A BEE company, MX Distributors, is seeking an interdict to stop a three-year tender award for the supply of R350m worth of oils to Eskom power stations, a move the utility says could be catastrophic for power supply.
Eskom has been accused of being “anti-transformation” in a legal battle over the tender to supply lubricants to all its power stations.
If it is not resolved within two weeks, the power utility company says it will run out of stock and the results will be “catastrophic” for electricity supply countrywide.
The company says for 28 years it has procured the lubricants from the big three suppliers — Engen, Astron (Chevron) and BP — but in 2017 it decided to “transform the industry”.
It put out a tender aimed at targeting BEE-complaint suppliers.
One of the 58 companies that submitted bids was KwaZulu-Natal based MX Distributors, a lubricant and petrochemical distributor with a level 1 broad-based BEE certification being wholly black-owned, with a 70% black youth woman stake.
It entered into a strategic partnership with Engen in its bid for the contract.
Second tender
Director Mlungisi Nhlanhla accuses Eksom of “undermining” its stated aim of targeting economic transformation.
In court papers filed in the high court in Pietermaritzburg, Nhlanhla says while the tenders were being adjudicated, it came to his attention that Eskom had put out a second “identical” tender, which did not require any economic empowerment compliance.
“My attorneys wrote to Eskom, asking for an explanation. But we got no response. Eskom has been secretly approaching specific identified companies and calling for new bids.”
Nhlanhla is seeking an order stopping the process pending a review of the decision to issue the second tender.
Attempt failed
When the matter came before the court last week, an order was taken by consent that the matter would be argued on August 8, and that until then Eskom would not adjudicate or award the second tender.
In an opposing affidavit, Eskom procurement manager Boiketlo Mashila alleged its attempt to transform the industry had failed.
He said each of the power stations had “large sophisticated equipment” that need frequent lubrication to cool and protect surfaces from abrasion, seal and prevent the release of contaminants and dirt deposits into the environment and wash away metal corrosion.
“They [the lubricants] directly affect performance, the life and reliability of operating plants. Eskom cannot do without them if it wants to generate and supply electricity.”
He said it was a “technical affair” and, after issuing the open tender, only 16 tenderers passed the first phase and all failed the second phase of evaluation.
“It proved to be a failure and the entire tender was cancelled. The existing tender expired end of May this year. We have stock for about two-and-a-half months, so by the middle of August, Eskom projects will run out of stock and this will be an unimaginable disaster.
“Time was of the essence, so the second, sole-source tender was issued to prevent a catastrophe. We wanted to transform the industry and remain resolute that we will. But it has not worked yet.”
Mashila conceded that Eskom had been slow to update bidders in the first tender of its decision.
MX Distributors attorney Justin Klingbiel said his client is continuing with its application.
He said Eskom’s stance demonstrates that despite what the law says, it is cherry-picking its tenderers behind closed doors.
“It pays lip service to transformation and tries to stifle investigation into its conduct with threats of cutting power to the national grid.”
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