Eskom set to cancel R14bn contract

Eskom plans to cancel a contract to buy as much as R14 billion of fuel oil from Econ Oil & Energy, after a probe it commissioned found Econ’s fees had been inflated, a source said this week.

Nothemba Mlonzi, a director at Econ Oil, declined to comment because she said the matter is a legal dispute, without elaborating whether any legal proceeding has been filed.

The company is a black women-owned business that supplies fuel oil to clients in a number of industries, according to its website.

The process of cancelling the contract began earlier this month, following completion of the report.

The probe was conducted by Wim Trengove, one of South Africa’s best-known lawyers, after Eskom’s management initially asked the board for permission to cancel the contract in January, the source said.

Sifiso Dabengwa, an Eskom director at the time, asked for the probe.

Dabengwa has since resigned from Eskom. In his resignation letter, he disagreed with the findings of the probe and said they didn’t prove there had been “fraud and corruption”, but only that there had been allegations of the crimes.

Dabengwa declined to comment. Eskom and Trengove didn’t respond to requests for comment.

The expected move to cancel the five-year contract and seek supplies directly from oil refineries comes as Eskom chief executive officer Andre de Ruyter seeks to cut expenses.

The state-owned utility is struggling to meet the cost of maintaining its power plants and servicing a R480 billion debt burden.

– Bloomberg

The process of cancelling the contract began earlier this month.