Eskom, Tegeta: details sought

Arbitration settlement

THE Department of Public Enterprises wants details of the arbitration settlement Eskom has struck with Tegeta Exploration & Resources, a company part-owned by the Gupta family over a fine of more than R2 billion Eskom had levied on Tegeta’s Optimum coal mine.

Eskom levied the fine on Optimum’s previous owners, Glencore after the mine delivered substandard coal. Tegeta, a company in which President Jacob Zuma’s son Duduzane and members of the Gupta family have interests, inherited the fine when it bought the mine from Glencore last year.

Eskom, whose relationship with Tegeta has been the subject of close scrutiny since Tegeta’s acquisition of Optimum, last week confirmed that it had entered into a settlement agreement with Tegeta.

But against the backdrop of last year’s public protector report on so-called state capture, the deal between the two companies has raised eyebrows.

Report The public protector’s report suggested a close relationship between former Eskom chief executive Brian Molefe and members of the Gupta family. It also emerged that Eskom had made a prepayment of R569 million to Tegeta for the supply of coal. In the aftermath of the report, Molefe resigned from Eskom in November, last year.

Newspaper reports last weekend also alleged that Molefe and Eskom board chairman Ben Ngubane had withheld information from a PwC report that pointed to several breaches in Tegeta’s R4 billion coal-supply contract with Eskom.

Eskom’s refusal to give details of the latest deal with Tegeta has raised more questions. The power utility has also not disclosed the settlement amount.

In a statement on Thursday, the Department of Public Enterprises said its director-general, Mogokare Richard Seleke, had requested a briefing from Eskom on the arbitration award in the Optimum mine matter to satisfy himself “that Eskom’s interests are secure”.

It said Seleke exercised an oversight role – as shareholders’ representative on behalf of the government – in respect of the six state-owned companies in the Department of Public Enterprises’ portfolio, including Eskom.

“The arbitration award settles a long-standing dispute between Eskom and Optimum mine over coal prices and supply. In terms of the rules of arbitration the quantum of the award may be publicly revealed on agreement of both parties.

“Eskom’s legal representatives have approached those representing Tegeta Resources, owner of Optimum mine, to obtain the necessary consent,” the department said.

Eskom spokesman Khulu Phasiwe said on Thursday that the matter had been settled through private arbitration.

“The arbitration was private, and Eskom is bound by the rules of confidentiality.

“Details cannot be revealed, but the arbitrator has made an award,” said Phasiwe, adding that the matter was settled last month.