Eskom service provider T-Systems recently published a temporary extension of its contract with the electricity parastatal. T-Systems is a technology solutions provider which has been at the centre of hullabaloo in the media fraternity citing that Eskom could save R900m by terminating the contract and moving the skills in house. Surprisingly, T-Systems South Africa announced that it concluded the extension of a two year period with Eskom on May 1 2015.
The technology solutions company provides Eskom with desktop and server services.
The original contract between the two companies integrated a committed, annual unit rate reduction. It also included a benchmark clause – giving Eskom the power to regulate unit rates aligned with market pricing. As such, T-Systems and Eskom renegotiated in light of the two drivers mentioned above.
T-Systems’s management indicated that they employ around 1 600 employees and that a termination of the Eskom contract would have a negative impact on the workers.
Eskom has also publicly commented on the extension of the contract. In a statement, the power utility said it was pleased to have concluded the disengagement contract with T-Systems on favourable terms. It further cited that the conditions allowed for in the original contract together with the successful insourcing of selected services earlier this year, will secure savings aligned with its original intent, while minimising business risk and instability to Eskom.
Eskom Tariff increase
Finances at Eskom have been under inspection as South Africa is staggering through the most heightened electricity crisis since 2008. Earlier this year, President Jacob Zuma said that Eskom would receive a capital injection of R23bn even as questions are being asked of the financial management at the state owned enterprise.
Chief executive Tshediso Matona, finance director Tsholofelo Molefe, group capital executive Dan Marokane and technology and commercial executive Matshela Koko were recently suspended from Eskom pending an inquiry into the state of affairs at the power utility. Eskom has also asked the National Energy Regulator of South Africa for a 25.3% increase in electricity tariffs.