Eskom wins round one in battle to undo multibillion rand Econ Oil contract

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Power utility Eskom has won the first round of its bid to undo a multibillion-rand contract with Econ Oil.

On Thursday, the Johannesburg High Court suspended a dispute resolution process that Econ Oil and Eskom entered into over a fuel oil contract awarded to Econ Oil, Sasol and FFS in 2019. 

In court documents, Eskom said the value of the award to Econ Oil was R8 billion. 

Eskom has described the contract as "riddled with serious irregularities". In March 2020, its board decided to cancel the contract.

Econ Oil has defended the contract, arguing that it has become the target of a "carefully orchestrated disinformation campaign".

READ | Eskom official went out of her way to help Econ Oil, and linked them up with Gigaba - probe report

After Eskom's board chose to cancel the contract in March of 2020, Econ took the matter to an adjudicator, who ruled in its favour in December. The fuel oil supplier was awarded R21 million in damages for every month that Eskom did not fulfil the contract.

Eskom, however, said the adjudication process was flawed. It then instituted an application for a court interdict to suspend the dispute resolution proceedings.

This interdict was granted on Thursday. 

"Eskom is most pleased with the outcome of the court case," the utility said on Friday morning.

"What this means is that Econ Oil cannot enforce the adjudicator's award pending the outcome of the court hearing on the merits of the whole matter."

Tinyiko Mabasa, Econ Oil's head of operations, said in a statement that the fuel supplier was also pleased with the ruling, as it served to expedites the main hearing.  

"The hearing of the matter will finally lay to rest the innuendo, propaganda, and disinformation campaign run against Econ Oil. The questionable reports used to run a smear against us will finally be refuted in a court of law."

The two parties will again meet in court in June, where the merits of the case will be argued. 

* This article has been updated to include a statement by Econ Oil. 

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