Eskom service provider T-Systems has announced a temporary extension of its contract with the electricity parastatal.

T-Systems is a technology solutions provider and has been at the centre of controversy where media reports have indicated that Eskom could save R900m by terminating the contract and moving the skills in house.

But T-Systems South Africa says it has concluded the extension of a two-year “disengagement period” with Eskom, effective from 1 May 2015.

T-Systems provides the likes of desktop and server services to Eskom.

“Firstly, the original contract included a committed, annual unit rate reduction; secondly, the original contract also included a benchmark clause — providing Eskom the right to adjust unit rates aligned with market pricing. T-Systems and Eskom renegotiated in light of the two drivers mentioned above,” T-Systems South Africa MD Gert Schoonbee said.

T-Systems has around 1 600 employees and Schoonbee indicated that a termination of the Eskom contract would have an acute impact on the workers.

“Employees spending the majority of their time on the Eskom contract, will ‘follow the work’ as prescribed by section 197 of the labour law. Additional actions will be taken based on specific circumstances at the time.”

Eskom has also publicly commented on the extension of the contract in a statement on Monday.

“We are pleased to have concluded the disengagement contract with T-Systems on favourable terms as allowed for in the original contract together with the successful insourcing of selected services earlier this year, will secure savings aligned with our original intent, while minimising business risk and instability to Eskom,” said Eskom acting chief information officer Sean Maritz.

Finances at Eskom have been under scrutiny as South Africa lurches through the most acute electricity crisis since 2008.

President Jacob Zuma announced earlier this year that Eskom would receive a capital injection of R23bn even as questions are being asked of the financial management at the state-owned enterprise.

CEO 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.

The energy producer has also asked the National Energy Regulator of South Africa for a 25.3% increase in electricity tariffs. – Fin24