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This is how prices for boreholes in Limpopo were inflated by millions

The Special Investigating Unit (SIU) has outlined to members of the standing committee on public accounts (Scopa) how a service provider inflated prices for boreholes in villages in Giyani.

The company, which was probed by the SIU for the irregular awarding of the tender, installed 167 boreholes across the region. The SIU’s senior official Gina Pretorius said they conducted a sample of five boreholes out of the 167 that were installed by LTE Consulting a few years ago. The unit brought in an expert to look at the prices and if there was value for money.

However, in the report that the SIU tabled before Scopa on Tuesday, it was found that in the sample of five boreholes there was an overpricing of R7 million. “We originally looked at five sample boreholes. The SIU contracted the services of an expert to conduct the value for money exercise for those five boreholes of the 167 that were installed by the service provider.

“The report obtained from the expert Quantity Surveyor identified that there was excessive overpricing on the boreholes amounting to R7 million. Bear in mind these were just five boreholes that were sampled and there were non-functional water purification plants which R2.5m had been paid for. The expert quantified that the Lepelle Northern Water did not receive value for money for the five sampled boreholes and overpaid a total of R9.5m due to either non-performance or significantly inflated project costs,” said Pretorius.

The SIU report presented to Scopa showed that in Mphangani village the actual cost of the borehole was R1,192,787.94 and the price charged by the service provider was R1,250,646.45. The difference was R57,000. In Phalaubeni village the actual cost of the borehole was R1,486,196.30 and the price charged by LTE was R4,010,466.02. The difference was R2.5m.

In Mapayeni village the actual cost was R1,093, 207.52 and the money charged by the service provider was R3,029,636.06. The difference was R1.9m. The SIU report also showed that in Bambeni village the cost was R1,252,272.01 and the price by the service provider was R2,117,331.68. The difference was R865,000.

The report found that in Mningisi village the actual cost for the borehole was R1,013,873.67 and the money charged by the company was R2,678,969.58. The report found that the difference was R1.6m. In total, the SIU report said there was overpricing of R7m.

Source: www.iol.co.za

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This is how prices for boreholes in Limpopo were inflated by millions

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