Limpopo's R580m broadband fiasco

Limpopo's R585 million broadband project hangs in the balance as the consortium of companies appointed to lead it squabbles over money.

The rollout was aimed at establishing an open access, shared, secure, affordable next-generation broadband transmission carrier network infrastructure for the province, and to connect about 6000 government sites and 1.6 million households by 2030 in line with SA Connect targets.

The squabble comes after Altech Alcom Matomo reneged on the initial agreement that would have seen six SMMEs getting 33% of the pie amounting to R192m. According to two SMME’s, Altech had indicated that it wouldn't be able to afford the 33% which they proposed themselves but failed to give valid reasons, other than to say if they achieved the figure, it would default the project.

Also, government’s IT provider, State Information Technology Agency (Sita), is seething and has cautioned against government departments using Altech services and infrastructure. In February the agency's chief executive Setumo Mohapi fired off a scathing letter to the provincial government criticising the project.

Mohapi stated in the letter that Sita was the sole statutory supplier of the access broadband network services to state departments. Mohapi further warned the provincial government and its departments not to utilise the vehicle created through Limpopo Connexion as it violated the Sita Act.

“It follows that the expenditure by any provincial department as a result of utilisation of this tender will be irregular,” said Mohapi. According to one of the sources from the SMMEs, who didn’t want to be named, Altech was in breach of the tender specifications and agreements. The company has made a U-turn on its promise.

Altech would be in default of the contract by not fulfilling their obligations, which was achieving the 33% (specified),” he said. Attempts to get comment from Altech were not successful. The company's project director JT Engelbrecht failed to respond to questions sent to him.

Problems were said to have started when Altech, which was the project leader, added five other companies that were not part of the initial bid. According to sources, the initial list had six SMMEs, which were Leshabane Technologies, IT Master information consultants, Enabling Solutions, Foresight Business Solutions, RJT Tech Telecoms and Mongalo Engineering and Projects.

Other companies that were part of the original bid were Huawei Technologies Africa, Broadband Infraco SOC Limited, Liquid and Dark Fibre Africa. “Altech, however, added five new silent partners, IN2IT, Arrow Altech, AME Technologies, Seacom and British Telecoms. "Some of those companies have already been paid by Altech but, we, the original SMMEs, have not seen a single cent from the project.

“It is understood that Altech has already earned almost a quarter of the total value of the project, whereas their strategic partners labelled as SMME contractors are just spectators, and when consulting with their partner, Altech always responds by saying they are still in negotiations,” said the source.

Limpopo Connexion, which took out the tender, have already paid R200m for the first phase of the project. The sources added that from the agreed R192m, Altech said that it would only be able to pay them R80m. “They can’t tell us where the rest of the money went or is going. We have been reliably informed that one of the added silent partners has already been paid R60m by Altech.

"It’s clear now that we are being short-changed for the benefit of the silent partners,” said the business owner. Rolda Ledwaba, programme manager of Limpopo Connexion, maintained there was no change in terms of what the SMME’s were entitled to get. She added that they were not aware of any challenges with regards to the project.

“There is no about-turn on the 33% allocation. "The alleged issue raised has not been submitted to Limpopo Connexion,” said Ledwaba. She said the R200m paid to Altech had been used for broadband imported core equipment delivery, installation and configuration. Limpopo Connexion chief executive Baldwin Ramasobane said Altech has to honour its end of the deal and give the SMMEs what is rightfully due to them.

“If the agreement is 33%, that has to be done otherwise they will be going against what the contract is saying. The other companies added are subcontractors and not SMMEs,” he said. Ramasobane added that the six silent partners were companies that already had existing infrastructure in the province and there was nothing untoward with their addition to the contract.

“The SMMEs are still part of the contract. Other subcontractors like IN2IT, Broadband Infraco and Liquid, those are companies which had fibre infrastructure already in place. They are OEMs and not SMMEs,” he said.