Parliament wants R776m Telkom Towers losses recovered before R2.2bn rebuild

Parliament’s portfolio committee on public works and infrastructure wants the R776 million lost on Telkom Towers quantified and recovered before government commits up to R2.2 billion to rebuilding the Pretoria complex.

The committee’s chairperson, Carol Phiri, said the law leaves no room to move on. “We must work according to the law and the Constitution,” she said. “The Public Finance Management Act (PFMA) is clear. Where the state has suffered losses in the procurement of assets, those losses must be determined, the money must be recovered, and the people responsible must be held to account.”

Phiri said the committee had repeatedly asked for a forensic investigation into Telkom Towers and had raised concerns that the matter had not been brought to finality. “Redevelopment cannot be used to distract from accountability,” she said.

Public Works and Infrastructure Minister Dean Macpherson told the committee the state has already spent about R1.4 billion acquiring, renovating and maintaining the complex, with a further R776 million in financial losses attributed to the historical mismanagement of the property.

The numbers matter because they are public money spent on a property that has not yet delivered what it was bought for. Telkom Towers was bought from the Telkom Retirement Fund after Telkom moved its operations to Centurion. The South African Police Service was identified as a potential user before the complex was transferred to the state in 2016, and the North Tower was later earmarked for SAPS.

In 2024, Parliament said about 90% of renovations had been completed, yet the building remained uninhabitable. In August, the committee again raised concerns over SAPS’s failure to fully occupy the complex, saying the department had previously indicated it did not intend to occupy the building. It also questioned the continued cost of private leases while state-owned buildings stand vacant or underused.

The redevelopment plan now on the table would refurbish all nine buildings under a rehabilitate-operate-transfer model. Macpherson said the project is estimated at between R1.8 billion and R2.2 billion, and that the department would issue a Request for Information to test private-sector interest.

“Once completed, the department will have 106 000m2 of gross leasable area that can be used to maximise state revenue either by existing clients or new ones,” he said. He said the redevelopment would also allow government departments currently housed in costly private leases to return to state-owned buildings, and create an opportunity for the department to let space to private-sector tenants.

Macpherson said the Request for Information would test the project’s commercial viability and bankability, including funding assumptions and conditions for private-sector participation. It would also assess risk allocation, affordability and value for money, as well as operations, maintenance and long-term asset performance. A Request for Qualification process would follow to identify companies with the technical and financial capacity to take on the work, before qualifying bidders are invited to submit proposals.

The department has indicated that Public Works House and the Central Government Offices could form part of a broader precinct-scale approach during the feasibility process, although they remain separate from the Telkom Towers base project.

The committee said Parliament must be given the information it needs to assess the proposed partnership and exercise its oversight role.

South African Property Owners Association chief executive Neil Gopal said the redevelopment could make commercial sense, but only if government established that the project was financially viable and supported by sufficient market demand. “The committee tasked with this project should have done its full analysis on the financial impact and feasibility of this redevelopment,” he said.

Gopal said the financial model would likely be governed by National Treasury guidelines and recommendations on public-private partnerships, and that public assets needed to be put to adequate use to generate revenue for the state. He pointed to Intersite, a state-owned entity, which he said had successfully implemented a similar model during the 1990s.

“A market study of whether the precinct or node requires more commercial use would also be needed,” he said. Government should also examine the return on investment and consider whether the redevelopment should be undertaken in phases. “Generating revenue to reduce the ongoing costs would be essential to its success,” Gopal said.

For an ordinary reader, the stakes are straightforward. Telkom Towers is public property bought with public money, and it has sat largely unused while departments pay private landlords for office space. The committee’s position is that the R776 million cannot simply be folded into a new deal, and that the accounting has to come before the next contract.

IOL reported the committee’s concerns and the minister’s plan on 28 September. The Enquirer’s account of what the record shows, and what it means for the public purse, is set out above.

The Enquirer will follow the Request for Information when the department publishes it, and will report what the forensic investigation the committee has asked for establishes, if it is commissioned.