Eskom has no contracts with Trillian and associated companies

27 October 2016

Eskom has been inundated with media queries about the contract it has allegedly awarded to advisory group Trillian Capital Partners.

We would like to state categorically that Eskom has no contracts in place with Trillian Capital Partners and/or associated companies.

When the current Board was appointed in December 2014, Eskom was facing challenges at both operational and financial levels. This period was plagued by capacity constraints, delays in the new build programme and the associated cost overruns, and load shedding.

These challenges led to the Board initiating an investigation into the reasons for the above issues and to also devise a turnaround strategy for the organisation. Pursuant to this, in June 2015 the Board gave the mandate to negotiate a risk-based contract with McKinsey, covering the main risk areas of the turnaround strategy.

In addition to the turnaround initiatives adopted by the Board, Eskom was faced with other pressing challenges namely, an unfavourable Nersa decision on Eskom’s selective reopener tariff application, fulfilling equity injection conditions set by the National Treasury, and imminent credit rating reviews by ratings agencies. This required Eskom to engage with a wide variety of service providers to mitigate against these risks with a sense of urgency. These service providers included Deloitte Consulting, Barclays, McKinsey, Citibank, the Public Investment Corporation and Trillian.

There is currently no master services (MSA) agreement in effect with Mckinsey, Regiments or Trillian. In June 2015 the Eskom Board approved a mandate to negotiate a MSA to help the company address operational and financial challenges that the company had to deal with. The proposed agreement was to be linked explicitly to benefits derived by Eskom, meaning that if no benefits were derived for Eskom no payment would be made. However, the Eskom Board decided in June 2016 not to proceed with the MSA. All required governance processes were followed in this process, including a review by Eskom’s external auditors.

It is also important to note that neither Regiments nor Trillian provided any assistance on an analysis of the China Development Bank’s US$500m loan facility which has now been successfully concluded; an analysis of a Goldman Sachs R30-billion loan facility which Eskom has decided not to proceed with; and assistance with negotiations for Eskom’s Duvha insurance claim.

Issued by Eskom Media Desk, 27 October 2016