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Durban - It’s worth R1.2 billion and it never went out to tender. Now the man who brokered the deal to install and operate a fibre optic cable network around KwaZulu-Natal’s capital city is about to land R100 million a year for 12 years – and he admits he knows nothing about telecommunications.
Pietermaritzburg tender king Paris Dlamini, also the chairman of the Pietermaritzburg Chamber of Commerce, landed the deal just months after securing another plum piece of city work – a multimillion- rand parking meter tender.
Ahead of claims that he was clinging to power and refusing to relinquish his grip on the chamber chairmanship, Dlamini this week justified his windfall, in spite of the municipality’s parlous financial status and crumbling infrastructure.
Funding for the construction, maintenance and use of the fibre optic network never went out to tender because it was deemed part of a transport contract.
The 119km web of fibre optic cable is set to increase the connectivity of government and business entities across the city with high-speed internet. A Sunday Tribune probe established that in February the contract was awarded to Joburg-based company Bwired, and their four-month-old local partner Duziwired, which appears to have been formed to cater for this tender.
The directors of Bwired are also the directors of Duziwired. They had made a proposal late in 2011 in which the network was punted to complement Pietermaritzburg’s Urban Renewal Project.
Dlamini is understood to have brokered the deal, trading on his position in the city.
Msunduzi Municipality resolved to award the vast contract to Duziwired without considering other bidders when the resolution was passed at a strategic management committee meeting in February.
“The council hereby authorises the municipal manager to sign the contract on behalf of the municipality, provided that the contract may only be signed after confirmation that the ICT/Telecommunications services not exceeding R100m can be transferred to this contract,” an official report reads.
In line with the agreement with Duziwired to “build, operate and from page1
transfer”, the assets and ability to generate revenue will be handed over to the city only once a decade has passed.
This means the city is funding the construction and maintenance of the network, as well as committing to spending over R100m a year for its services.
Council documents obtained by the Sunday Tribune show the project will be funded by the national Department of Transport using a budget allocated for the Integrated Rapid Public Transport Network. The contract was awarded under the emergency regulation section 32, which means there is no need to call for proposals or bids.
Auditor-General spokesman Africa Boso said a probe into the contract had not been initiated as it had not been formally brought to their attention.
Msunduzi city manager Nxolisi Nkosi said no accord between the municipality and Duziwired had been drawn up.
“The project has not been awarded as yet. We made a recommendation for it to be awarded in terms of section 32 of the Supply Chain Management regulations. This means that you use a supplier procured by another municipality through a competitive bidding process. In order for that to proceed you first have to obtain approval from another municipality to use section 32 and obtain their approval as well as contractual documents. What has happened to date … we have written to the City of Johannesburg requesting their approval to use section 32. To date the City of Johannesburg has not responded and that is where the process is at.”
In a bid to explain the questionable funding from the Department of Transport, Nkosi said, “The only commitment is that once the broadband system is up and running the municipality will procure communication services both for the administration and the IRPTN project. The preferred bidder will lay the infrastructure at its own cost for a period of three years and operate it for a further 12 years.”
Dlamini was reluctant to answer questions about the network, and provided scant responses. “Duziwired is an idea that came up when a Joburg company was building a broadband network in that city. We met and discussed the possible project because they needed a local administrator, but then it never happened,” he said.
“Talks about this project have been on the go since 2011 and Duziwired is not a registered company, it is just an idea,” he added.
But according to state documents, the project is going ahead and Duziwired is a registered company, formed in August last year.
Dlamini described himself as “an entrepreneur” but admitted he had no experience in telecommunications. “I used to be in politics in this area so I know the playing field,” he said.
Bwired chief executive Musa Nkosi refused to comment because he was playing golf. “You interrupted my backswing,” he said tersely.
At the time of going to press, the provincial Treasury Department had not answered the following questions:
* Why was the build, operate and transfer agreement not registered with the Treasury?
* Why was a feasibility study never conducted and handed to the Treasury?
* Was Treasury approval obtained to bypass the normal tender process?
* The municipality can only bind itself in a contract for three years; why was this flouted?
* Why was the tender process bypassed under emergency regulations?
DA deputy chief caucus whip Mergen Chetty said the decision to implement the broadband network seemed to have been engineered by the city manager.
“When this proposal was initially presented before the executive committee, rather coincidentally it was preceded by the Municipal Managers 2020 Vision for the City. Ironically, the need for a broadband network was conveniently included in his presentation.”
He said the DA had opposed the project because it was viewed as a luxury as opposed to real service delivery issues.
“…our core business as a municipality is service delivery and not funding private entities to finance their business ventures. I raised a serious concern that Duziwired will not embark on this venture if the council doesn’t enter into an agreement with them, as this business is solely reliant upon the funds, a minimum of R100 million a year, being secured for a 12-year period.
“The condition that after the expiry of this tenure the system will be transferred to the municipality is absurd; in view of the lightning speed in which technology changes, this system could very well render itself obsolete after 15 years. We believe that this contract should have gone out on open tender due to the magnitude of the financial implications.
“Second, Msunduzi having recently been under administration, we believe there should be closer oversight by the MEC for Co-operative Government and Traditional Affairs in view of the awarding of this tender, together with the R1.2m tender for the Msunduzi News and the Panzascore parking meter tender, having all been awarded to a common number of individuals,” he added.
NFP executive council member Ntokozo Bhengu said, “At the time we supported the deal because management (the ANC) said that it was something Pietermaritzburg needed as KwaZulu-Natal’s capital.”
Bhengu regretted this decision, saying “the money could have been allocated to something more important like housing, infrastructure and electricity”. He said if the project were to create jobs it would be worth it.