The Eastern Cape government will be paying close to R4-billion for its broadband internet connection rollout project – almost double what the Western Cape is paying for the same project.
This has been revealed to the Daily Dispatch by three independent sources who are privy to the broadband connection in the province.
This is despite the province having signed a “piggyback” contract based on the Western Cape’s State Information Technology Agency (Sita) contract with Liquid Telecom.
Sita is the implementing agency that handles all IT projects on behalf of the government.
However, while the Western Cape project is being billed R2.8-billion for the same services, the Eastern Cape is paying almost R1.2-billion more.
The rules of piggyback contracts, according to the Public Finance Management Act, are that:
- The contract needs to be materially the same;
- The scope of the original contract should be similar or smaller; and
- Permission must be given by the National Treasury.
The Eastern Cape government failed to follow these regulations and opted to bypass Sita and source these services directly from Liquid Telecom, without any National Treasury or Sita approval.
The sources are now asking why the province’s director-general, Marion Mbina-Mthembu, would negotiate and consent to such a contract and why she and her team persisted in making sure the deal went ahead when they had been denied permission to use the piggyback system.
“The Eastern Cape contract is materially different in many aspects. One of the biggest differences is the addition of an upfront payment of R228-million. The Western Cape contract has no upfront payment.
“We are paying R3300 per site and the Western Cape is paying R1900 per site,” said the source.
“This contract signed with Liquid Telecom is illegal. Why call it a piggyback if the contract has changed,” said the source.
The Sita contract with Liquid Telecom for the Western Cape, seen by the Dispatch, is R2.8-billion.
“We are paying between R3.3-billion and R4-billion for this contract as Eastern Cape,” said the source.
The Dispatch has seen the clause in the contract between the Eastern Cape and Liquid Telecom.
It states: “In terms of the amended contract, in commencing the project, the Eastern Cape provincial government shall pay to the service provider a non-recurring charge in the amount of R228-million. The service provider will invoice the ECPG the NRC amount on signature date or upon commencement of the provision of the services ... the ECPG undertakes to pay such NRC amount on or before November 30 2017.”
Initially, Mbina-Mthembu and her team signed documents on December 6 for the payment of R171-million to Liquid Telecom. On December 18 last year, Mbina-Mthembu “committed” another payment of R57-million to get to a total of R228-million.
Both Mbina-Mthembu and provincial treasury denied this money was released to Liquid Telecom.
“The contract as you read it said they must pay the money by November 30, hence Mbina-Mthembu was signing to pay ... it was in the amended contract with Liquid Telecom,” said a source.
Yesterday, the Dispatch saw a new payment “stub” from the Office of the Premier for R41.1-million to be paid to Liquid Telecom.
The payment was prepared on February 16 this year.
Last month, Mbina-Mthembu accused the Dispatch of “shoddy, misleading and blatantly untrue” reporting.
Mbina-Mthembu told the Dispatch in a letter that she had not been happy with a Sita proposal for the project which she dubbed as “unaffordable”. “We remain dumbfounded why Sita advised us to get into a contractual obligation that is more than twofold that was afforded to the Western Cape government by the same state-owned enterprise that is supposed to safeguard the public purse,” she said.
The Daily Dispatch has also seen a letter written in December last year by Western Cape director-general Brent Gerber, in which he advises Mbina-Mthembu to approach Sita.
Provincial government spokesman Sonwabo Mbananga failed to respond to questions sent to him last month regarding this contract.
After attempting to get comment from Liquid Telecom since late December, company representative Mike Silber said last week: “As a matter of principle, Liquid Telecom does not comment on matters relating to its customers.
“We hope that our customer, the Eastern Cape government, was afforded the opportunity to respond to the allegations in your article, an opportunity not afforded to us.”
He said that they would cooperate with any review that might be undertaken.
Referring to a report published about the broadband deal last month, Silber said: “The article published on February 3 is an inaccurate reflection of the facts and a misrepresentation of the circumstances of a significant project, which is aimed at ensuring the growth of data services and availability of infrastructure for the people of the Eastern Cape.” —
bonganif@dispatch.co.za
E Cape to pay ‘extra’ R1bn for broadband deal
This has been revealed to the Daily Dispatch by three independent sources who are privy to the broadband connection in the province.
This is despite the province having signed a “piggyback” contract based on the Western Cape’s State Information Technology Agency (Sita) contract with Liquid Telecom.
Sita is the implementing agency that handles all IT projects on behalf of the government.
However, while the Western Cape project is being billed R2.8-billion for the same services, the Eastern Cape is paying almost R1.2-billion more.
The rules of piggyback contracts, according to the Public Finance Management Act, are that:
The Eastern Cape government failed to follow these regulations and opted to bypass Sita and source these services directly from Liquid Telecom, without any National Treasury or Sita approval.
The sources are now asking why the province’s director-general, Marion Mbina-Mthembu, would negotiate and consent to such a contract and why she and her team persisted in making sure the deal went ahead when they had been denied permission to use the piggyback system.
“The Eastern Cape contract is materially different in many aspects. One of the biggest differences is the addition of an upfront payment of R228-million. The Western Cape contract has no upfront payment.
“We are paying R3300 per site and the Western Cape is paying R1900 per site,” said the source.
“This contract signed with Liquid Telecom is illegal. Why call it a piggyback if the contract has changed,” said the source.
The Sita contract with Liquid Telecom for the Western Cape, seen by the Dispatch, is R2.8-billion.
“We are paying between R3.3-billion and R4-billion for this contract as Eastern Cape,” said the source.
The Dispatch has seen the clause in the contract between the Eastern Cape and Liquid Telecom.
It states: “In terms of the amended contract, in commencing the project, the Eastern Cape provincial government shall pay to the service provider a non-recurring charge in the amount of R228-million. The service provider will invoice the ECPG the NRC amount on signature date or upon commencement of the provision of the services ... the ECPG undertakes to pay such NRC amount on or before November 30 2017.”
Initially, Mbina-Mthembu and her team signed documents on December 6 for the payment of R171-million to Liquid Telecom. On December 18 last year, Mbina-Mthembu “committed” another payment of R57-million to get to a total of R228-million.
Both Mbina-Mthembu and provincial treasury denied this money was released to Liquid Telecom.
“The contract as you read it said they must pay the money by November 30, hence Mbina-Mthembu was signing to pay ... it was in the amended contract with Liquid Telecom,” said a source.
Yesterday, the Dispatch saw a new payment “stub” from the Office of the Premier for R41.1-million to be paid to Liquid Telecom.
The payment was prepared on February 16 this year.
Last month, Mbina-Mthembu accused the Dispatch of “shoddy, misleading and blatantly untrue” reporting.
Mbina-Mthembu told the Dispatch in a letter that she had not been happy with a Sita proposal for the project which she dubbed as “unaffordable”. “We remain dumbfounded why Sita advised us to get into a contractual obligation that is more than twofold that was afforded to the Western Cape government by the same state-owned enterprise that is supposed to safeguard the public purse,” she said.
The Daily Dispatch has also seen a letter written in December last year by Western Cape director-general Brent Gerber, in which he advises Mbina-Mthembu to approach Sita.
Provincial government spokesman Sonwabo Mbananga failed to respond to questions sent to him last month regarding this contract.
After attempting to get comment from Liquid Telecom since late December, company representative Mike Silber said last week: “As a matter of principle, Liquid Telecom does not comment on matters relating to its customers.
“We hope that our customer, the Eastern Cape government, was afforded the opportunity to respond to the allegations in your article, an opportunity not afforded to us.”
He said that they would cooperate with any review that might be undertaken.
Referring to a report published about the broadband deal last month, Silber said: “The article published on February 3 is an inaccurate reflection of the facts and a misrepresentation of the circumstances of a significant project, which is aimed at ensuring the growth of data services and availability of infrastructure for the people of the Eastern Cape.” —
bonganif@dispatch.co.za
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