Tegeta advance ‘must be converted to loan’
• Treasury says no evidence company used money to buy equipment for its mining operations
The Treasury wants the R659m Eskom paid to Gupta company Tegeta to be converted into a loan with interest payable as there is no evidence that Tegeta used the money to buy equipment for its mining operations.
The fiscus also wants the prepayment to be declared irregular expenditure and Eskom investigated for failure to prevent irregular and fruitless and wasteful expenditure.
The interest payable, which would be determined by an auditing firm appointed by the Treasury in consultation with the accounting authority, would be recovered from either Tegeta or the relevant Eskom officials.
Treasury acting chief procurement officer Schalk Human, who signed off on the draft report, also noted in it that former Eskom CEO Brian Molefe may have misled the fiscus when he gave written assurance in August 2016 that coal procured from Tegeta met all of the power utility’s requirements.
He also observed that erstwhile group executive for generation Matshela Koko, who is now acting CEO, got rid of contractors Sibonisiwe Laboratories and SGS — which found that Tegeta’s coal did not meet Eskom standards.
This is one of several findings contained in a 25-page draft report of the Treasury’s longawaited review of Eskom’s controversial coal-supply contracts with Tegeta Exploration and Resources.
The draft report, which Business Day has seen, was sent to Tegeta for comment two weeks ago and the company and Eskom both have until Friday to comment on its damning observations about how the utility flouted its supply chain prescripts to accommodate Tegeta.
The Treasury confirmed late on Thursday that both Eskom and Tegeta had until Friday to submit their comments on the draft report.
Failure to meet the deadline would indicate agreement with the draft report’s observations and its recommendations.
Molefe said: “Treasury has not given me a copy of the report, so I did not get an opportunity to give feedback on it. Therefore, I am not in a position to comment on a report that I have not seen. “Why did the Treasury give the report to Business Day?” he asked.
Business Day, however, did not get the draft report from the Treasury.
Asked why Eskom had not forwarded him a copy, he said: “I am no longer an Eskom employee. Eskom has its own confidentiality issues.”
Eskom board spokesman Khulani Qoma said: “The report being referred to is not final, but a draft version — even Business Day has sufficiently acknowledged this fact. We therefore don’t see the relevance of the nature and form of the questions as they seek to portray this report as final and therefore ripe for remedial actions.
“It will be grossly unfair to
R659m The amount the Treasury wants to be deemed a loan with interest payable
use the contents of a [draft] report to make conclusive comments about the culpability of Eskom and/or its leaders.
“This being a draft, Eskom has consequently been given an opportunity to respond until April 21. It is very convenient and coincidental that the report is leaked to the media a day before the Eskom 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. We will continue to work constructively with Treasury, as we have done since July 2015, to reach finality on this matter.”
Tegeta CEO Ravindra Nath referred questions to Oakbay’s corporate communications division, which had not responded to detailed questions by the time of publication.
The draft report paints a damning picture of how Eskom gave Tegeta multiple lifelines even though the company could not only not provide coal of sufficient quality, but also delivered erratically, often missing its tonnage targets.
In addition, the draft report raises questions about how Koko inexplicably lifted an Eskom suspension on Tegeta’s coal supplies. But this leniency had not been extended to the power utility’s employees, as well as Sibonisiwe and SGS.
The remedial section of the report partly reads: “The office of the chief procurement officer in consultation with the accounting authority must appoint a foren- sic audit firm to: investigate why Eskom gave and continued to give preferential treatment to Tegeta by not enforcing key conditions of the coal supply agreement; and investigate whether Eskom acted negligently by not enforcing key conditions of the coal supply agreement, particularly the conditions precedence of the agreement.”
Other aspects of the agreement that the Treasury wants looked into include: why Eskom, through Molefe, gave assurance that Brakfontein Colliery supplied, and continues to supply, coal that conforms to the coalsupply agreement “despite ample evidence that there was noncompliance”.