made for it.
In the 2014/15 financial year the city payed R880 million to PEU and announced in May last year it would cancel the contract because it was unaffordable. The cost of cancellation has never been fully disclosed. The payments, made daily, have for the previous and current financial years amounted to about R70 million per month and are continuing.
Ramokgopa said at the meeting, which was held to approve the city’s budget, that he had no knowledge of supply chain matters. The city did not respond to subsequent questions from Moneyweb regarding the alleged payment.
AfriBusiness on June 6 asked for an undertaking from the city that it won’t proceed with the payment. This was based on its pending application to have the contract reviewed and set aside, the view of National Treasury and finance minister Pravin Gordhan that the contract is unlawful, as well as the Auditor General’s ruling of the expenditure as irregular.
Irregular expenditure is expenditure incurred in contravention of applicable laws and regulations.
The city had not responded by AfriBusiness’s extended deadline on Monday.
Spies told Moneyweb the R950 million is styled as payment for PEU’s infrastructure. PEU earlier disclosed that Tshwane agreed to buy the infrastructure as a condition of the cancellation, at an amount to be determined by an independent valuer.
The city apparently tried to off-load the obligation to a new service provider and in its tender specification for this contract, it required bidders to pay R950 million for this purpose.
The city never responded to questions about the identity of the valuer and basis for the valuation. It subsequently appointed international consultancy Accenture, but it is not clear whether Accenture has committed to buy the infrastructure.