Eskom contract valid and binding, says Intechem

Integrated Chemical Solutions (Intechem) has approached the Joburg High Court to interdict Eskom from canning a lucrative contract to supply the power producer with sulphuric acid.

Intechem and Eskom entered into the contract in March 2017 to deliver and off-load sulphuric acid to the entity’s power stations on “as and when required” basis for a five-year period. The contract was meant to lapse in February 2022.   The other contractor was Maano Water.

The relationship between Intechem and Eskom began to turn sour in September 2018when Intechem was unable to supply the suphuric acid to their allocated power stations due to financial challenges and requested to be given a supply relief from their contractual obligations from September to February 2019.

Eskom approved the request and allowed Maano Water to supply Intechem’s stations on a back-up arrangement.

In July this year, Eskomterminated Intechem’s contract. The power producer then triedto get the National Treasury to approve the variation of its contract with Maano Water by increasing the contract amount by 41.9% to include the work that ought to be done by Intechem.

However, the National Treasury in a letter seen by Sunday World rejected Eskom’s proposal.

“The reason to extend the work that was supposed to be done by TradeCorp [the former name of Intechem] without testing the market is not justifiable. National Treasury does not support the extension. Eskom must take the work which was supposed to be done by TradeCorp to the open market,” the letter reads.

In an affidavit, Intechem CEO Makhawukani Bvuma wants the court to set aside Eskom’s decision to terminate its contract to deliver and off-load sulphuric acid at its various power stations.

Bvuma also wants the court to bar Eskom from awarding the contract to other
companies.

“Intechem has prima facie right to continue to supply sulphuric acid to Eskom in terms of the contract. The contract was entered into pursuant to a lawful tender process that has never been challenged or set aside by Eskom. It remains valid and binding,” Bvuma’s papers read in parts.

“In addition, the cancellation of Intechem’s contract with Eskom has resulted in irreparable harm to Intechem’s business. On average, based on quarterly average figures during 2018 when Eskom was still acting in terms of the contract between it and Intechem, Intechem will lose R1211 465 [R1.2-million] in revenue per month as a result of Eskom’s unlawful cancellation of the contract.”

Eskom could not be reached for comment.


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