City of Tshwane Mayor Cilliers Brink says the City is in a poor financial position due to the metro's monthly R91-million tax payments for an irregularly awarded smart meter contract.

Brink said the African National Congress (ANC) irregularly awarded the contract  to PEU Capital Partners and Total Utility Management Systems in 2012, and a court declared it unlawful in 2016 already.

It was for the provision and installation of smart meters for City customers when the ANC governed the metro. The ANC governed in Tshwane until 2016 when the party lost its majority. 

Brink said the City was obliged to pay SARS value-added taxes for payments made to the companies between 2012 and 2015.

The City paid R2-billion to PEU and Total Utility Management Systems, he said.

"In the past year, we have learnt that we owe SARS VAT and penalties on this unlawful contract for the period from 2012 to 2015. The full extent of this liability is between R4.7-billion, and most are in the form of penalties," Brink said.

But SARS is now demanding more than R91-million a month.

News24 previously reported that the City paid more than R830-million towards the contract in October 2013 and only 12 000 meters were installed. 

The mayor said an investigation would be conducted into why the City was liable for the tax fines and penalties.

Brink's revelation comes after the metro's adjustment budget failed to secure the required number of votes for it to be passed at a council meeting last week.

The Democratic Alliance (DA) and its coalition partners had 107 votes, but needed 108.

Brink added that another reason the City was struggling financially was that it needed to increase its revenue collection, which is sitting at 63%. 

To increase this expenditure, the City plans to raise rates and taxes by 12%.

Brink said the City would not award increases to its staff and councillors, a decision which could leave it at loggerheads with unions.