Electricity meter scandal makes Nkandla look like small change
21 June 2016
The money that was spent on President Jacob Zuma’s private residence at Nkandla looks like small change compared to the scope of taxpayers’ money that was wasted as part of the Tshwane Metro Council’s controversial prepaid electricity meter contract with company PEU Capital.
This is the conclusion of AfriBusiness legal representative, Willie Spies, after the AfriBusiness legal team this weekend for the first time got the opportunity to view the agreement according to which the Tshwane Metro Council undertakes to make a payment of at least R950 million.
The Tshwane Metro Council has previously refused to reveal the conditions in terms of which the controversial contract with PEU Capital was cancelled. It recently became known that the Metro was on the verge of paying an amount of R950 million to PEU Capital, but payment has provisionally been suspended after AfriBusiness urgently approached the court about it.
In a court order that was made last week by agreement between the parties, the court application will stand over until 5 July 2016, and the Metro was ordered to provide AfriBusiness with a copy of the cancellation agreement, the valuation and relevant parts of the budget.
While PEU Capital as well as the Metro Council constantly gave the assurance that the R950 million was compensation for infrastructure which PEU Capital had sold to the Council at an objective valuation, it now appears that this price was an agreed amount and that the valuation was done according to inappropriate measures.
According to the valuation that was done, the infrastructure was valued as a going concern by discounting the future revenue stream against the current value.
“What the Metro Council therefore did, was to first give away 19,5% of its income stream from electricity to a contractor for free and to now buy it back again at the value of that income stream. This goes against all norms and rationality,” says Spies.
Issued by Stefan Pieterse, Spokesperson AfriBusiness, 21 June 2016