Oracle cut Eskom off – what is happening now

Oracle has cut off essential technical services to Eskom following a payment dispute, but the impact on the power producer’s operations has been minimal.

The payment dispute arose after Eskom allegedly added modules and users to its Oracle software services without paying the required license fees.

An audit by Oracle revealed abuse by Eskom and the software giant initially claimed Eskom underpaid by R7.3 billion.

Following discussions between the parties the amount was lowered to R380 million. Eskom, however, said it only owes Oracle R166 million.

Oracle threatened to cut off essential technical services to the power utility unless it settles the outstanding R380 million.

Eskom responded by launching an urgent court application to compel Oracle to continue providing technical support amidst the payment spat.

The Johannesburg High Court dismissed Eskom’s application, and shortly afterwards Oracle cut its essential technical services to Eskom.

In its court application Eskom warned of “catastrophic consequences” if Oracle withdrew its support services.

Eskom said it could affect its ability to supply electricity to South Africa which will have a crippling effect on the economy.

To date the impact of Oracle’s decision to discontinue its support services has, however, been minimal.

Sikonathi Mantshantsha
Eskom spokesperson Sikonathi Mantshantsha

Eskom spokesperson Sikonathi Mantshantsha confirmed that Oracle has cut off technical support services after their legal victory.

“Oracle’s technical support services have not been available to Eskom over the past week,” Mantshantsha told Bruce Whitfield on The Money Show.

Eskom has now implemented contingency plans which it developed in preparation for this scenario.

Mantshantsha said at this stage there has not be a “very big impact” on Eskom’s operations.

This is partly because Oracle’s support was a supplement to Eskom’s internal teams who have been working with the software for more than 20 years.

“We have activated those teams and they are holding the fort at the moment,” said Mantshantsha.

This raises the question whether Oracle technical support services were necessary in the first place.

Mantshantsha said it is undoubtedly necessary to have the technical expertise of companies like Oracle to resolve problems with their software.

“We will continue to require such services and as such Eskom has embarked on an urgent procurement process to find the technical skills to replace Oracle,” he said.

Oracle’s decision to terminate its technical support services adds risk to electricity supply in South Africa, but Mantshantsha said they do not rely entirely on the experts from Oracle.

“There is a risk which Eskom has put mitigation measures in for…but we are able to operate without their support for now,” he said.

Eskom dismissed concerns that other providers will be hesitant to work with Eskom following this debacle.

“Any supplier which enters into business with Eskom can expect that Eskom will always honour its contractual obligations,” said Mantshantsha.

Oracle has been mum on the matter, only saying “Eskom should pay the pending dues for Oracle software that they use”.

Now read: Pay up, Eskom

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Oracle cut Eskom off – what is happening now