Eskom slaps Optimum with fine for failing to supply it coal

ESKOM has issued the Gupta-owned Optimum with a R105-million fine for failing to deliver coal, which has spurred a supply shortage at the power utility.

As Eskom grappled with the issue, alternative coal producers would benefit from a shortage of coal and come to the rescue of the power utility, as it sought to plug a gap in supplies at several of its stations. Eskom spokesman Khulu Phasiwe said on Tuesday the power utility had imposed the R105-million penalty in January and Eskom had refused to pay Optimum a R53-million invoice. That is when Optimum went into business rescue.

Phasiwe said the coal supply issue would be resolved before winter sets in as Eskom was awaiting approval from the National Treasury to source coal from elsewhere.

Roger Lilley, an analyst at EE Publishers, said coal companies would probably use the shortage of supply to their own advantage by increasing coal prices, knowing Eskom was desperate.

Eskom approached the Treasury in April for permission to seek alternative suppliers of coal. Eskom had been given the go-ahead to deviate from “competitive” bidding and to look for more coal suppliers, the Treasury said.

“Some of them [suppliers] are already there, but we don’t have contracts because of the necessary approval from Treasury to do so,” Phasiwe said.

However, Lilley said sourcing coal from other mines was not that simple.

“They can’t just accept any form of coal. The power stations are designed to use a certain type of coal, so if you use the wrong kind of coal, over time you get a problem with the boiler or end up with pollution,” he said.

Eskom has had a shortage of supply at six of its 29 power stations for the past few months. The first shortage occurred at Hendrina, which is supplied by the Gupta-owned Optimum.

The Gupta-owned Tegeta mines have been under business rescue since February. They supply coal to Arnot and Majuba. Camden and Tutuka have also experienced a shortage of coal.

Phasiwe said Eskom was mitigating the shortages by taking coal from other oversupplied power stations. Hendrina needs to be supplied with 5.5million tons of coal annually, which translates into about 400 000 tons a month. It had received only 118 000 tons in January.

Optimum mine supplies 80% of the coal to Hendrina while the rest is sourced from small surrounding coal miners.