Municipality overpaid R46m to water firm

31-10-2014
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Fin24
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Cape Town - A water engineering company, Khasu Engineering Services was overpaid by over R46m by the Naledi municipality for a project but it failed to complete the work and has not paid the money back, Cooperative Governance and Traditional Affairs Minister Pravin Gordhan has told parliament. Kevin Mileham, a DA MP, in a written question asked Gordhan whether since January 2004 any amounts were paid by the Naledi municipality to Khasu Engineering Services or to its owner Khotso Frank Khasu and what amounts had been paid to them.

Naledi local municipality is included in the Dr Ruth Segomotsi Mompati district municipality, North West province. The seat of the municipality is Vryburg.

The minister said payments had been made to Khasu Engineering Services from April 11 2008 when the company entered into a contractual relationship with the municipality. Khotso Frank Khasu was not paid any monies in his personal capacity.

Gordhan said the total amount paid to Khasu Engineering was R87.9m which included “an overpayment of R46 094 026”. The payments were made for the installation of sewer and water services and construction of 3 000 top structures.

The minister said according to a technical report compiled by the provincial department of human settlement all the top structures did not comply with the minimum standards and extensive work needed to be done to rectify the structural and other engineering defaults.

Only 90% installation of the internal water services for phase one which consisted of 1 500 stands was carried out, he reported.

There was still an outstanding requirement to install internal water and sanitation services for the second phase of the project - a total of 1 500 remaining stands. “The budget for the project was exhausted with only half of the work completed,” said Gordhan.

The quality of the structures on the ground did not warrant the expenditure incurred and the top structures needed extensive remedial works to be carried out, said the minister. “As a result the contract with Khasu Engineering was cancelled,” he reported.

The municipality had instituted legal proceedings to recover the overpayment. Naledi was granted a court order in its favour for the overpaid amount. “To date, Khasu Engineering has failed to comply with the said order and has appealed against the court decision,” the minister’s reply stated.

While no civil charges had been instituted by the municipality, disciplinary proceedings had been instituted against the municipal manager and the acting executive manager for infrastructure, the minister reported.