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Joburg broadband network costs balloon to R1.7bn

City of Johannesburg executive mayor Herman Mashaba.
Read time 3min 50sec
City of Johannesburg executive mayor Herman Mashaba.

The costs for the City of Johannesburg's (COJ's) broadband network project have ballooned by at least R400 million.

This is according to executive mayor Herman Mashaba, who implicated an unnamed government minister and a deputy minister in the city's broadband network tender.

In a statement issued yesterday, Mashaba said an update from the forensic investigation into the 900km fibre broadband network revealed the costs were higher than the R1.3 billion initially thought.

Mashaba received an update on the independent forensic investigation into the previous administration's decision to purchase a 900km fibre broadband network, supposedly at a cost of R1.3 billion.

However, he pointed out the investigation has since revealed costs relating to the deal currently amount to R1.7 billion.

"Based on the progress report provided to me, these costs are likely to rise as investigators delve deeper into alleged payments which had gone unaccounted for."

Minister implicated

According to the mayor, the investigating team's report also implicates two members of national government - a minister and a deputy minister - as benefiting from the previous administration's decision to purchase the fibre network - to the tune of almost R200 million.

The preliminary findings also indicate members of the ANC were, from the outset, involved in manipulating the city's tender process with respect to the deal, he added.

In addition to this, said Mashaba, an official has been suspended for deliberately frustrating the investigation.

He explained the suspended official refused to allow investigators access to a number of devices that were believed to contain crucial information relating to the investigation.

"The city was forced to obtain a court order to create mirror images of the official's devices so as to preserve all information on the devices and ensure that potential key evidence relating to the investigation was not destroyed."

In 2015, the city acquired the fibre network and established a municipal-owned entity called Metro Trading Company (MTC) to run the network, despite having no viable business plan nor requisite capacity to run a broadband operation of this size, he claimed.

The aim of the Johannesburg Broadband Network Project is to provide access to broadband services that will improve the city's service delivery, realise ICT cost-related savings for the city, and grant communities and businesses across Johannesburg more affordable access to the Internet.

"Despite the astronomical cost, few of these benefits have been realised, necessitating a thorough investigation of the decision.

"Under the initial agreement, the city would have paid an annual fee for the building and operation of the network. After 15 years, we would have taken over ownership of the network. Instead, the previous administration decided to purchase the network at considerable cost, without any viable business plans and at the risk of serious financial distress to the city.

"Since coming into office, and given the facts put before me, I have struggled to understand why the city would decide to proceed with the purchase."

He added: "Once the investigation is complete, I will not hesitate to ensure that all those implicated are held to account and that monies lost by the city in this transaction are recovered. As the new administration, we are determined to bring to book those that have stolen money from our residents."

Earlier this year, the DA-led government said it was looking to rehabilitate the troubled MTC. The city recently transferred MTC from its Department of Economic Development, to Group Finance, headed by prominent ICT figure Rabelani Dagada, who is member of the COJ mayoral committee of finance.

Corruption-busting unit

Meanwhile, the DA said a newly established corruption-busting unit in the City of Johannesburg has recorded over 2 000 cases of corruption involving more than R14.4 billion.

It noted this has seen 451 officials linked to corruption being arrested, another 100 suspended and seven voluntarily resigning. More officials are being investigated over allegations of bribery and other corrupt practices.

Databases of indigent residents have also been cleaned up, removing the names of hundreds of city and government officials who were benefiting improperly from services that were meant to go to the poor, the opposition party said.

Admire Moyo
ITWeb's business editor.

Admire Moyo is ITWeb's business editor. He has been a tech journalist at ITWeb since 2010. Before joining ITWeb, Admire worked for The Herald newspaper based in Zimbabwe. He holds a BA degree (English and History) from Africa University.

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