SIU uncovered how Giyani water project escalated from R90m to R2.2bn and later R4.1bn

The Special Investigating Unit (SIU) has lifted the lid how the Giyani water project was increased from R90 million to R2.2 billion and finally R4.1bn and the tender was awarded without following supply chain management processes.

SIU programme manager Gina Pretorius told the Standing Committee on Public Accounts (Scopa) that they have gone to the High Court in Limpopo to set aside the tender as it was awarded irregularly and unlawfully. The unit also found that there was no value for money as the project was not completed.

Pretorius, who was briefing Scopa on Tuesday, said government wanted to address water challenges in the Giyani area in 2014. Initially, government decided on an emergency contract of R90m. State-owned Lepelle Northern Water was leading the process. But a month after the R90m contract was awarded to LTE Consulting, Lepelle Northern Water extended the contract to R2.2bn.

“LTE was initially appointed on an emergency basis in August 2014 for the repair and refurbishment of the water and wastewater works to the value of R90m. On September 25, Lepelle Northern Water appointed LTE for non-emergency works to the value of R2.2bn. It must be noted that there was no procurement process followed when the project was extended from R90m to R2.2bn,” said Pretorius.

She added that this was done without authorisation from the former minister of water, Nomvula Mokonyane, and the Department of Water and Sanitation. Pretorius said their investigation has found that when Lepelle Northern Water extended the contract in September 2014, increasing it from R90m to R2.2bn, it did not follow supply chain management processes. “The project cost was increased from the approved budget of R90m to R2.2bn,” said Pretorius, adding that the SIU found that the contract was irregular and unlawful.

“’In terms of the CIDB (Construction Industry Development Board) compliance, it was found that the appointment of LTE by Lepelle Northern Water in August and September were irregular and unlawful, in that LTE was not registered with the CIDB to undertake or carry out construction work for public sector contracts and Lepelle Northern Water was prohibited in terms of the CIDB Act to appoint a contractor to carry out construction work without a valid registration certificate issued by the CIDB,” said Pretorius.

“The investigation uncovered that Lepelle Northern Water paid an amount of approximately R4.1bn to the service provider, which far exceeds the contract value of R2.2bn,” she said. Pretorius said to set aside the contract of R2.2bn, which subsequently increased to R4.1bn, they have gone to the High Court. They were waiting for the Judge President of the Limpopo High Court on a date for a hearing of the case.

She said this case was brought to the High Court a few years ago. This was before government established the Special Tribunal to hear SIU cases. The SIU found that there was no value for the contract.