The Department of Home Affairs says it has saved R2billion by reaching a settlement with IT company GijimaAST instead of asking the courts to cancel their contract.
Yesterday Home Affairs director-general Mkuseli Apleni said the government had a strong case against Gijima but did not want a long court battle.
In 2007 the department signed a R2,1billion tender with Gijima to produce a computer system where birth and death certificates, IDs, visas and other permit applications could be processed online.
But the cost of the "Who Am I Online" project quickly shot up to R4,5billion though the tender was for only R2,1billion.
By February 2010, after already paying Gijima R391million, the department realised that GijimaAST was not going to deliver the system in time for the 2010 World Cup.
The department then cancelled the contract and went into negotiations for settlement with GijimaAST.
Gijima was also recently hired by a consortium that won a R6,2billion tender to set up a new toll system on Gauteng roads.
Under the settlement with Home Affairs Gijima will continue working on the project but it will now be managed by Home Affairs and Sars
"We will use other service providers because we can't rely only on Gijima," Home Affairs Minister Nkosazana Dlamini-Zuma said.
The total cost of the project will now be R2,5billion - more than the original budget of R2,1billion - but much less than the R4,5billion Gijima wanted to charge the government.
The R2,5billion includes R815million that government must pay Hewlett Packard and IBM to settle their debt, the R391million that they already paid Gijima and R1,28billion that it will cost to complete the project - part of which will be paid to Gijima.
Gijima chief executive officer Jonas Bogoshi said the settlement came at a loss but his board was prepared to make losses in the short term but gain in the long term.
State, Gijima settle for R2bn
The Department of Home Affairs says it has saved R2billion by reaching a settlement with IT company GijimaAST instead of asking the courts to cancel their contract.
Yesterday Home Affairs director-general Mkuseli Apleni said the government had a strong case against Gijima but did not want a long court battle.
In 2007 the department signed a R2,1billion tender with Gijima to produce a computer system where birth and death certificates, IDs, visas and other permit applications could be processed online.
But the cost of the "Who Am I Online" project quickly shot up to R4,5billion though the tender was for only R2,1billion.
By February 2010, after already paying Gijima R391million, the department realised that GijimaAST was not going to deliver the system in time for the 2010 World Cup.
The department then cancelled the contract and went into negotiations for settlement with GijimaAST.
Gijima was also recently hired by a consortium that won a R6,2billion tender to set up a new toll system on Gauteng roads.
Under the settlement with Home Affairs Gijima will continue working on the project but it will now be managed by Home Affairs and Sars
"We will use other service providers because we can't rely only on Gijima," Home Affairs Minister Nkosazana Dlamini-Zuma said.
The total cost of the project will now be R2,5billion - more than the original budget of R2,1billion - but much less than the R4,5billion Gijima wanted to charge the government.
The R2,5billion includes R815million that government must pay Hewlett Packard and IBM to settle their debt, the R391million that they already paid Gijima and R1,28billion that it will cost to complete the project - part of which will be paid to Gijima.
Gijima chief executive officer Jonas Bogoshi said the settlement came at a loss but his board was prepared to make losses in the short term but gain in the long term.