Eskom should pay the pending dues for the software that they use, Oracle South Africa said amidst a payment spat between the two companies.
The Johannesburg High Court last week dismissed Eskom’s application to prevent Oracle from withdrawing its services over a payment dispute.
Eskom has a contractual agreement with Oracle to provide products, services, and technical support until 31 March 2022.
Many of Oracle’s services are core to Eskom’s operations. Its software is used, among other things, to support plant maintenance, billing and accounts, and electricity distribution.
Oracle is now threatening to withdraw its services because Eskom has underpaid it for its software licenses and services.
Energy expert Ted Blom said Eskom seems to have added more modules and users to the system without notifying Oracle about the change.
“When Oracle came to do an audit, they found gross abuse by Eskom. Even just from a reputation point of view it is disastrous,” he said.
Oracle initially claimed Eskom underpaid it by R7.3 billion, but after discussions this amount was reduced to R800 million. Oracle has now reduced it even further to R380 million.
Eskom disputes this amount and argues that it only owes Oracle R166 million.
Eskom spokesperson Sikonathi Mantshantsha said Eskom “has acknowledged that it owed Oracle R166 million which it will pay on receipt of an invoice”.
Mantshantsha added that Eskom intends to appeal the Johannesburg High Court ruling as it is within its right to ensure it receives services from Oracle until the end of March 2022.
“We will ask the courts to compel Oracle to continue providing the services that they have been contracted for,” he said.
In its court application Eskom warned if Oracle withdrew its services it would have “catastrophic consequences”.
The power producer said it could affect its ability to supply electricity to South Africa which will have a crippling effect on the economy.
Blom agreed. He said Eskom has been using Oracle systems for a long time and it is unlikely that the power utility would be able to run without this software.
According to Blom, Oracle can easily pull the plug on providing services to Eskom as the data is in the cloud.
“One password change and Eskom will have to go back to carrier pigeons,” Blom said.
After the adverse court ruling Eskom started to downplay its reliance on Oracle and dismissed concerns about a blackout.
Mantshantsha said they have put contingency measures in place to continue operating in a worst-case scenario.
“If Oracle pulls out it will not cause a blackout. Oracle is one of thousands of contracts that are running at Eskom which work together to produce, supply, and distribute electricity,” he said.
“There may be hiccups in areas where we use Oracle’s systems, but there will not be a blackout as a result of Oracle pulling its technical support services.”
He said they have software to use if Oracle pulls out. They would, however, not be able to rely on Oracle’s experts to assist in the event of problems.
“We have primed our internal team that Oracle helps to support.”
Eskom has also instituted an urgent procurement process to ensure smooth operations if Oracle withdraws.