Lighting firm suing Eskom for harmful claims contained in official bid documents

15th October 2013

By: Terence Creamer

Creamer Media Editor

  

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South African industrial lighting specialist Magnitech Lighting is suing State-owned electricity producer Eskom for making what it alleges to be false and misleading claims about its xenon-sodium lamp, which has resulted in a dramatic decline in the sale of these lamps to the industrial and mining markets.

The Johannesburg-based company is the sole distributor of EYE xenon-sodium lamps, which are manufactured by Iwasaki, of Japan, and which have been widely used across South African industry for many years.

MD Howard Page tells Engineering News Online that the inaccurate description first emerged in a request for prices issued by Eskom subsidiary Roshcon in late 2008, but has since been widely disseminated across the consulting engineering fraternity.

He says the statement not only unfairly disqualified the product for consideration in Eskom lighting contracts, but also resulted in a precipitous decline in sales to other industrial and mining customers, who consider Eskom policies and standards to be authoritative.

Page says he is resorting to the courts after making exhaustive, yet unsuccessful, attempts to have the clause removed from the utility’s specifications and tender documents. He says the entire Eskom hierarchy, from the engineers involved through to CEO Brian Dames, have been made aware of his complaint though “almost five years of incessant interactions”.

The statement has also persisted in the utility’s documentation despite several revisions to the specifications and despite written admissions by Eskom that errors were made in its initial drafting. Eskom-initiated forensic investigations into the matter, as well as a Magnitech Promotion of Access to Information Act application showed that there was no basis for the statement and also concluded that it “may have been potentially unfair to Magnitech”.

Besides a civil application for damages running to tens of millions, which has been lodged with the South Gauteng High Court, Magnitech also filed an abuse-of-dominance complaint with the Competition Commission in October 2012.

In July, the commission issued a notice of nonreferral, citing jurisdictional concerns. But Page has since referred the complaint directly to the Competition Tribunal, maintaining that Eskom’s actions amount to a breach of the Competition Act.

Eskom says it is unable to comment on the matter, owing to the fact that it is before the court and Competition Tribunal.

The company is further incensed by the utility’s decision to remove significant amounts of Magnitech lamps and fixtures from several of its power stations in favour of a replacement programme being run under the aegis of the utility’s demand-side management programme.

The company has raised the matter with Public Protector Advocate Thuli Madonsela and has requested that she probe whether the replacement programme could amount to fruitless and wasteful expenditure.

In a letter to Madonsela dated September 6, 2013, Department of Public Enterprises director-general Tshediso Matona acknowledged Page’s complaint and his allegation that the 110 W xenon-sodium lamps being discarded by Eskom were more energy efficient than the 70 W metal-halide solution being implemented.

He also acknowledged that the allegations were disconcerting and “must be addressed”.

“I have addressed a letter to the Chief Executive Officer of Eskom to deal with the matter as promptly as possible and report the outcomes to your office,” Matona wrote.

Page asserts that Eskom’s actions are not only irrational and wasteful, but raise serious questions about whether there are not ulterior, even corrupt, motives at play.

Edited by Creamer Media Reporter

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