Outa forcing Eskom to disclose stats on its Gupta coal contracts

ESKOM may be compelled to reveal whether it is favouring the Gupta family in its coal contracts after an initial victory by the Organisation Undoing Tax Abuse.

Outa successfully appealed to the National Energy Regulator of SA (Nersa) to hold a public hearing on Eskom’s application to keep certain of its operating statistics a secret. The hearing will be held tomorrow at Nersa’s head office in Pretoria.

Outa suspects Eskom is not disclosing the statistics because it includes the actual amounts of “Gupta coal” for which Eskom pays twice as much as it does to other suppliers.

The Gupta family-controlled Tegeta Resources supplies coal on contract to three of Eskom’s power stations – Arnot, Hendrina and Majuba. Various aspects of these coal transactions have raised concerns.

Eskom refused to renew its contract with Exxaro’s Arnot mine to supply the Arnot power station, saying the coal was too expensive.

It then awarded the contract Tegeta.

Tegeta is supplying Arnot from the Optimum mine at a higher price than Optimum receives for the coal it supplies to Hendrina on a longterm contract.

Tegeta bought Glencore’s Optimum Coal Mine out of business rescue in late 2015 with the assistance of an unprecedented R660million advance payment from the state power utility.

Apart from the loss-making Hendrina contract, Optimum was also faced with a R2-billion penalty from Eskom for supplying substandard to coal. For Tegeta, Eskom has agreed to reduce the penalty to R200-million.

In March, Eskom told Nersa it could not meet certain requirements for its application for a tariff hike of 19.9% in 2018-19. These include providing coal volumes burnt per station, per contract type or per supplier; a valuation of its regulatory asset base; research costs; and details of coal handling costs.

Outa argued that this application should be rejected.

The organisation’s director for energy, Ted Blom, in his submission to Nersa, said the “gross stealing and corruption” at the utility rendered it inefficient and nullified any justification for increases in tariffs.

On these grounds, tariffs should be reduced by at least 50%. — BDLive