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City Power terminates contract with Setheo Engineering

On 30 November 2017, City Power officially terminated its contract with Setheo Engineering.
Setheo was awarded a R168 million contract to build a new substation in Eldorado Park, but has failed to deliver on the contract despite receiving R66 million from the City by July this year.

Worsening matters was the fact that Setheo was also awarded a similar tender worth R44 million to conduct repairs at the Hopefield Power Station. By July 2017, they were paid R22 million by the City, however, work estimated to be worth only R1.5 million has been done at the time.

The termination of the contract is the culmination of investigations conducting over the course of the past year. Indeed, a criminal case was opened by the City with the South African Police Service (SAPS) and two City Power officials, who were project managers, were suspended by the City and arrested by the SAPS.

In an effort to not delay the completion of the projects any further and to ensure that quality of work is not compromised, City Power is working to appoint new contractors to complete the project.

As part of this work, the entity will investigate how best to incorporate community based SMME’s so as to support jobs in our local economy and the area. The need for these SMME’s will be influenced by an assessment into the scope and business requirement of the project, following the appointment of a contractor.

The City anticipates that the termination process might take a few weeks to complete. I urge residents to bear with us while we conclude this process.

In addition to the cancellation of the contract, I have instructed our City’s legal team to investigate the means by which the City may reclaim money paid to Setheo Engineering fraudulently. Similarly, I have also instructed our legal team to investigate bringing civil claims against the responsible city officials and the leadership of the previous administration for loses experienced by the City.

Had City Power’s governance and management systems not been eroded by corruption, there would have been proper management of these projects and quality services would have been delivered to residents.

Our residents are sick and tired of the countless power outages they experience on a monthly basis. It is widely known that our aging electricity infrastructure has received little to no attention over the past two decades, and it is vital that we turn this sad state of affairs around.

I have previously stated that our priority is to bring stability to City Power, and terminating the contract with Setheo is one of the steps we are taking to ensure that projects are properly managed and implemented to ensure better service delivery to our residents.

Cllr Herman Mashaba 
Executive Mayor
City of Johannesburg

Media Enquiries:

Luyanda Mfeka
Acting Director of Communications
Office of the Executive Mayor
City of Johannesburg
Tel: 011 407 6727
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