Eskom on Monday said it had put contingency measures in place to reduce the risk related to its reliance on service provider Oracle Corporation after a contractual dispute. Picture: Armand Hough/African News Agency (ANA)
Eskom on Monday said it had put contingency measures in place to reduce the risk related to its reliance on service provider Oracle Corporation after a contractual dispute. Picture: Armand Hough/African News Agency (ANA)

Eskom puts contingency measures in place after contractual dispute

By ANA Reporter Time of article published Apr 6, 2021

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CAPE TOWN - Eskom on Monday said it had put contingency measures in place to reduce the risk related to its reliance on service provider Oracle Corporation after a contractual dispute.

In a statement, the South African power utility said the foreign-based multinational software company was contracted to provide it with a number of technical services. Eskom however disputed the claim by Oracle that the state-owned utility had underpaid it by around R7.3 billion (US$500.9 million).

“Eventually, the amount claimed by Oracle was reduced to just under R400 million. As far as Eskom is concerned, the amount due to Oracle is approximately R166 million in total,” Eskom said.

“Eskom offered to settle the R166 million, and proposed a verification and court process in order to legally and sustainably resolve the dispute,” it said.

“When Oracle rejected this approach, threatening to terminate its services to Eskom, Eskom approached the high court to compel Oracle in essence to continue providing the technical support services for the duration of the agreement until April 2022.”

Eskom said the court last week dismissed its application, but the utility intended to apply for leave to appeal.

It said it had assessed the risks should Oracle withdraw its technical support services, and had “interim risk mitigating processes in place” to avoid possible disruptions to its operations.

“Eskom finds regrettable the manner in which Oracle has handled the matter, and would like to assure the people of South Africa that as an entity dealing with public funds, Eskom will pursue all legal avenues and will not be bullied into paying any monies outside of the legal processes,” the company added.

In the past financial year the utility recorded revenue of R200 billion, but suffered a net loss of R20.5 billion after tax.

Eskom supplies the bulk of South Africa’s electricity but has struggled to meet demand over the last decade, mainly as a result of its generating units frequently breaking down after years of poor maintenance. Most of Eskom’s 15 coal-fired power stations are more than 40 years old.

The power utility also has one nuclear-powered power station and nine smaller stations that run on a combination of diesel, pumped storage and hydroelectricity.

On Monday, Sunday World reported that almost the entire country was at risk of being plunged into darkness after Eskom lost the court battle to stop Oracle from withdrawing its services.

According to the report, Oracle’s products and services include the online vending system that records 77 million transactions of electricity sales a month as well as services for monitoring the electricity generation load by power stations.

Another operation, Maximo, is a maintenance tool used for asset management and power outages and logging of faults and control of electricity grids.

Maximo also enables Eskom to distribute prepaid electricity to areas, collect revenue, and detect and record faults in the distribution system, Sunday World reported.

The paper said it had seen court papers in which Eskom’s chief adviser for strategic IT alliance Tshifhiwa Ratshimbilani said Oracle should not be allowed to withdraw its services as the utility’s operations would be prejudiced.

“This would have catastrophic consequences for Eskom and countless members of the public and business,” Sunday World quoted Ratshimbilani as saying.

“Without a proper supply of electricity from Eskom, almost the whole of South Africa will be in darkness and come to a standstill, potentially endangering the life, personal safety, or health of the whole or part of the population.”

African News Agency

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