Court battle dims electricity project

Businessman Lufuno Mphaphuli wants the green light

Businessman Lufuno Mphaphuli wants the green light

A looming court battle between a local municipality and a service provider is threatening a five-year-old rural electrification initiative for thousands of Limpopo residents.

The ambitious project involved an innovative business model, based on long-term financial commitments rather than on current available budgets. It was meant to accelerate the electrification of rural areas but it has been stalled for more than a year.

But just two weeks after the Fetakgomo Greater Tubatse Local Municipality and Eskom, in an attempt to rescue the project after it garnered national attention, announced the recommencement of a project to electrify nearly 10 000 households, Lufuno Mphaphuli is seeking an interdict to stop the work.

The businessperson, after electrifying 7 500 households near Burgersfort in Limpopo in just over a year, is fighting to hold on to the R300-million pilot project, which has been bedevilled by political instability in the municipality. It has had five municipal managers in five years.

Mphaphuli, the chief executive officer of Mphaphuli Consulting, said the municipality deliberately terminated his contract for the project, Operation Mabone, because he successfully sued it in 2016 for about R41-million for failing to pay for completed aspects of the projects.

He had also stopped work because payments were not forthcoming.

“To many people in South Africa and across the African continent, access to electricity remains a distant dream, notwithstanding the existence of numerous international conventions recognising the centrality of electricity [to the] attainment of economic and social development,” engineer and businessperson Mphaphuli said in his founding affidavit filed with the high court in Polokwane.

“The development aspect related to the provision of electricity is intrinsically connected to the improvement of the living standard of all households and the alleviation of poverty, which are of themselves constitutional ideals.”

This matter will be heard in February.

The stalled project made national headlines when it emerged that the municipality had lost the R245-million it had deposited in the now liquidated VBS Mutual Bank.
It is part of R1.5-billion in municipal deposits the treasury and South African Reserve Bank say are unlikely to be recovered.

The municipality failed to respond to questions by the time of going to press.

Eskom confirmed it had an agreement with the municipality, but said it was not involved with Operation Mabone, which was between the municipality and Mphaphuli. “Eskom respects the laws and legal processes of South Africa and will abide and/or respond to any court decision.”

Mphaphuli’s contract with the municipality was signed in 2013 and he was meant to electrify 9 500 homes in 26 villages for R168-million. In January 2015, the number of houses was increased by an additional 3 725, bringing the total cost to R231-million. The addition of another 9 250 homes brought the total to R326-million.

These increases are the subject of an investigation by the Special Investigating Unit (SIU), which has been tasked to recover about R76-million from Mphaphuli, which was allegedly misspent and not due to him.

He said he had approached the municipality with his novel idea of using a long-term commitment from the municipality to electrify thousands of households without expecting immediate payment.

Before his plan, which he said had received the approval of the treasury and department of energy, the municipality was electrifying about 2 000 homes a year by using its available budget.

“So instead of having a community await the availability of funds two years down the line, and have the construction of infrastructure commence then, only to be completed a year later, the applicant devised a model in terms whereof delivery takes place immediately whilst awaiting future allocation of funding,” he said in his affidavit.

The work began in April 2015 and 4 962 households were electrified within a year. But then problems started.

“Financial management of the first respondent [the municipality] presented another problem, in a sense that the first respondent would not have funds to pursue projects preferred by the municipal manager, or to cover other obligations of the first respondent, and eventually leading to the use of funds specifically ring-fenced for the project,” Mphaphuli claimed.

The municipality then started claiming there were procurement irregularities and that payments would be made only after internal investigations were concluded. “None of the investigations ever got off the ground but for the investigation of the Special Investigating Unit, which has culminated in the issue of summons against the applicant,“ Mphaphuli said.

He had previously written to Parliament’s portfolio committee on justice to intervene in what he described as the unlawful use of the SIU.

Sabelo Skiti

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