SCENARIO

Transnet ordered to pay Spill Tech R$177$m

By$.$Bongani Mdakane

$19$th Feb $2024$

Cash$-$strapped state$-$owned freight rail company. Transnet will have to fork out R$117-$

million to a Gauteng contractor after the South Gauteng High Court found it reneged on

a contract it had with the firm by giving work meant for it to a rival. Before $2016,$ Spill

Tech was the only service provider that provided services related to the containment of

spillages and remedial work of polluted sites on Transnet$$s vast fuel pipeline effectively

from $2013.$ Transnet$$s liquid fuels network traverses the provinces of KwaZulu$-$Natal,

Free State, Gauteng, North$-$West and Mpumalanga, handling an average of $16-$billion

litres of liquid fuel per annum. Transnet, sometime in $2016,$ decided to go out on tender

and split the contract, without appointing a panel of service providers from whom it

could choose should spills occur. Following the procurement process, Spill Tech was

awarded the contract to attend to spills above $50000$ litres and Drizit Spill Technologies

for spills below $50000$ litres.

The issue of whether a spill was major or minor was managed in the following manner:

when Spill Tech attended to a site, and it emerged that the spill was minor, it was

asked to hand over the site to Drizit. The process also worked in reverse.

However, during the course of the contract, Transnet would call Drizit to attend to

spills of above $50000,$ the terrain that according to the contracts, belonged to Spill

Tech.

Spill Tech then sued Transnet for loss of income, with the court ruling in the company$$s

favour. Spill Tech is a nationwide hazardous waste response company that specialises

in providing rapid response to hazardous waste spills and discharges. The company

handles a wide range of hazardous waste materials, including but not limited to$,$ oil,

chemicals and medical waste.

According to the court papers, Transnet would provide Spill Tech with as much

information as they had regarding the location of the spill. Transnet would also provide

information on what type of product was involved such as diesel, intermix $($a mixture of

diesel and petrol$),$ or Avtur $($jet fuel$).$ The Spill Tech operational team would then deploy

to the site to contain the spill. In the judgment, Transnet$$s application for review of the

arbitral award was dismissed. Transnet$$s liquid fuel pipeline has often to contend with

leaks due to damage caused to the pipeline network by thieves or by wear and tear.

The lucrative pipeline has also increasingly come under siege from syndicates looking

to steal oil and sell it on black market. Transnet has reported about $465$ theft and

sabotage incidents of critical infrastructure since $2019$ that have led to the conviction of

$21$ criminals.

Please provide questions and answers based on these Chapters $5($law of contract$),$ Chapter $6($contract administration$)$ and Chapter $7($Contract closure$)$ for procurement asked based on the scenario