Eskom to cancel contract after probe
Investigation finds Econ Oil & Energy had inflated fees in R14bn contract
Eskom plans to cancel a contract to buy as much as R14bn ($834m) of fuel oil from Econ Oil & Energy, after a probe it commissioned found Econ’s fees had been inflated, a person familiar with the situation said.
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 in July, following completion of the report.
The probe was conducted by Wim Trengove, one of SA’s best-known lawyers, after Eskom’s management initially asked the board for permission to cancel the contract in January, the person said, asking not to be identified as a public statement has not been made. Sifiso Dabengwa, an Eskom director at the time, asked for the probe, the person said.
Eskom confirmed that the contract was being cancelled, without specifying its size.
“A review of the circumstances leading to the tender being awarded to the company revealed serious irregularities in the process, including inflated prices charged to Eskom when lower-priced alternatives were evident,” the utility said in a statement on Friday.
“Eskom is currently reviewing the roles played by all stakeholders in awarding the tender, including the role of its own employees. Where applicable, disciplinary processes will be pursued and criminal charges laid.”
Dabengwa has since resigned from Eskom. In his resignation letter, verified by Bloomberg, he disagreed with the findings of the probe and said they did not prove there had been “fraud and corruption,” but only that there had been allegations of the crimes.
Dabengwa declined to comment when called by Bloomberg. Eskom and Trengove did not respond to requests for comment.
The expected move to cancel the five-year contract and seek supplies directly from oil refineries comes as Eskom CEO 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 R480bn debt burden.
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