Nothemba Mlonzi is the Managing Director at Econ Oil and Energy.
Nothemba Mlonzi is the Managing Director at Econ Oil and Energy.

Econ Oil to appeal judgement

By Thabo Makwakwa Time of article published Jun 30, 2021

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DURBAN - GIANT oil supplier Econ Oil and Energy intends to appeal the high court judgment that ruled in favour of Eskom’s decision to cancel the multi-billion contract deal with it.

The oil supplier insists that its contract with the power utility was validly in force and remained effective.

Econ issued a statement on Tuesday indicating its intention to appeal Judge Bashier Vally’s ruling which was handed down on the same day in the South Gauteng High Court in Johannesburg.

“Econ Oil has noted the South Gauteng High Court judgment on the matter against Eskom. We have instructed the attorneys to appeal the judgment. It is evident in the judgment that the initial allegations of corruption, collusion, fraud, and overcharging by Eskom were not relied upon by the court.”

“Econ Oil would like to reiterate that the case was about Eskom's request to cancel the fuel oil contract. The cancellation was going to impact a legally binding contract the power utility had entered with us, which Econ believes is validly in force and effect,” the organisation’s statement read.

The dispute between Eskom and Econ Oil arose from a tender process that culminated in Eskom’s board resolving to award a contract for the supply of fuel oil to various bidders including Econ Oil, Sasol and FFS refineries to the combined value of R14 billion.

Things fell apart when Eskom chief executive officer Andre De Ruyter cancelled Econ’s contract on the basis of allegations of corruption and irregularities.

Arguments were heard virtually in court on June 9, with both lawyers for Econ Oil and Eskom presenting their side of the story.

Eskom argued that the multibillion-rand tender was “unlawful” and clearly contravened key provisions of public procurement policy.

Econ Oil argued that Eskom overlooked its own tender processes and therefore, the review application should not be entertained as this was not their fault.

Handing down his judgment, Judge Valley said the tender was blemished by “irregularity and illegality of the most fundamental kind”.

“Had the board applied its mind properly to the matter it would have had no choice but to forsake the outcome of the negotiations with Econ Oil and others. Instead, it chose to adopt it. By doing so, it perpetuated the illegality and gave it legal effect,” the judge said.

He ruled that the Eskom board’s decision to award the tender to Econ Oil and two other fuel oil suppliers in late October 2019 be set aside.

He said that no binding contract had been entered into between Econ Oil and Eskom.

Judge Valley criticised Eskom’s board and questioned how it could have entered into such an agreement with Econ Oil in the first place.

In a statement, Eskom welcomed the ruling and said “it was a boost and it has been vindicated in its fight to eliminate irregular and unlawful procurement practices in the organisation”.

“This is yet 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.

“In setting aside the decision to award the tender, Judge Vally concurred with Eskom that the tender process was tainted by palpable irregularities,” Eskom said.

Daily News

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