PEU may bid for meter contract

TSHWANE SMART METERS: NEW CONTRACT PROCESS TO START SOON

The City of Tshwane will this week brief interested parties about the future of its failed, but lucrative smart metering project that has cost rate payers close to R1bn.

PEU Capital may get a second bite at the lucrative smart meter cherry when Tshwane advertises the contract again.

The City of Tshwane will on Wednesday brief interested parties about the future of its failed smart metering project, which has cost rate payers close to R1 billion since October 2013.

In recent months, payments totalled about R100 million per month.

Mayor Kgosientso Ramokgopa a week ago announced the cancellation of its contract with smart metering partner PEU Capital Partners. A new service provider was to be appointed by a tender process before the year end.

He said the successful bidder would take over PEU’s infrastructure, including some 14 000 smart prepaid meters, at an amount to be determined by an independent assessor.

It will have to complete a project to convert the city’s 800 000 electricity consumers to smart prepaid meters.

PEU said the city was obliged to buy the infrastructure from PEU.

It now seems as if the city is in a race to find a third party on which to off-load it.

Business has learnt the termination agreement, drafted by PEU, includes an irrevocable instruction to Standard Bank in terms of which PEU will be paid 9.5% of the electricity revenue vended through its system from July 1 until December 31. This is a reduction from the earlier 19.5%.

The difference (10% of revenue) will be paid into an escrow account pending the city’s compliance with the terms of the termination. Ramokgopa did not disclose this at his press conference.

On Thursday the city’s supply chain management division placed a notice for a public meeting on Wednesday. It calls the meeting an “Information sharing session for future Security of Revenue Programme”.

City manager Jason Ngobeni said last week the new contractor would not be paid for every meter, as was the case with PEU. Instead, the city would set targets and make payments after every 100 or so installations.

AfriSake attorney Willie Spies told Moneyweb the organisation had no objection to a new tender process, as long as it complied with the relevant legislation.

AfriSake was concerned that the terms of cancellation placed hurdles in the path of other prospective bidders and might set the table for PEU to win the new tender.

Ramokgopa had indicated that PEU was welcome to tender.