Forget Eskom, Tegeta goes for bigger bucks
Gupta-owned coal supplier makes R4bn by bending the rules
Gupta-owned Tegeta has made up to R4-billion over the past two years from coal exports — while failing to meet its domestic delivery commitments to Eskom.
Optimum, Tegeta’s largest mine, was supposed to supply 10 million tons of coal to Hendrina power station in Mpumalanga between June 2016 and January this year, at a price of R150 a ton. Instead, it supplied only 6.5 million tons, but exported more than 4 million at an average price of R1 075 a ton.
Severe coal shortages at Eskom have raised fears of renewed loadshedding, with Hendrina named late last year as one of three power stations suffering critical shortages.
Optimum has met its delivery targets to Hendrina only four months out of 20. Eskom needed emergency procurement approval from the Treasury to ensure that the Hendrina, Komati and Kriel power stations would not run out of coal this month, and to avoid two others running out of fuel next month and in October.
● While severe coal shortages at Eskom have raised the spectre of renewed load shedding, Gupta-owned coal supplier Tegeta — at the centre of the coal crisis — has made billions by short-changing the power utility.
Business Times has established that over the past two years Tegeta’s largest mine, Optimum, has made up to R4-billion from exporting coal — some of which would have gone to Eskom had the power utility enforced stringent contractual obligations.
The mine sold 1.9 million tons of coal destined for Hendrina power station to Bermuda-based and Gupta-linked asset management firm Centaur Ventures for R2.3-billion between October 2016 and last November.
Centaur is 50% owned by Akash Garg Jahajgarhi, the man who married the Guptas’ niece, Vega, at the now infamous 2013 Sun City wedding. The company denies in court papers it is controlled by the Gupta family.
Centaur is asking the High Court in Pretoria to recognise it as Optimum’s biggest creditor, with a claim of R760-million. The mine is under business rescue.
Optimum sold the coal to Centaur at an average price of R1 075 a ton, seven times more than the R150 a ton it was getting from Eskom. The utility has consistently failed to act against Optimum, which has fulfilled its monthly quota only four months out of 20.
This was after Eskom granted Tegeta a R600-million prepayment for coal in 2016, which allowed the Guptas to buy the mine from Glencore. The exports coincided with periods in which Eskom, exercising an emergency procedure for mines under duress, temporarily allowed Optimum to deliver less coal to Hendrina than the contract required.
The relaxation deal kicked in just four months after the Guptas bought the mine. It meant that from September 2016 to October last year the mine needed to supply only 375 000 tons a month rather than 458 000.
Between June 2016 and January this year Optimum should have supplied roughly 10 million tons to Hendrina — one of three Eskom coal stations which nearly ran out of coal — but it only supplied 6.5 million tons, while exporting more than 4 million tons valued at about R4-billion.
Coal shortages at Hendrina led to the coal crisis that brought South Africa to the brink of load shedding. Eskom required emergency procurement approval from the Treasury to avert disaster.
Eskom spokesman Khulu Phasiwe said: “We are not at liberty to make any further comments on it as this may jeopardise our investigations.”
Eskom recently suspended a senior manager at its primary energy division, three station managers and a stockpile manager at Hendrina for contributing to the coal crisis.
Eskom has publicly stated that its coal supply contract with Tegeta was to blame for the narrowly avoided coal supply crisis.
Late last year Eskom was embarrassed when news was leaked that Hendrina’s coal stockpile inventory was overstated by 18 days. This emerged in an emergency meeting in which Tegeta threatened to stop supplying coal unless its rate was increased from R150 to R200 a ton.
A subsequent probe into the stockpile revealed two more power stations — Matla and Kendal — also had critical shortages. It found that several Eskom employees were part of a scheme to accommodate Tegeta’s short supply and had tried to hide this by moving coal from these stations to Hendrina.
Eskom revealed in parliament that Tegeta was paid R7-million in September last year for 37 000 tons of coal that was never delivered. The stations’ managers, Bruce Moyo and Christopher Nani, have been suspended along with Hendrina power station manager Lesolang Maserati.
These latest suspensions follow the resignation, and suspension a day later, of primary energy senior manager Ayanda Nteta, who Eskom places at the centre of the crippling crisis. Nteta is believed to have been charged with approving the second relaxation, from August to October 2017, without the necessary delegation of authority.
Nteta refused to comment in line with Eskom policy.
The number of stations affected had risen to seven as Eskom began moving coal from four other stations — Camden, Arnot, Komati and Kriel — whose reserves have also dipped. Eskom documents show that without Treasury approval Hendrina, Komati and Matla power stations would have run out of coal by May, while Camden and Arnot would have run out in June and October respectively.
An insider said: “Right now the situation is acute, but we’ve got the emergency procurement approved by the Treasury and speeded up the process so that we don’t get shortages which would lead to load shedding.”
Right now the situation is acute, but we’ve got the emergency procurement