Eskom wins multimillion-rand case against contractor who didn't finish large project on time

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Eskom's head office in Johannesburg.
Eskom's head office in Johannesburg.
Bloomberg
  • The Supreme Court of Appeal has ruled that Eskom doesn't have to pay claims lodged by a contractor who failed to deliver a large project on time.
  • The contractor didn't deliver a 100km transmission line on time, despite two extensions. 
  • It then tried to claim an extra R625 million from Eskom for the delays. 

In a big win for Eskom, the Supreme Court of Appeal (SCA) found in its favour after a contractor claimed millions despite not being able finish a project on time.

In 2011, Edison Jehamo and KEC International won a R320 million contract to build a 100km section of a transmission line from Victoria West in the Northern Cape Province to Touws River in the Western Cape, to strengthen the electricity feed to the Western Cape.

Durban businessman and friend of former president Jacob Zuma, Vivian Reddy, is the chairperson and founder of the Edison Power Group. The company has scored other contracts from Eskom for its electrical supply support services.

The contract was supposed to be completed within 547 days. But despite two extensions, the joint venture did not complete the work in time, and claimed that some of the challenges it encountered were due to Eskom.

The joint venture then filed 13 claims against Eskom, claiming R625 million in costs due to the delays. The power utility denied responsibility and filed a counter claim against the joint venture to demand penalty damages.

The matter went to adjudication, and the adjudicator ordered Eskom to give the joint venture more time until March 2014 and to pay around R82 million for the extended contract period.

But both parties were dissatisfied with the adjudicator's ruling, and referred it to arbitration.

At arbitration, Eskom won the day, and all the claims were set aside.

Then the joint venture launched an application at the high court for a review of the arbitrator's finding. The high court found that the arbitrator was unfair in some of the claims that were awarded.

But on appeal against the high court finding, initiated by Eskom, the SCA dismissed the high court's judgment, and found the arbitrator had not committed any gross irregularity.

It upheld the appeal against Edison Jehamo, with costs – and dismissed the order of the high court which ruled that Eskom owed the contractor money.

READ | State confiscates R11.5m from bank account of former senior Eskom manager

The project was completed in 2015.

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