Eskom in nasty contractual dispute with Oracle

Eskom said on Monday that it has put “contingency measures” in place to reduce the risk of its reliance on software from US technology giant Oracle, with which it is in a heated contractual dispute.

The state-owned electricity utility said Oracle is contracted to provide several technical services but the company, which is based in Austin, Texas, has claimed it is owned R7.3-billion. Eskom has disputed this claim.

Oracle is a major player in enterprise business software, including ERP and database solutions. It was co-founded by Larry Ellison, the 10th richest person in the world according to Bloomberg, and who now serves as chairman and chief technology officer.

Eskom said the amount claimed by Oracle has been reduced to less than R400-million through negotiation, but the utility believes the amount owing is far less: R166-million.

“Eskom offered to settle the R166-million and proposed a verification and court process to legally and sustainably resolve the dispute,” the utility said in a statement.

“When Oracle rejected this approach, threatening to terminate its services to Eskom, Eskom approached the high court to compel Oracle, in essence, to continue providing the technical support services for the duration of the agreement, until April 2022.”

Leave to appeal

Eskom said the court dismissed its application last week and it will now seek an application for leave to appeal. “Eskom has assessed the risks in the event of Oracle withdrawing technical services support (and) has interim risk-mitigating processes in place to reduce the risk of its operations being disrupted.”

Sunday World first reported on the dispute at the weekend, under the headline “SA faces total blackout”. The newspaper said: “The whole of South Africa is now at the mercy of Oracle to save it from plunging into darkness and keep the lights on after the acrimonious fallout that saw Eskom fail to convince the Johannesburg high court to stop Oracle from withdrawing its crucial services to the embattled state-owned company.”

According to the report, Oracle’s software is used in critical Eskom operations, including an “online vending system” that processes 77 million transactions of electricity sales a month.

Eskom also reportedly uses Oracle products and services for load monitoring of electricity generation by power stations and has supplied a maintenance tool called Maximo used for asset management and power outages, logging of faults and control of the grid.

In Monday’s statement, Eskom said it finds the manner in which Oracle has handled the matter “regrettable”. The utility said it will “pursue all legal avenues and will not be bullied into paying any monies outside of the legal processes”.

A spokeswoman for Oracle couldn’t immediately be reached outside normal business hours.  — © 2021 NewsCentral Media

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