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Eskom’s COVID-19 force majeure

Michael Ward (University of Pretoria Gordon Institute of Business Science, Johannesburg, South Africa)

Publication date: 25 July 2020


Learning outcomes

The case describes the fall of Eskom, which in 2001 was named the Financial Times’ Power Company of the Year, but by 2019 was suffering from “systemic corruption, malfeasance, fraud and state capture” that had “compromised the credibility of the organisation and eroded investor confidence”. Eskom’s incompetent management lays the ground for reasonable doubt as to whether the force majeure notice was indeed irresistible. The case suggests several methods available in financial markets to hedge risk – but to what extent are these relevant and appropriate? The main objective of the case, however, is to examine and assess the criteria required to claim force majeure. Two aspects are questionable: Was the virus unforeseeable and was it irresistible? Eskom is “bleeding” R2.5m per month because of significantly reduced electricity demand, and while it clearly benefits Eskom to break their supply contract, the consequences for Exxaro are far more dire. And, if carried to conclusion, how would such actions impact the entire economy?

Case overview/synopsis

In April 2020 South Africa’s stated-owned electricity utility Eskom sent a pre-cautionary force-majeure notification to Exxaro Limited’s Grootegeluk Coal Mine. The notification, citing COVID-19 as an unforeseeable, external and irresistible event, would have disastrous consequences for the mine’s 25 m tonnes pa coal contract to supply Eskom’s Medupi power station. Not only was the legality of the force-majeure questionable, it was unethical, and not in the spirit of President Ramaposa’s call to businesses to continue paying contractors. The case briefly describes Eskom’s troubled history following South Africa’s 1994 democratic election. It examines the force majeure clause common in contracts, and questions whether COVID-19 meets the criteria of an “unforeseeable, external and irresistible” event.

Complexity academic level

MBA and Executive Education

Supplementary materials

Teaching Notes are available for educators only.

Subject code

CSS 7: Management Science.



Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.


Ward, M. (2020), "Eskom’s COVID-19 force majeure", , Vol. 10 No. 3.



Emerald Publishing Limited Bingley, United Kingdom

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