Contract terminated, but at what cost?
01 March 2016 – A new resource has been added to the PM World library related to Project Failures. The resource is titled “The prepaid meter project that failed to deliver”.
Located in The City of Tshwane, Gauteng, South Africa. In October 2013 the City of Tshwane (Pretoria) launched the project to change old analogy meters to smart prepaid meters. The project was an eight year roll-out programme to install 800,000 of the smart meters to all consumers.
“In terms of the contract, PEU Capital will roll out 800 000 smart pre-paid meters. The contract stretches over eight years. PEU will cover the capital outlay, estimated at R6 billion, but will be paid a 19.5% commission on the electricity subsequently purchased by consumers through these meters.”
By October 2013 at a cost of R830 million and only 12,930 install sparked an outcry. That means the average cost per meter rolled out amounts to more than R64 000, excluding any cancellation cost.
“It was meant to improve revenue collection by delivering cash up front, improve the efficiency of collection of electricity (how does one collect electricity?) and other service charges and reduce energy theft through meter by-passing, the city says.
This clearly did not materialise, since the decision to terminate the contract was, according to the statement, based on “the negative financial and economic impact on the city”.”
To access this new project story gone wrong, go to https://pmworldlibrary.net/major-projects-programmes/, click on “Failed Projects”, scroll down to RSA and click on “The prepaid meter project that failed to deliver”. Must be a registered and logged in member to access.
Posted by: Gary Mitchell
