Eskom has been ordered by a high court to pay more than R1bn to French reactor supplier Framatome after contract and project management bungles delayed a crucial steam generator swap at the Koeberg nuclear power plant.
The ruling by the Western Cape High Court last week sharpens the spotlight on Eskom’s endemic contract and project management failures while its balance sheet and generation capacity are already under siege. The prolonged outage escalated to stage 6.
With investors skittish and the government reluctant to inject more capital, the verdict underscores the urgency of overhauling Eskom’s procurement protocols and raises fresh doubts about its ability to self-execute complex, high-stakes infrastructure projects.
The adjudication process, handled by advocate Peter Ramsden, ended up with the court ordering Eskom to pay Framatome €35.2m (R727m) and a further R256.6m, in line with Ramsden’s earlier findings. That is before VAT, interest and the bill for Framatome’s French-based attorney are tallied up.
The dispute arose in 2022 when Eskom took Koeberg Unit 2 offline, which provides the equivalent of stage 1 load-shedding, for what it promised would be a five-month outage to refuel and replace its three steam generators.
Months later, Eskom abruptly informed Framatome that it would not be continuing with the work, leaving the French contractor to claim compensation for breach of contract.
This was acknowledged by Eskom’s project manager, who later said no compensation was due to Framatome.
At the time, Eskom said both it and the contractor were responsible for the delays, arguing both parties had contributed to the deficiencies.
Framatome, on its part, laid the blame at Eskom’s door, saying Eskom’s role in contributing towards the project not commencing as scheduled included that the facilities required to house the old steam generators, once removed, were not ready for use.
The parties then engaged an adjudicator over the dispute. Instead of hashing out the numbers, Eskom refused to participate in adjudication, let Framatome figures go uncontested and then challenged the adjudicator’s findings in court. The gambit failed.
The judgment shows Eskom unnecessarily played hardball with the adjudicator, appointed to facilitate the assessment of compensation for Framatome after the utility breached its contractual obligations with the French group.
But Eskom refusing to fully participate meant it did not submit its version of the quantum, though it had been given three opportunities to do so, and squandered every shred of credibility.
The court branded its legal submissions “contrived and unconvincing” and refused to set aside Ramsden’s award.
“Eskom’s challenge to the reasons provided by the adjudicator are clearly a distortion of the quantum decision and a stratagem to avoid having to comply with the adjudicator’s decision. Its submissions are contrived and unconvincing and fall to be rejected,” reads the high court judgment.
“There is no basis to set aside the decisions of the adjudicator, which are valid and binding. In terms of the parties’ contract, Eskom was obliged to comply therewith. The bringing of this application and the pending arbitration does not relieve Eskom from complying with its contractual obligations.”
Delays in the project saw Eskom in 2022 suspend the steam generator replacement (SGR) programme manager, Justice Gumede, project engineering manager Tommy Booysen, and SGR project controls manager Jacky Major-Petersen.
“Eskom management has identified poor project management, inadequate contract management and a lack of financial discipline as being contributory factors towards the project not commencing as scheduled,” Eskom told MPs at the time.
Koeberg is SA’s only nuclear plant and its 1.8GW generation potential is a key part of Eskom’s ability to provide power to the nation.
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