Nelson Mandela Bay Mayor Babalwa Lobishe faces questions about the lease of a provincial asset – a R25-million transformer – to a private company, Coega Steels. (Photo: Andisa Bonani) A signed agreement for the lease of a R25‑million Nelson Mandela Bay municipal transformer to private company Coega Steels does not stipulate a bank account where the rental money should be paid.
Daily Maverick has now obtained the lease agreement, which contains no designated municipal bank account for the payments. A senior official in the metro’s finance directorate, who spoke on condition of anonymity, said the lease should include all relevant details.
“This includes which bank account and municipal account will be used. The municipality has various accounts for the different services it offers. So if there’s a lease agreement, the city ought to create an account for it.”
Responding two weeks after Daily Maverick sent questions about the rental of the transformer, current acting city manager Lonwabo Ngoqo said the metro has been receiving the rental fee monthly as per the signed agreement.
“We have evidence to this effect that we can provide,” Ngoqo said.
“This matter is currently in court. We submitted a review application I also have proof of this that I can provide by sending the front page of the application. We went to court and made a submission to set aside the agreement so we can get back our transformer.”
Ngobo has not yet, however, provided the promised proof.
Asked to which account the funds were deposited, Ngoqo said a budget vote (a department’s proposed budget) was specifically created for the transformer lease.
Mayor Lobishe under fire
The transformer issue has been a thorn in the side of Nelson Mandela Bay mayor Babalwa Lobishe, who over the last few weeks has been fighting fires on numerous fronts.
Aside from being hauled before the ANC integrity commission to answer questions about the lease, Lobishe has been accused by the former regional chair of the Good party, Siyanda Mayana, of having her Capitec account frozen owing to large tranches of money being paid into it irregularly.
She hit back at these accusations and turned to the courts for an urgent interdict to stop Mayana from “defaming” her – an application that was dismissed. Lobishe claimed that the lease to Coega Steels was a move made to save jobs.
Mayana registered a case with the Hawks to investigate the “freezing” of her Capitec account and the source of the “unscrupulous” funds allegedly deposited to her.
Mayana also called for inquiries into the lease agreement with Coega Steels. The lease was entered into in September 2025 for a period of 12 months. However, the metro has since taken the matter for judicial review in a bid to set aside the agreement.
Some councillors have expressed concern over the leasing of the transformer, with questions raised about whether the municipality was receiving the R250,000 rental fee that was agreed upon with Coega Steels and to which municipal account it was paid to.
Questions about transformer lease
ACDP councillor Lance Grootboom submitted a notice of motion to the office of the Speaker on 12 February demanding answers about the transformer issue.
/file/attachments/orphans/LanceGrootboom_133737.jpg "ACDP councillor Lance Grootboom. (Photo: Deon Ferreira)")
“The terms of this agreement allegedly required Coega Steels to pay the municipality R250,000 per month for 12 months, yet no credible evidence of such payments has been placed before council,” Grootboom said.
“The lease agreement was concluded in defiance of council processes, without a council resolution, a public participation and any proper due diligence, thereby exposing the municipality to serious financial and legal risk,” he said
The matter was discussed in council in October 2025 where it was resolved that disciplinary action and consequence management be instituted against the former acting city manager, Ted Pillay, and former electricity boss, Tholi Biyela, for drawing up and signing off the lease. Both Pillay and Biyela have since left the employ of the metro.
“Mr Pillay misled the National Treasury by stating that due diligence had been conducted, when in fact it had not, amounting to a serious misrepresentation of facts to a national authority,” Grootboom said.
“A legal opinion obtained from Advocate Olav Ronaasen SC concluded that the conduct of Mr Pillay and Mr Biyela constituted gross negligence, confirming the seriousness of this misconduct.
“To date, council has been deliberately kept in the dark and has not been provided with transparent financial records regarding the payments received and under which vote the funds are recorded,” he said.
In the notice of motion, Grootboom demands immediate, full disclosure and answers to the following:
- Has Coega Steels paid any lease amounts to the municipality since September 2025? Yes or no?
- If yes, what is the exact total amount paid to date, and why has council not previously been informed?
- On what specific dates were such payments made?
- Under which municipal vote or financial account are these funds recorded, and who authorised the allocation of such funds?
- Is the transformer still in the possession of Coega Steels? If so, on what legal basis does the company continue to hold a municipal asset valued at R25-million?
Grootboom also demanded that documentary proof of payments, including bank statements and deposit slips, be submitted to council without delay.
Councillor Lawrence Troon, of the Good Party, has opened a criminal complaint against Pillay.
/file/dailymaverick/wp-content/uploads/2025/10/ED_552465-1.jpg "Nelson Mandela Bay acting city manager Lonwabo Ngoqo. (Photo: Lulama Zenzile / Die Burger / Gallo Images)")
Coega Steels’ response
A Coega Steels spokesperson who asked not to be named said the company had been making payments to an Absa municipal beneficiary account for electricity payments.
“The total rental over the 12-month period is R3-million, paid in 12 instalments of R250,000 without any variation. To date, Coega Steels has paid R1.5-million (R1.725-million including VAT).”
The spokesperson said the company has since sourced its own transformer which should be in its possession mid year. He said in the meantime, it is still in possession of the metro transformer.
On Monday, 23 February, Azapo’s Nelson Mandela Bay mayoral candidate for the 2026 local government elections, Chris Swepu, called for Lobishe’s precautionary suspension over the transformer issue.
Swepu said that if the allegations were proven true, they would amount to a serious breach of governance procedures and a violation of laws governing public assets.
“A precautionary suspension is not a presumption of guilt. It is a responsible governance measure aimed at protecting the integrity of municipal processes and restoring public confidence,” he said.
Swepu emphasised that these concerns remain allegations at this stage and should be properly investigated by the relevant authorities. However, he said, in the interest of transparency, accountability and preserving the integrity of the office of the mayor, Azapo believes that a precautionary suspension would be an appropriate step, pending the outcome of an independent and transparent investigation. DM