Eskom loses urgent court bid to stop the country from plunging into darkness US company pulls plug on power utility.
Almost the whole of South Africa is at risk of being plunged into total darkness, “potentially endangering the life, personal safety, or health of the whole or part of the population”, as the country faces a real possibility of coming to a standstill.
This is according to Eskom, which on Thursday lost a court battle to stop a foreign-based multinational software company, Oracle Corporation, from withdrawing its crucial services over a dispute relating to billions of rands owed by the power utility.
As a result, the whole of South Africa is now at the mercy of Oracle to save it from plunging into darkness and keep the lights on after the acrimonious fallout that saw Eskom fail to convince the Joburg High Court to stop Oracle from withdrawing its crucial services to the embattled state-owned company.
Among Eskom’s critical operations that rely on Oracle’s products and services are its online vending system that records 77-million transactions of electricity sales a month.
The entity recorded revenue of R200-billion in the past financial year.
Eskom also uses Oracle’s products and services for load monitoring of electricity generation by power stations. Other operations include Maximo, which is the maintenance tool used for asset management and power outages, logging of faults, and control of electricity grids, which allows areas to be switched off. Maximo also enables Eskom to distribute electricity in prepaid areas, collect revenue, and detects and records faults in the distribution system.
In the papers that we have seen, Eskom’s chief adviser: strategic IT alliance, Tshifhiwa Ratshimbilani, pleaded with the court not to allow Oracle to withdraw its services.
He said if Oracle withdrew these services from the power utility, its operations would be gravely prejudiced and would not be able to fulfil its obligation to supply electricity to the country.
“This would have catastrophic consequences for Eskom and countless members of the public and business. It would thus have a crippling effect on the economy, which is already under strain due to the Covid-19 global pandemic.
“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,” according to court papers. “In order to maintain a regular supply of electricity to the tens of millions of people who are entirely dependent on Eskom for such supply, Eskom requires to contract with, among others, service providers who can provide essential sophisticated IT, electronic and related products and services. “Oracle is one such service provider and has for more than 20 years been providing different products and services that are quite essential to some of Eskom’s crucial operations,” it reads. Eskom, which suffered a net loss of over R20-billion in the year to March 2020, generates about 95% of South Africa’s electricity. Oracle Corporation.
South Africa, whose headquarters are based in Texas in the US, wrote a letter to Eskom on March 5 informing the financially embattled parastatal that it would withdraw the provision of its services on the eve of Good Friday. Oracle is controlled by American business magnate Lawrence (Larry) Ellison. As of this week, he was listed by Forbes magazine as the fourth-wealthiest person in the US and as the seventh wealthiest in the world, with a fortune of $93.7-billion (R1.3-trillion).
The 76-year-old is chairperson, chief technology officer, and co-founder of Oracle, of which he owns about 35.4%.
Explaining the genesis of the dispute, Ratshimbilani said the two entities entered into a new pact titled “2017 Master Agreement”, in which Oracle agreed to provide products and services and technical support services for Eskom until April 2022.
He said two years after signing the contract, Oracle conducted an audit on Eskom’s use of its products after which it claimed that the utility had overused them.
He said Oracle wanted Eskom to pay it R7.6-billion in penalties for overusing the products but later whittled it down to R600-million.
Ratshimbilani said when Eskom denied the allegations, Oracle demanded the payment and threatened to withdraw its services and products if it was not remitted.
He said Eskom wrote to Oracle informing it that it would only pay it if the matter could be referred to court for a determination of the amount. But Oracle, he added, refused to budge.
He said Eskom CEO Andre de Ruyter even wrote a letter to Oracle last year in which he agreed to pay Oracle what he termed Opex (operating expenses) services but asked that the payment of Capex (capital expenditure) portion be referred to court for determination, but no response was received.
Oracle spokesperson Gaurav Bhatnagar did not answer questions on whether the company will follow through on its threats to withdraw its services, merely saying the court had dismissed Eskom’s urgent interdict application.
“Eskom should pay the pending dues for the Oracle software that they use,” Bhatnagar said. Former Eskom CEO and head of generation Matshela Koko said without Maximo, Eskom’s distribution business will collapse.
Energy expert Ted Blom said the developments pointed to Eskom management’s “incompetence”. “When you know you’re heavily reliant on a contractor or supplier, you make.
This would have catastrophic consequences for Eskom and the public
Oracle wanted Eskom to pay it R7.6-billion for over-utilization of its products
it a point that you keep that relationship intact. If Oracle follows through on its threat, that spells trouble for Eskom and the country,” he said.
Eskom board chairman Malegapuru Makgoba said he would not comment because he was not aware of the matter.
“I did not see court papers you are talking about and the group chief executive [De Ruyter], who is my link, has not informed me about it, so I’m not bothered about the matter,” Makgoba told Sunday World yesterday.
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