Eskom Holdings Limited v The New Reclamation Group (Pty) Ltd

Eskom Holdings Limited, an organ of state, invited tenders in March 2007 for the collection and disposal of non-ferrous scrap metal. The tender required tenderers to submit audited financial statements for the previous two years to demonstrate financial viability. Eskom awarded the tender to Kwanda Ferro Alloy African Resources (Pty) Ltd, despite Kwanda lacking its own financial capacity to perform the contract. Instead, Eskom relied on the financial strength of Rappa Holdings, a company that held a 50% shareholding in Kwanda but was under no legal obligation to support it financially. The New Reclamation Group (Pty) Ltd (NRG), an unsuccessful tenderer, challenged the award. The High Court set aside the tender award, finding it reviewable under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). Eskom and Kwanda appealed to the Supreme Court of Appeal.

The appeal was dismissed. The award of the tender to Kwanda remained set aside. Eskom and Kwanda were ordered to pay NRG’s costs of appeal jointly and severally.

This case is an important authority on judicial review of public procurement decisions under PAJA. It affirms that organs of state must evaluate tenders strictly in accordance with stated requirements, particularly financial capacity, and may not rely on the resources of third parties absent a binding obligation. The judgment reinforces principles of rationality, relevance of considerations, and proper exercise of remedial discretion in tender reviews.