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There were no irregularities in the R1.1 billion tenders awarded to one company by Rand Water, Parliament heard today.
The country’s biggest water utility, which supplies Gauteng and parts of Mpumalanga and Free State, was summoned to explain to Parliament a report that it was reportedly paying millions more for work that was not being completed.
On October 30 City Press reported that Rand Water had handed more than R1.1 billion in tenders to Fast Move Electrical, which was battling to complete the work.
The company was also paid R56 million in advance for work that was not completed.
Fast Move Electrical is owned by “little known” businessperson Osfael Vusumuzi Mazibuko, who was born in Zimbabwe.
But Rand Water went on the offensive in Parliament when its representatives briefed the water and sanitation committee on the allegations.
Board chairperson Faith Hashatse rubbished claims that there was anything irregular with the tenders, and called the story “innuendos”.
Rand Water could not find information to corroborate the report, she told the committee. They could only deal with what was in front of them as they could not go to the source.
Hashatse told the committee that the company had received R1.1 billion in tenders over the course of five years, “which was not unusual”.
“These are multiple projects awarded over five years. This is something that would not be unusual within the space that we operate in, and would not be unique to Fast Move. There are other companies that do business within this space that get repeat work from Rand Water, and this has been so for a long time. This is also partly because this is a specialised space.”
Defending the advance payments, she said they had a sound system of checks and balances before a payment was made.
Advance payments were made, she said, in keeping with contractual agreements. In one case, the progress payment was made after the delivery of a pump manufactured in Germany.
The advance payments were the most explainable part of their report, she said, and they would stand if audited.
The company has been in business for 20 years, the committee was told, and the owner is South African according to his identity document and the information they had.
But Hashatse said she could not be sure if he was a naturalised citizen or not.
They had gone through the proper processes, she insisted, and there was no sign of any wrongdoing in the contracts.
One of the contracts in question relates to the R490-million project to design and build an engine room and reservoir at the Zuikerbosch Pumping Station in Vereeniging.
Rand Water chief executive Percy Sechemane said work had already started on the project, and they were looking at making their 2018 deadline.
Although the contract was awarded in 2015, he said, they only started the work in 2016 due to civil unrest in the area.
“People were demanding jobs and contractors wanted to be sub-contracted. We officially started in June 2016. We are on site, we are close to finalising the excavations,” he said when questioned by members of Parliament on the project.
Report slammed
The board and some of the committee members slammed the media reports as “belittling of black companies”.
Hashatse said they had responded to City Press, and gave their side of the story, but it was ignored in the report.
Committee chairperson Lulu Johnson referred to media as a “special kind of animal”, and said it was a concern to see how black companies were “really rubbished”.
Economic Freedom Fighters MP Makoti Khawula said the report had not given them enough information to decide if there had been any wrongdoing on the part of the water utility.
“It’s an insult to us,” she said.
One MP called for media to be engaged, because they provided oversight between legislators and the public.
Rand Water should answer on each and every allegation and question levelled against them, MPs said, so that the public could have peace of mind.
In the article published by City Press on October 30, this is what Rand Water said:
The utility’s spokesperson, Justice Mohale, confirmed the delays and cost overruns of projects in Fast Move’s hands, but said there were good explanations for them.
Mohale remained insistent that Fast Move was never paid upfront on any of its contracts, saying: “There were no advanced payments made as alleged.”
Meyersdal
City Press has also established that R31 million was paid in two advance payments for four electrical motors for the Meyersdal Pumping Station project, which is still incomplete.
At the Meyersdal site, City Press found Fast Move’s employees and equipment hard at work. The site – said an insider close to the water utility with intimate knowledge of the projects, who spoke on condition of anonymity – should have been handed over to Rand Water in February 2015.
“The duration of the contract was 18 months,” the insider said.
Mohale confirmed that the original completion date was February last year, but an extension was granted to July that same year.
“Rand Water granted the contractor the extension of time at the contractor’s costs. The estimated completion is February next year,” he said.
“The issue of applicable penalties [for late completion] is currently under review by the two parties as per contractual mechanisms.”
About R160 million would have been paid to the contractor by the time it handed over the site, he said.
Vaal
Regarding the Vaal pipeline project, the payment certificate shows that Fast Move was paid R405 million – R34 million more than the initial contract value of R371 million.
The insider close to Rand Water said that about 3km of pipeline, valued at more than R100 million, was still to be laid and that this cost would be passed on to Rand Water and, by extension, its users.
However, Mohale said provisions had been made for R29 million in escalations and R32.6 million in contingencies.
Minutes of meetings, obtained by City Press, show that Fast Move should have finished the Vaal pipeline 18 months after it was awarded the contract. The company started work on the contract in July 2013.
When City Press visited the construction site near Meyerton this week, workers, pay loaders and front loaders were busy on site.
Mohale blamed the delays on “abnormal underground water” conditions, continuous flooding of work areas, collapsing soil and the diversion of the Klip River in order to lay the pipes. Excessively hard rock, which required specialised blasting, also contributed to the delays, he said.
“The question relating to 3km of the outstanding work is currently for internal discussions. This information has been prematurely leaked to the media,” he said, adding that all work is due to be completed by May next year.
“The contractual matters relating to penalties cannot be disclosed since they are under review.”
Brakpan
The insider said it was curious that – after Fast Move took three years to complete the comparatively small, 12-month Brakpan pipeline project, completing it in 2014 – it subsequently received “projects worth billion of rands”.
However, Mohale defended the company, saying the delays were not Fast Move’s fault, and it was held up by several factors such as a delay in the issuing of a water-use licence, problems with interconnections to existing infrastructure and changes to the scope of work.
The firm was therefore not penalised for the delays, he said. Normally, construction companies incur heavy penalties if they are not able to meet deadlines. As a result of the delays, escalations and other contingencies, Rand Water ended up with a R41.6 million bill for the R31 million project, Mohale said.
Zuikerbosch
City Press was unable to access the site of the Zuikerbosch Pumping Station, but the insider said Fast Move, which received the contract in June last year, had still not started work and was unlikely to make the deadline. “They are still establishing the site,” he said.
However, Mohale insisted the company would meet the December 2018 completion deadline.
