Journalists uncover fresh Eskom Zupta scandal: R10bn in 15 days for Gupta-linked companies

The team of investigative journalists at the amaBhungane Centre for Investigative Journalism has served up another reminder that state entities have been positioned so that President Jacob Zuma’s friends can take maximum advantage. In their latest in-depth report, the group has pieced together a trail of contracts which, in essence, amount to Eskom handing about R10bn to Gupta companies in just over two weeks. Eskom and the Gupta brothers featured prominently in the state capture dossier put together by the former public protector after whistleblowers revealed that the Gupta family had effectively taken control of the South African government by pulling Zuma’s strings. – Jackie Cameron

By Lameez Omarjee

Johannesburg – The “noise” surrounding Eskom’s contract with mining company Tegeta Exploration and Resources has to do with its links to the Gupta family and Presidency, said the power utility’s spokesperson, Khulu Phasiwe.

Speaking to Fin24 by phone, Phasiwe was commenting on an article by amaBhungane, which reported that last year Eskom signed three deals to extend coal contracts totalling R10.7bn, despite failing to follow correct procurement procedures.

An Eskom sign stands outside the headquarters for Eskom Holdings SOC Ltd., South Africa’s state-owned electricity utility at Megawatt Park in Sandton, near Johannesburg, South Africa. Photographer: Waldo Swiegers/Bloomberg

One of the contracts, amounting R7bn, would see Tegeta supplying Komati power station. Komati is one of five power stations which have been identified for closure, which raised questions about how Eskom would cover the cost of the contract.

Earlier this week, a leaked draft report by Treasury revealed irregularities in the coal contract between Eskom and Tegeta. BusinessLive reported that Treasury wants the R659m prepayment to Tegeta to be converted to a loan with interest.

However, Phasiwe told Fin24 that because the report has not been finalised, anything being said about it is speculation. “Anything else anyone is saying is mere speculation because none of us have seen the final report, because the final report is not out yet.”

Phasiwe said that the power utility had submitted its comments to Treasury and met the April 21 deadline. “If there is anything untoward, I am sure National Treasury would not have allowed us to extend those contracts,” he added.

He said that the power utility has an existing coal contract with Tegeta and that coal contracts have been awarded according to the Public Finance Management Act (PFMA), administered by Treasury.

“From our side, we believe we followed the necessary processes, but if there are any deviations, those deviations will be revealed ultimately when the National Treasury completes its study.”

Regarding the prepayment made to Tegeta, Phasiwe said it was a normal practice at Eskom. In the past such prepayments had been granted to companies such as Anglo American, Exxaro and BHP Billiton, when it operated in the coal industry. 

“The situation with Tegeta has to do with Guptas and somehow linked to the Presidency, everything we read these days is about the Guptas and the Presidency,” said Phasiwe. “Maybe if Tegeta was owned by someone else, I am sure no one would have made any noise about it.”

In March 2016, Eskom had made a prepayment of R1.8bn to Exxaro to sink another shaft to meet its coal requirements, Phasiwe explained. “Prepayments are not unusual, we do them all the time, based on the requirements that we currently have… That is how we do business.”

He emphasised that Tegeta and the other companies named have paid back the prepayments. “We made announcement in Parliament but no one is interested in the fact that the money has now been paid back.”

When asked about the closure of Komati power station, Phasiwe told Fin24 that a final decision had not been made.

Eskom has been commissioned by Public Enterprise Minister Lynne Brown to conduct an economic assessment on the impact of the possible closure on communities. Based on the findings of this assessment, a decision will be taken, he explained.

“Eskom can’t wake up and say tomorrow will close the power station, it has to be a very involved process, so we can get input from all stakeholders, which is what the minister is requesting us to do.” – Fin24


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