Eskom Coal Supply Contracts: The Guptas And Zuma’s Son Denied R4 Billion Rack-up

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BuzzSouthAfrica has confirmed that the National Treasury blocked some Eskom coal supply contracts which would have handed a company owned by the Guptas and President Zuma’s son the opportunity to rack-up R4 billion.

From our gatherings, the Treasury blocked the Eskom coal supply contracts after it commissioned an investigation to ascertain if Eskom followed the required supply chain policies when it handed the contracts to Tegeta Exploration and Resources.

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A preliminary report of the investigation which City Press obtained detailed that the investigation uncovered the following:

  1. Treasury in August 2016, refused Eskom’s request to expand Tegeta-owned Brakfontein colliery’s 10-year coal-supply contract by another R2.94 billion. Eskom’s request was for a 77.42% increase from the company’s initial agreement to supply coal to the Majuba power station in Mpumalanga. It would have skyrocketed the worth of the contract from R4 billion to R7 billion.
  2. Again, Treasury in the same month, stopped Eskom from expanding Tegeta-owned Optimum Coal Mine’s two-month contract to supply coal to Arnot power station in Mpumalanga, for another six months without going through the tender process. While the initial worth of the contract was R235 million, Eskom’s move for expansion would have increased the worth by R855 million to over R1 billion.
  3. Treasury’s investigation found that Tegeta delivered substandard coal to Majuba and that Eskom ought to have rejected it.

Among other things, the investigation found that the Brakfontein colliery missed its coal targets to Eskom by 150 000 tons in January and February 2016.

Also, it was revealed that Eskom agreed to buy coal from Tegeta at R13.50 per gigajoule between April 2015 and March 2016. But then, from April 2016 until now, Tegeta received a 46% increase which soared the price of coal to R19.70. The strife here is that it’s uncool for Eskom to let Tegeta sell coal at R19.70 when it under-supplied them.



With the above, the preliminary report asked that a forensic audit be conducted to find out the following:

  1. Why Eskom gave and continues to give preferential treatment to Tegeta by not enforcing key conditions of the coal-supply contract.
  2. Why Eskom’s former chief executive Brian Molefe gave assurance that the Brakfontein colliery supplied and continues to supply coal that conforms to the coal-supply agreement, despite ample evidence that there was noncompliance.
  3.  The extent of fruitless and wasteful expenditure regarding payments made to Tegeta for coal from Brakfontein and Optimum.
  4. If the modifications of the coal-supply agreement with Tegeta prejudiced Eskom in any way.

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Reacting to the development, Eskom expressed that it is shocked to learn that the Treasury report was leaked to the media while it’s yet to comment on it.

“Eskom had raised its concerns that the draft Report on the Verification of Compliance with SCM legal Framework – Appointment of Tegeta Exploration and Resources (Pty) LTD were made available to third parties without Eskom having the opportunity to respond to allegations contained in the draft Report.

“It seems very convenient and coincidental that the report is leaked to the media a day before its comments are due to be issued to National Treasury which, in the eyes of the public, would now be irrelevant as perceptions would now be reality.

“Eskom pleads for caution amongst all South Africans and others who may come across the Draft report as the contents thereof is yet to be finalized and is speculative to say the least as Eskom is yet to respond. Consequently, its contents do not entail remedial actions which are final,” stated the South African electricity public utility.