A dubious prepaid electricity metering contract that could have cost a Free State municipality R285 million is in the spotlight, as questions are raised about who pushed for it.
According to Bethlehem-based Dihlabeng Local Municipality, the contract was terminated about two years ago, but it is now subject of a legal wrangle with the service provider, who is demanding almost R100 million in damages related to cost of equipment, labour and loss of profit.
Certain items in the electricity prepaid metering contract indicate it could have been a cash cow for the service provider and some municipal officials. A dedicated bank account was to be opened by the municipality and once the vending system was up and running, revenue collected by the municipality would be deposited into it.“The agreed commission for the service provider is 30% of the monthly received energy revenue” and the municipality was to issue the bank an irrevocable instruction to automatically pay 30% of all revenue received at the end of every month to Hexing.
“The contract was subsequently terminated because of deliverables and value for money that the municipality was not happy with. I cannot engage any further because the matter is before the courts and therefore sub judice,” he said. Sources within the municipality said Hexing was brought in through section 32 of the Public Finance Act, which allows supply chain to award a contract to a company already contracted to another organ of the state for the same service.
It was reported in the same article that Hexing was taking 30% of the electricity revenue collected by eDumbe Local Municipality in KwaZulu-Natal after signing a five-year contract which also being investigated.
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