Eskom’s bid to overturn its contract with Econ Oil — the company which supplies fuel oil to its power stations — has been successful with the high court in Johannesburg ruling in its favour on Tuesday.
Eskom had sought to have the tender set aside arguing that it had been irregularly and unlawfully awarded and was not in the interests of Eskom due to its excessive cost. The court set aside the contract and awarded costs against Econ, which had opposed Eskom’s application.
Eskom said in a statement that it had been vindicated by the judgment, which was “another successful attempt by the board and management of Eskom in their endeavours to safeguard the public purse by setting aside irregular tender awards where prima facie evidence of unlawfulness exists”.
Judge Bashier Vally found that the award of the tender was “blemished by irregularity and illegality of a most fundamental kind, and could under no circumstances be rescued”.
The fallout over the contract has been immense, claiming the heads of non-executive director Sifiso Dabengwa, who resigned in July 2020 claiming that CEO André de Ruyter had misled the board over the contract, and chief procurement officer Solly Tshitangano, who was fired last month. Tshitangano had reappointed Eco Oil despite knowing that a forensic inquiry had uncovered gross overcharging.
The contract was awarded in October 2019.
Econ Oil is a fully empowered company owned by businessperson Nothemba Mlonzi.
De Ruyter, who joined the company several months later in January 2020, sought to cancel the contract, citing suspicion of overpricing, collusion between the suppliers and possible fraud and corruption.
But with the award already made, in December 2020, Econ Oil won an arbitration process to force Eskom to continue to make payments of R21m a month.
Eskom succeeded in suspending the arbitration award
in April, ahead of this week’s hearing.
Tshitangano, who ran into conflict with De Ruyter over the Econ Oil contract among other issues, made allegations that
De Ruyter was racist because, he claimed, the CEO targeted black-owned suppliers for investigation and did not do that for white-owned companies.
The dispute led to the board commissioning two independent inquiries to clear the air over allegations levelled at De Ruyter.
In the first, an independent inquiry by senior counsel Wim Trengove found that De Ruyter had not misled the board and that Dabengwa had been reckless in making the accusations. Dabengwa resigned thereafter.
In the second, headed by advocate Ishmael Semenya, claims of racism against De Ruyter were dismissed.
“This court judgment is a vindication of the board’s and management’s unwavering stand to protect Eskom’s financial and operational interests from corrupt elements,” De Ruyter said.
“At the beginning of 2020, when we assumed the mandate to lead this organisation, we pledged to investigate and set aside all contracts where evidence of corruption has been uncovered. We shall not waver, thereby safeguarding the public purse,” he said.
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