Gupta mine in ‘talks’ for more Eskom cash

Executives ‘overruled’ despite delivery delay

Eskom is in negotiations with the Guptaowned Optimum Coal Mine for a coal price increase, despite the company’s erratic record in delivering the commodity.

Since April, Optimum has missed its coal supply delivery targets to Hendrina power station.

The Sunday Times understands that Eskom’s interim board, all of whom were named to the permanent board by Public Enterprises Minister Lynne Brown on Friday, mandated the power utility’s executives to negotiate with the Gupta-owned mine.

The executives’ board tender committee had recommended the price hike be declined just two days before the board approved it.

“They are still busy negotiating, so I do not know what you are referring to,” said acting CEO Sean Maritz when asked about the approval. He referred further queries to Eskom’s media desk, which later denied there were negotiations.

An Eskom insider with knowledge of Optimum’s request said the board would be “crazy if they approved this request.”

“It’s clear they want to go to jail,” insisted the insider.

When Glencore’s away

Reservations about the negotiations partly stem from the fact that this is the same contract commodities multinational Glencore was muscled out of by the Gupta-owned Tegeta Resources and Exploration.

In late 2015, Glencore placed its subsidiary under business rescue after former Eskom CEO Brian Molefe refused a request to increase the price of coal from R150 a ton to R300 a ton on the basis that it cost more than the contracted price.

Eskom is in a precarious financial position and is unlikely to afford the increase because it cannot raise any further debt.

Some 21 months after the Guptas took charge of the mine, Eskom appears willing to accede to a price hike request.

The insider said this created the impression that Glencore had been pressured into business rescue to force the sale of its asset — Optimum Colliery — under duress.

Investigative journalism unit amaBhungane ran an exposé recently which showed that, since taking over Optimum Colliery in March last year, Tegeta had failed to deliver 458 000 tons of coal between April and October this year. At the same time, Tegeta had been exporting coal from Optimum.

Eskom said this meant Hendrina power station’s coal reserve stockpile had plunged to 10 days’ worth, instead of 20 days, as per the utility’s requirements.

Burning issues

Eskom spokesman Khulu Phasiwe told the Sunday Times that the utility was investigating the coal shortfall.

The negotiations mentioned by Maritz, clarified Phasiwe, related to how Tegeta would make up for the coal shortfall. “[Optimum] asked for a meeting — just like any other supplier — and Eskom agreed to meet them. Eskom rejected any price adjustment, in the same way it did with Glencore. Tegeta continues to supply Hendrina with coal, albeit at reduced volumes,” Phasiwe said.

The power utility was working with the National Treasury to secure other contracts to supply Hendrina, said Phasiwe, adding that “Eskom will ensure that the power system will not be compromised”.

Brown on Friday announced a littlechanged permanent board, with the exceptions of health ombudsman Professor Malegapuru Makgoba and Professor Tshepo Mongalo, a law expert. The retention of Zethembe Khoza as chairman has raised eyebrows.

They are negotiating, I do not know what you are referring to Sean Maritz Acting Eskom CEO