Bree Street repair deadline to be missed as Joburg fires contractor with poor performance history

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23-08-2024
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News 24
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• The contract to repair Lillian Ngoyi Street after it exploded was terminated due to the contractor's alleged failure to meet its obligations.


• The contractor, Step Up Engineering, has a history of incomplete projects in the City of Johannesburg.


• The deadline for completing repairs, set for December, will be missed.

The Johannesburg Roads Agency (JRA) has fired the contractor working on repairing Lilian Ngoyi Street (formerly Bree Street) for poor performance, but the company blames the JRA for the mess and insists it will continue.

The JRA has already paid Step Up Engineering more than R17 million for clearing rubble and diverting sewage and electricity lines damaged when the road was wrecked by a gas explosion more than a year ago.

JRA acting CEO Lufuno Mashau told News24 that there was still an additional payment that needed to be made to Step Up Engineering, of R1.2 million, which will take the total to R19 million.

Mashau said the contract had been terminated "due to poor performance and failure to meet contractual deliverables".

In response, Step Up Engineering's sole director Vutlhari Chawane admitted that they had received a termination notice from the JRA, but said it was invalid. He said the company would carry on working at the site.

"Simply put, the termination is unfounded and opportunistic at best. On the advice of our attorneys, we cannot divulge certain information, but we can confirm that the 'challenges' you inquired about are directly attributable to a lack of planning and implementation by the JRA, for instance their inability to pay the contractor, make decisions on technical matters, and budget constraints which have hampered effective construction solutions," he said.

"In any event, Step Up Engineering (Pty) Ltd has not accepted the alleged termination and will continue to execute the works."

Chequered history

JRA insiders told News24 that Step Up Engineering had a history of poor performance in the City, at a time when it was operating under the name of Setheo Engineering.

Setheo's former directors are currently embroiled in a corruption case before the Palm Ridge Magistrate's Court in Ekurhuleni after the City of Johannesburg terminated its contract with the company on 30 November 2017.

In that case, Setheo was awarded a R168-million contract to build a new substation in Eldorado Park, which it failed to do despite being paid R66 million.

Then-mayor Herman Mashaba opened fraud and corruption complaints against the company with the South African Police Service and escalated the matter to the National Prosecution Authority and the Hawks.

On 30 August 2017, Mashaba released a statement saying the company had colluded with City Power officials to obtain an advance payment of R66 million "without evidence of any physical work being done at the substation".

At the time, Mashaba also questioned why the company was hired after it failed to complete a previous construction project.

"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 had been done at the time," he said in a statement on 5 December 2017.

Mashaba conducted an oversight visit to the Eldorado Park construction project with Setheo and City Power managers in June 2017. During the visit, he instructed City Power to ask Absa to verify the bank guarantee Setheo Engineering submit it to the council. According to Mashaba, Absa revealed that the bank guarantee was fraudulent.

Setheo Engineering directors Tinashe Mangwana and Nomathemba Ncube, who were arrested for fraud and corruption on 29 August 2017, were released on bail. The case is yet to be finalised.

Mangwana and Ncube were also listed as directors of Step Up Engineering, but both reportedly resigned on 15 January 2022.

Step Up was registered in 2010 as Setheo Investments. It changed its name to Setheo Engineering in 2022.

Chawane, was appointed in October 2022. The company is currently trading as Step Up Engineering with the same registration number as Setheo Engineering.

Regarding the company's previous executives, Chawane said: "Please note that Step Up Engineering (Pty) Ltd (formerly known as Setheo Engineering (Pty) Ltd) has new owners and executives. The previous owners and directors are not involved or associated with Step Up Engineering (Pty) Ltd, our newly branded organisation."

On 19 June 2024, Mashaba, now president of ActionSA, testified in the corruption case at the Palm Ridge Magistrate's Court.

He told News24 on Monday that it was strange that the company would be hired to work for the City despite its past.

Mashaba and his party this week threw their weight behind the election of the ANC's Dada Morero as Johannesburg's new mayor.

JRA says it didn't know

Mashau said the JRA was only made aware of the issues with the company through the media.

He said Step Up was awarded the contract after agency conducted an analysis to assess the financial health of the company, "and the outcome of the exercise indicated that the company is in good financial standing to complete the project".

He said the company was also checked on the National Treasury Register of Restricted Suppliers and Tender Defaulters report, and Step Up Engineering and its director did not appear on the register. 

Mashau said:

We can confidently state that the panel appointment was done in a thorough, transparent and fair process.

The termination of the contract means that the deadline set to repair the road - 15 December 2024 - will likely not be met. 

Meanwhile, Lilian Ngoyi Street has been closed since 19 July 2023, when a methane gas explosion tore up the road during rush hour traffic, killing one person and injuring 48 others.

Construction to repair the road began on 11 January after the tender was awarded to Durapi Consulting, a consulting engineering company, and Step Up Engineering, the contractor.

The repairs were expected to cost R196 million.

The street was built in 1935 and has been one of the City's main taxi arterials. Its closure has had a significant knock-on effect on the traffic flow in the city centre, which was already prone to gridlock before the 400m section of road between Eloff and Simmonds streets exploded.

The plans for Lilian Ngoyi Street are to widen the pavement to create a safe space for hawkers who were displaying their wares next to the road on the day of the blast.

City manager Floyd Brink told News24 that the road would feature upgraded underground infrastructure that would allow gas to escape so that such an incident would not happen again.

Trying to fix a shattered street:

• 19 July 2023: Explosion occurs.


• 27 July 2023: City compiles a report to declare the incident a local disaster.


• 30 August 2023: Deadline to remove blast site rubble is missed.


• 21 September 2023: Repair project begins.


• 9 October 2023: Deadline for assessors for tunnels under the city CBD to be appointed. It is unclear if this was done.


• 8 November 2024: Deadline for detailed designs for the road.


• 30 November 2023: Appointment of a contractor to fix the road.


• 30 November 2023: Then-mayor Kabelo Gwamanda said the City's request to declare the blast a local disaster is rejected.


• 11 January 2024: Road repairs begin, set to be completed by 15 December 2024.


• 23 July 2024: JRA issues a formal notice of intent to terminate Step Up Engineering's contract.