Eskom paid more than R1 billion to Guptas

Eskom has paid a Gupta-owned mine nearly R1 billion this year for coal it has not received, despite the utility flagging that its coal supply was at record lows that has lead to blackouts.

Eskom paid R705 million to Optimum since March, because of contractual obligations largely engineered by former mineral resources minister Mosebenzi Zwane and axed-acting group chief executive Matshela Koko. This month, Eskom implemented stage 1 load shedding after supply at its coal power stations dwindled to only 10 days’ worth. The plants are supplied by mines owned by Tegeta Exploration and Resources, in turn, owned by the Guptas' Oakbay Investments.

The utility normally keeps about a month supply for emergencies. Eskom has maintained payments to Oakbay, despite its liquidity problems, charging that it was contractually obliged to do so. Eskom spokesperson Khulu Phasiwe said the utility paid R150 a ton to Optimum. Phasiwe said the contract with Tegeta was ongoing binding, even though Oakbay was under business rescue. “They are under business rescue and the law says there is nothing you can do in terms of penalties until the matter has been resolved,” Phasiwe said.

“From our side, we are only interested in getting coal and we are willing to buy from suppliers at a reasonable price. “All we are saying from our side is that we don’t want to enter into an area of speculation. We just want to get as much coal as possible.” Optimum mine has a capacity to produce more than 200 000 tons of coal each month. However, its contract with Eskom has allowed it to double the number to 470 000 tons per month.

The Guptas bought the mine from global mining giant Glencore for R2.15bn through Tegeta in a deal that was orchestrated by Zwane just days after he was appointed by former President Jacob Zuma. Eskom later extended a R659m prepayment to Tegeta to facilitate its supply operation to the utility. Energy analyst Ted Blom described the ongoing prepayment as bizarre. “Tegeta is exporting as much coal as possible to generate cash to keep alive – and even that situation is not running optimally,” Blom said.

Optimum workers are currently protesting at the mine to demand payment of their monthly salaries. The National Treasury report on Eskom this month fingered Koko as the brain behind the prepayment that was endorsed by the Eskom Special Board Tender Committee. The report said it was strange that the prepayment was made just days after the utility threatened Glencore with a hefty fine for allegedly supplying sub-standard coal to Eskom, something that Koko wanted waived for Tegeta.

It described the prepayment as preferential treatment. “Eskom and Tegeta officials contravened section 34(1) of the Prevention and Combating of Corrupt Activities Act,” the report said. “It is is, however, a question that still needs to be answered by the relevant Eskom executives as to why Eskom continued to use the coal and only levied the penalties afterwards.”