Legal View

Tshwane wants broadband tender set aside

Read time 2min 20sec
The City of Tshwane's broadband contract is valued at R2.7 billion.
The City of Tshwane's broadband contract is valued at R2.7 billion.

The City of Tshwane has decided to subject the multibillion-rand broadband contract to judicial review after discovering what it says are serious irregularities, which "taint the legality of the deal".

Yesterday, the city hosted a review meeting where it said it has asked the North Gauteng High Court to set aside the Tshwane broadband contract with Thobela Telecoms. The contract was entered into by the previous ANC-led administration.

The incumbent administration, led by the DA's Solly Msimanga, says it instituted an investigation into the procurement process of the deal after the Auditor-General (AG) found the contract to be irregular.

The AG's report also determined the value of the contract at R2.73 billion.

Msimanga's administration "contends that the broadband contract and its procurement are riddled with irregularities and non-compliance".

"What we have discovered are serious irregularities which we believe taint the legality of the broadband deal. Crucial information was also withheld from councillors who voted on the project in April 2016."

Tshwane's broadband project aims to bring down the cost of government, promote and support e-government initiatives like eTshwane, generate new revenue streams, and improve service delivery and government responsiveness.

Before the broadband tender was approved, National Treasury raised concerns about the project in February.

Last April, city officials put forward a request to the council to approve the contract for broadband roll-out for a period of 18 years, which includes three years to build the network and 15 years to operate it.

In terms of the request, the council was asked to approve the off-take amount of R278 million inclusive per annum for a period of 18 years. During the build period, the off-take amount will be paid pro-rata in line with the services made available from the network, said the city. The off-take may increase if the city procures additional services not covered by the current agreement.

The off-take amount was constituted as R153 million per annum, reprioritised from the current operational budget of the ICT department, and another R43 million taken from the budgets of the three departments, namely: ICT, metro police and electricity.

The city said it would fund the shortfall of R82 million per annum required from the 2016/17 financial year as follows: R40 million in the financial year 2016/17, increased by another R42 million in the next financial year.

The deal was subsequently approved and the contract awarded to Thobela Telecoms.

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