Legal team to look at implications of Eskom's B-BBEE ruling – Sakeliga

SOE's tender committee selectively applied BEE criteria to disqualify certain contractors

Sakeliga instructs legal team to consider implications of B-BBEE Commission’s Eskom ruling  

13 June 2019

Sakeliga notes the recent ruling by the B-BBEE Commission on a multibillion-rand contract awarded by Eskom. In its findings the commission recommends the cancellation of a R4 billion contract awarded to Dongfang Electric Corporation Limited by Eskom.  

Sakeliga has instructed its legal team to evaluate the ruling for its larger implications as well as any bearing it might have on this business organisation's pending litigation to challenge race-based pre-disqualification of prospective contractors at state-owned enterprises.  

Sakeliga is currently engaged in litigation with the Department of Public Works to have regulations that allow race-based pre-disqualification of prospective contractors set aside. The regulations, adopted in 2017, currently allows state-owned enterprises such as Eskom to set their own discretionary and arbitrary minimum BEE requirements a contractor must meet if it wants to do business with Eskom. At present, if a prospective contractor is not 51% black-owned, Eskom frequently pre-emptively disqualifies it for doing work for this state-owned enterprise. That is, without even considering its proposals.  

It is a practice,” says Piet le Roux, CEO of Sakeliga, “that precludes – at a critical time for the economy – electricity consumers in South Africa from the full range of cost-effective expertise available on the market. In the end, consumers and tax payers lose, because the wrong benchmark is applied. Tenders should be about value for money for consumers (or tax payers), not about the race of a contractor’s shareholders or the ability of a contractor to get special treatment.” 

Le Roux concludes: “The ruling by the B-BBEE Commission raises serious questions on the application and impact of BEE at state-owned enterprises. In this case, the ruling shows how Eskom’s tender committee, negligently at best or fraudulently at worst, selectively applied BEE criteria to disqualify some contractors, while at the same time flouting rules in awarding a tender to Dongfang Electric Corporation.” 

Issued by CEO, Sakeliga, 13 June 2019