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The City of Tshwane is trying to get out of a deal that would have seen it pay a company it awarded a contract to install smart meters – but later terminated – R1.2 billion over the next two years.
According to calculations made by the company – PEU – the City of Tshwane is liable to pay it R600 million a year to keep servicing more than 12 000 meters it installed before the contract was terminated.
But the city said it had rejected the proposal from PEU and was now in negotiations with it to draw up an exit agreement suitable to both parties.
“We rejected that proposal. We have already met the company and are meeting again next week. Hopefully, we will be able to finalise the terms of the termination, which we will take to council for approval,” said Tshwane spokesperson Selby Bokaba.
PEU was initially contracted to install 900 000 smart meters as the City of Tshwane sought to improve its revenue collection and clamp down on nonpayers.
But the roll-out of smart meters went belly-up after just 18 months when civil rights group AfriForum launched an application in the North Gauteng High Court seeking to declare the contract invalid. PEU ran into financial difficulties as a result of the legal challenge. The city had already paid PEU R830 million when the contract was terminated.
DA councillor in the City of Tshwane Lex Middleberg said the money spent on the smart meters installed meant that the 12 920 meters had cost the city an average of R166 000 each to install and service.
Philip Loots, a smart-meter expert, said the average price of an electricity meter could be anything from R2 500 to R4 000. Loots said in some cases smart meters could cost up to R9 500 depending on the specifications.
“A number of things influence how much a smart meter costs, like how it is enclosed, the antennas used, underground electricity reticulation and the controller.
“But that is generally how much a single smart meter costs when sold individually,” he said.
In a written response to questions, PEU said: “We have been in discussions with the City of Tshwane since February 2015 to explore options, which include, among others, early mutual termination of the contract in a way that delivers a satisfactory resolution for all parties.”
