eThekwini Municipality has placed its suspended deputy municipal manager, Sibusiso Makhanya, at the centre of a legal dispute with Africa Utility Solutions.
This conflict arose after the municipality failed to correct a news report claiming that the company supplied dysfunctional electricity smart meters, which allegedly cost R500 million.
In response to Africa Utility Solutions’ legal papers, the municipality referred to Makhanya as “the central character to the unfortunate state of affairs,” suggesting that he has a personal agenda that conflicts with the municipality’s interests.
Africa Utility Solutions recently won a court case against the municipality regarding a non-payment of R63 million, which accrued interest.
The company issued a letter of demand to the municipality, requiring it to issue a statement within 30 days to counter the misleading report. If the municipality does not negotiate compensation, Africa Utility Solutions plans to sue for R500 million, citing financial loss and reputational damage due to the municipality’s failure to correct the misinformation.
In its response, the municipality denied liability for any damages claimed by the company, asserting that the article was published without its involvement.
Africa Utility Solutions stated that the municipality had issued a tender in March 2021 for the supply and delivery of three-phase electricity meters, which the company was awarded in August 2022. The company complied with its obligations and delivered the meters as per the purchase orders received from the municipality.
However, Africa Utility Solutions expressed shock at the publication of an article suggesting that the municipality paid R500 million for non-functional smart meters. The company argued that the allegations were “factually incorrect, misleading, and patently false.”
It further claimed that the article’s context was defamatory, implying that the company and its representatives were dishonest and engaged in fraudulent activities with the municipality.
The company highlighted that the municipality’s failure to provide accurate information regarding the compliance of the meters with the tender specifications was concerning.
It noted that more than three weeks had passed since the publication of the erroneous information, resulting in losses amounting to R48,384,000. Additionally, the company projected a loss of R78,000,000 in future work due to the suspension or termination of various contracts, totalling R203,092,500.
In light of these concerns, Africa Utility Solutions demanded that the municipality publicly confirm that all supplied electricity meters met its requirements and were operational.
Should the municipality fail to issue this statement and engage in compensation discussions, the company intends to pursue legal action for damages amounting to R329,476,500, plus a reputational damage claim of no less than R150,000,000.
eThekwini Municipality spokesperson, Gugu Sisilana, stated that the municipality had responded to the letter on October 17 2024, reiterating its position regarding its legal obligations to make public statements on these matters.
The Star