Court sets aside water meter deal
Amatola Water has since 2014 acted for the beleaguered Makana municipality as its bulk water services provider.
Then-Amatola CEO Lefadi Makibinyane says in an affidavit that the agreement with the municipality included that it would provide so-called blue drop certification of the municipal water treatment schemes as well as other support services.
Grahamstown was, at the time, facing regular water outages and had brought in Amatola to assist it overcome its administrative, capacity, structural and other challenges with regard to its water supply.
Amatola duly became its implementing agent for a project called The Makana Water Crisis Intervention. Because of the urgency of the situation, the board was given permission to deviate from normal public tender processes and piggyback one of its tenders on the back of an agreement between the George Municipality and a supplier called Sebata Municipal Solutions.
The George municipality had undergone a competitive bidding process for the tender.
The tender was for the reading of water and electricity meters and other meter-related services for some three years.
Amatola duly received certain identical goods and services from Sebata for the same price and under the same conditions tendered for by George Municipality.
However, according to court papers, instead of participating in the existing contract between George municipality and Sebata, Amatola, Makana and Sebata signed a separate new master contract for the provision of water meters and related services. This was not preceded by any bidding process.
Makibinyane says that Amatola had then begun to buy goods and services from Sebata on the basis of the master agreement without any reference to the pricing schedules and purchase agreements between the firm and George Municipality.
“The conditions of contract that existed in terms of the agreement between Sebata and the George municipality were neither adopted, adapted nor incorporated by reference in the main agreement concluded between Sebata and the Amatola Water Board.”
Over the following months it duly purchased and paid for goods and services to the tune of R22-million.
However, it was billed for a further R6.4-million, which Amatola suggested it was not liable for following a dispute over Sebata’s performance.
Sebata threatened to refer the matter for arbitration in line with the contract.
It was at this point that Amatola’s lawyer scrutinised the contract and advised the board that by signing an entirely separate contract with Sebata – instead of piggybacking on the contract with George Municipality – it had failed to follow proper procedures and the contract had been unlawfully concluded.
The board had immediately sought to have the contract reviewed and set aside. Sebata did not oppose the application to have the contract reviewed and set aside.
The Grahamstown High Court has duly set aside the agreement.