Treasury blocks Eskom’s R855 million Gupta coal contract

National Treasury has rejected a request from Eskom to extend a contract with Gupta-owned Tegeta Exploration by a further R855 million, amaBhungane reports.

The contract extension is for the same contract that Eskom previously extended by handing Tegeta an advance of R586 million earlier in the year.

Eskom’s contracts with Tegeta – which is majority-owned by the Gupta family as well as their associates and president Jacob Zuma’s son, Duduzane – is currently the subject of an investigation by Treasury.

According to Treasury, Eskom has been frustrating the investigation for the past three months by refusing to submit requested documentation. Eskom handed over the documentation on Tuesday night, after Public Enterprises minister, Lynne Brown, stepped in.

The investigation comes amid reports that the coal being supplied to Eskom from Tegeta is of poor quality, and does not meet the necessary standards for use. Eskom has rubbished these claims, however reports by SABS exist showing that the coal is out of spec.

Read: Top Eskom coal experts still suspended one year after saying Gupta coal was rubbish

The contract to supply Eskom with coal was awarded in 2015, valued at R253 million. It was then extended, through the form of an up-front payment of R586 million, in April 2016.

Had this payment gone through, the Guptas’ mining operation would have received R1.7 billion without an open tender.

Treasury spokesperson Khulu Phasiwe told amaBhungane: “The National Treasury did not approve the request to extend the contract, but made certain recommendations, which Eskom is in the processes of implementing.”

AmaBhungane said that it understands the Treasury’s “recommendations” included that Eskom should source the coal from a range of potential suppliers and not just Tegeta.

More on Eskom

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Eskom paid Gupta mine millions for coal it couldn’t even use – report

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Treasury blocks Eskom’s R855 million Gupta coal contract