City of Tshwane settles R4 billion SARS debt linked to smart meter scandal

The City of Tshwane has finally settled its R4 billion debt to the South African Revenue Service (SARS), bringing an end to a financial burden that has troubled multiple administrations. The massive bill stemmed from the controversial PEU smart meter project, which was declared unlawful by the courts years after its inception.

Background: The PEU Smart Meter Deal

In 2013, the City of Tshwane entered into a multibillion-rand contract with PEU Capital Partners for the provision of smart prepaid electricity meters. The project was initially meant to modernize the city’s electricity billing system, improve revenue collection, and reduce electricity theft.

However, the deal soon turned sour, as investigations revealed irregularities in the procurement process. The courts eventually ruled the contract unlawful, leading to its termination.

Despite the cancellation, the city was left with a massive financial liability, as the VAT (value-added tax) and penalties from the deal accumulated to R4 billion, which the municipality owed to SARS.

City of Tshwane

Final Payment Made in March 2024

At a media briefing on Wednesday, the City of Tshwane’s multiparty coalition government confirmed that it had completed the final payment to SARS in March 2024.

This milestone ends a long-standing financial headache that has plagued the city for years, resulting in adverse audit findings and hindering service delivery.

Tshwane Mayor Celebrates Debt Settlement

Tshwane Mayor Nasiphi Moya welcomed the news, stating that settling the SARS debt was a major financial relief for the city.

“Remember, this R4 billion was not budgeted for when the city realized we were owing SARS. So the fact that this cash can now be redirected to other commitments is a good thing for the cash flow of the city,” said Moya.

The mayor emphasized that with the SARS liability now cleared, the city can focus on improving service delivery, investing in infrastructure, and stabilizing its finances.

Holding Officials Accountable

While the SARS debt has been settled, Mayor Moya made it clear that this was not the end of the story.

The city still intends to hold officials accountable for the financial mismanagement that led to the PEU smart meter scandal.

“This was a serious financial blunder that left the city in debt for years. We must ensure that those responsible are held accountable so that such costly mistakes are never repeated,” Moya said.

There have been ongoing calls for an investigation into the officials and decision-makers involved in signing the controversial contract. The city is expected to pursue legal avenues to ensure accountability.

Impact of the Debt on Tshwane

For years, the R4 billion debt to SARS has significantly affected Tshwane’s financial health, leading to:

• Budget constraints, limiting the city’s ability to invest in infrastructure projects

• Adverse audit findings, damaging the city’s reputation for fiscal responsibility

• Struggles with cash flow, affecting basic service delivery

• Higher municipal tariffs, as the city tried to recover lost funds

With the debt now cleared, the municipality aims to refocus its budget on critical service delivery projects, such as road maintenance, water supply improvements, and housing developments.

Lessons from the PEU Smart Meter Scandal

The PEU smart meter project is considered one of South Africa’s most controversial municipal contracts, serving as a cautionary tale about poor governance, irregular procurement, and the dangers of rushed financial deals.

The City of Tshwane’s leadership has vowed to strengthen internal controls to prevent similar financial disasters in the future.

What’s Next for Tshwane?

Now that the R4 billion SARS debt is officially settled, the city must focus on:

1. Rebuilding financial stability – Ensuring that municipal funds are used effectively to improve services.

2. Accountability measures – Holding those responsible for the PEU contract accountable.

3. Improving governance – Strengthening procurement processes to prevent future irregular contracts.

4. Enhancing service delivery – Directing funds towards projects that benefit residents.

With this financial burden lifted, Tshwane now has an opportunity to move forward, restore public trust, and prioritize development for its residents.