Eskom has declared force majeure — unforeseen circumstances that prevent the fulfilment of a contract — on one of its biggest coal suppliers, Exxaro Resources, setting the stage for possible legal action.
In a statement to shareholders on Monday, Exxaro said Eskom served notice on its subsidiary, Exxaro Coal, in which it claimed force majeure on agreements in place for the supply of coal to the Medupi and Matimba power stations.
This will be in force from 16 April until one month after national lockdown has been completely lifted, Exxaro said.
“The effect of the letters received by Exxaro is that Eskom will not be taking the full contractually agreed tons of coal for the aforesaid period,” the company said.
But Exxaro said its legal advisers have told it that the Covid-19 lockdown does not constitute force majeure as stipulated in the coal-supply agreements as the power stations are still capable of supplying power.
“Exxaro will vigorously defend its position in this matter and take the necessary action. Exxaro is also of the view that this communication from Eskom is not in accordance with the spirit of the call by President Cyril Ramaphosa requesting businesses to continue paying contractors.”
It said Eskom has not indicated the extent of the reduced coal offtake, and so the potential impact on the company cannot be quantified until discussions with the state-owned power utility have been finalised. – © 2020 NewsCentral Media