Metro revives controversial deal despite legal opinion

Brian Hayward

THE Nelson Mandela Bay Municipality is reviving its controversial multimillion rand automatic meter-reading (AMR) deal with a company co-owned by property magnate Yossuf Jeeva, despite legal advice strongly recommending against proceeding.

The deal, worth up to R150-million when completed, also comes despite the Jeeva family owing an estimated R10-million in outstanding rates and services levies from properties they own to the municipality, well-placed sources confirmed to The Herald.

The AMR project aims for units to be installed at households which allow the municipality to monitor residents’ water and electricity consumption remotely, allowing it to save millions of rands resulting from incorrect manual readings.

The resuscitation of the project – for which the city’s 2010/11 budget has set aside R5-million – comes in the wake of an investigation by the government’s Special Investigations Unit (SIU) in 2007, after a whistle-blower raised concerns over the procurement process of the deal in which Unique Mbane SA Ltd was the only company to tender for the lucrative contract.

Unique Mbane’s directors include Yossuf Jeeva, his sons Nooshin and Shakir, and the company chief executive, Thiru Chetty.

According to a report by Bay advocate Richard Buchanan – of which The Herald has a copy – reviving the contract would almost certainly see the roll-out of the AMR system extend beyond the mutually agreed completion date of March 2011.

In response to a query from the municipality on whether it should revive the project, the report said the continuation past March 2011 “will not be permissible in terms of the constitutional and statutory framework binding upon the municipality”.

“It seems clear


(that) performance in terms of the contract, by both parties, would necessarily endure well beyond March 2011,” the report, dated February this year, said.

“It is the continuation of the agreement beyond that date which gives rise to serious legal obstacles. What will be required is for new tenders to be advertised.

Unique Mbane will obviously be entitled to tender, as will other competitors who, since 2006, have entered the relevant market.”

But on March 31, acting municipal manager Elias Ntoba e-mailed Chetty – The Herald also has a copy – saying: “Kindly take note that the Nelson Mandela Bay Municipality hereby wish to honour the existing contract per initial tender until the date of termination, March 2011.”

Ntoba failed to responded to queries on the issue by the time of going to print last night.

Jeeva said: “The AMR is not linked to the (outstanding debts by Jeeva property group) Africorp issue. Most – 98% – of our accounts are up to date with the municipality and hopefully the issue will be resolved shortly.”

According to Chetty, “there was an issue of funding for the AMR project (from the municipality), but that has now been resolved”.

He said the first phase of the contract had already been rolled out in 2006, with 300 AMR units installed in Summerstrand and Charlo.

Chetty refused to comment on specifics of the new agreement, saying: “No price was ever given for the whole contract, only a price the municipality would pay per unit. We are busy finalising a service level agreement with the municipality (for the second phase), so (details are) confidential. The tender lapses in March 2011, yes.”

Africorp’s outstanding debt to the municipality has been an ongoing legal dispute spanning several years. The payment – which at one time was said to be over R20-million – was further complicated because of outstanding debts owed by the city to Africorp. One of the buildings owned by Africorp is Kwantu Towers, opposite City Hall, of which the municipality rents five floors.

The municipality refused to confirm the outstanding amount owed by Africorp, simply saying: “Regarding the Jeeva family’s accounts, we are meeting them on Wednesday. This meeting is meant to give impetus to an ongoing process of reconciling accounts between the two parties. It is hoped that all outstanding matters will be resolved within the next 30 to 60 days, including payments.”

According to the SIU, although its investigation was shelved when the AMR project was put on ice in 2007, it could be revived “should additional information become available”.

“The unit carried out a preliminary investigation. On the basis of the documentation made available to it at the time, it felt that there were not sufficient grounds to motivate to the president that a full investigation should be done. Should additional information become available, the unit will evaluate it and proceed accordingly,” it said in a statement to The Herald.

The project was again investigated last year when Eastern Cape Local Government and Traditional Affairs MEC Sicelo Gqobana confirmed it had been included in an audit of lucrative tenders in the city, alleged to have been awarded irregularly. Although the audit has been wrapped up, it has not yet been made public.

First mooted in 2001, the AMR system was strongly advocated by then-mayor Nceba Faku, who promised at a public meeting in 2003: “Once implemented metro-wide, the new system will reverse hundreds of millions of rands of debt annually currently being lost due to unreliable meter reading and municipal billing.”

At the time, the AMR was also said to accurately read both electricity and water consumption remotely – both for credit and prepaid consumers – but several glitches were experienced after a pilot project in mid-2004. Despite this, the municipality called for tenders for the roll-out of the project in 2005 and awarded the contract to Unique Mbane – the only company to vie for the tender – in 2006.