By Lehlohonolo Lehana.
State-owned power utility Eskom has been ordered to pay more than R1-billion to French nuclear energy company, Framatome.
This excludes value-added tax, interest and Framatome’s French-based attorney’s fees.
The adjudication process by the French-based attorney which ended up with the court ordering Eskom to pay Framatome R727m and a further R256.6m, in line with the earlier findings. That is before VAT, interest and the bill for Framatome’s French-based attorney are tallied up.
Eskom did not participate in the adjudication, and then challenged the adjudicator’s findings in court.
Western Cape high court Judge Cecile Williams dismissed Eskom’s objections, affirming the adjudicator’s decisions.
“The adjudicator’s rulings were within his contractual mandate, and Eskom’s failure to comply with procedural timelines undermines their challenge,” Williams stated.
The dispute arose in 2022 when Eskom took Koeberg Unit 2 offline, for what it said would be a five-month outage to refuel and replace its three steam generators.
However, Eskom months later informed Framatome that it would not be continuing with the work, leaving the latter to claim compensation for breach of contract.
Eskom was of the view that the utility and the contractor were both responsible for the delays, arguing that both parties had contributed to the deficiencies.
Framatome, however, blamed Eskom, citing the utility’s role in contributing to delays as including that the facilities required to house the old steam generators, once removed, were not ready for use.
In March 2022, Eskom had announced the deferral of a project to replace three steam generators at Koeberg Unit 2 to August 2023 following a review, conducted with Framatome, which indicated that the replacements were unlikely to be completed within the six-month timeframe allocated for the project.
Then COO Jan Oberholzer had indicated that certain facilities, including the completion of the building that would house the radioactive steam generators being removed, were deemed to be not fully in place to ensure that the replacement could be completed to expected quality and schedule parameters.
The judgment exposes Eskom’s precarious financial position, with the state-owned power utility already grappling with debt and operational challenges.
The ruling also raises questions about future infrastructure projects, with fears of escalating costs and delays.
Meanwhile Hillside Aluminium, one of Eskom’s biggest customers, receives about a 50% discount, resulting in a net benefit of R7 billion annually over a 10-year contract for Hillside that other consumers must cover.
Hillside’s tariff will increase based on the Headline Producer Price Index, while other customers face a 12.74% price hike for 2025/2026. Eskom claims the deal was approved after proper consultation.