Photo: Gallo Images/Charles Gallo
Eskom to take action against an irregular tender contract awarded in 2019
Eskom will be taking steps to cancel the fuel oil supply contract awarded to Econ Oil & Energy. Here’s what we know.
Photo: Gallo Images/Charles Gallo
Eskom announced on Friday 31 July that they would be initiating a process to cancel the fuel oil supply contract awarded to Econ Oil & Energy back in 2019.
The power utility explained that the agreement with Econ Oil & Energy would have been a five-year contract. As per Eskom’s recent statement:
“A review of circumstances leading to the tender being awarded to the company revealed serious irregularities in the process”.
Eskom contract irregularities
Inflated prices
Some of these irregularities include inflated prices charged to Eskom, despite lower-priced alternatives being available. Eskom said that they have “written to the supplier notifying them of its intention to have the contract terminated”.
The contract will be cancelled “through the legal process”, Eskom vowed. In addition, the team would also be reviewing the “roles played by all stakeholders in awarding the tender”.
Action will be taken
The power utility explains that it includes the role of Eskom employees; action will be taken if any criminal activities and elements are exposed during the investigation:
“Where applicable, disciplinary processes will be pursued and criminal charges laid”.
This announcement follows after Eskom commenced a process to review all major contracts earlier this year. Eskom said it would not hesitate to “take steps to cancel such contracts” where evidence of corruption “or other irregularity” has been discovered. Furthermore:
“Eskom will not hesitate to […] recoup any losses that it might have incurred as a result of any irregular actions”.
Oil demands set to crash in 2020
AFP reported earlier this year that the price of oil dropped to its lowest level since 2002; planned output cuts were deemed insufficient to offset a coronavirus-fuelled slump in demand.
Back in April, the benchmark WTI contract tumbled to $19.20 per barrel, the lowest level in 18 years.
Joshua Mahony, senior market analyst at IG trading group, noted that “crude oil has been hit hard […] as a massive drop in demand highlights the shortcomings of the Opec+ production cut”.
“Whether today’s slump in oil prices serves to rally Opec+ into another cut remains to be seen.”
In addition, the global oil demand was predicted to fall “by a record amount this year” due to lockdown measures imposed by the outbreak of the novel coronavirus pandemic.
AFP reported at the time that the demand during 2020 will fall by 9.3 million barrels per day (mbd), “with April alone down 29 mbd from a year earlier to levels last seen in 1995”, as per findings from the International Energy Agency’s (IEA) latest report.
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