Eskom looks for alternatives to Optimum coal

Power utility Eskom says it is looking for an alternative fuel supply for the coal-fired Hendrina power station after its main provider, Optimum mine, threatened to stop deliveries.

Eskom said on Thursday that rolling power cuts were unlikely despite coal supply possibly falling below a 20-day requirement at the Hendrina power station.

“They wanted to increase the price,” Eskom spokesman Khulu Phasiwe said on Thursday.

The utility has an agreement with the Optimum mine, owned by Tegeta Exploration and Resources, to supply coal at R150 per tonne to December 2018 and the miner must adhere to that, he said.

Phasiwe confirmed Eskom held an emergency meeting last Friday to determine whether strategic coal stockpiles at Hendrina and other stations were sufficient after Tegeta Exploration and Resources threatened to halt supply.

Coal supply at Eskom’s power stations stood at 74 days’ worth in March but had fallen to 25 days’ worth at Hendrina by October and might since have fallen below a 20-day requirement, Phasiwe said.

Tegeta is owned by Oakbay Investments, a holding company controlled by the Gupta family. The family is at the centre of allegations they used a friendship with President Jacob Zuma to secure deals from the government and state-owned companies. The Guptas and Zuma have denied wrongdoing.

Oakbay agreed in August to sell Tegeta for R2.97bn to closely held Charles King, a Swiss company it said was owned by Amin al-Zarooni.

The sale was subject to regulatory requirements and other conditions and was expected to be concluded within 12 months, Oakbay said at the time.

Eskom last week found Hendrina, in Mpumalanga, had about 10 days’ worth of stock, which was an “unexpected” drop from the 25 days accounted for in October and below minimum requirements, Phasiwe said.

Gert van der Merwe, a lawyer for Tegeta, said that he had advised Tegeta not to operate at a loss, but didn’t know if the Hendrina contract was unprofitable.

Phasiwe said that Eskom was taking measures including working with the Treasury, to place supply contracts and divert coal from other sources to Hendrina.

SA had regular power cuts between 2008 and 2015, hitting key industries and knocking economic growth as demand exceeded capacity.

“If it happens that for some reason they are unable to supply us with coal, then clearly it means that they would have breached the contract and therefore it becomes a legal matter,” Phasiwe said.

A spokeswoman for Oakbay said the company would probably comment on Friday.