Eskom has cancelled a contract with Exxaro Resources and will now buy coal for one of its power stations from a company soon to be under Gupta control.
According to report by Bloomberg, Eskom is buying coal for its Arnot power plant from a mine being bought by a company controlled by the Guptas – friends of South African president Jacob Zuma.
This follows the cancellation of a contract with Exxaro resources, the group reported.
Eskom reportedly cancelled the contract – which saw 20% of Arnot’s coal needs – as prices were too high.
Instead, Eskom will now get its coal from Optimum coal mines, which is in the process of being bought by the Gupta family-owned Tegeta Exploration and Resources.
The Sunday Times reported in September 2015 that Eskom went to “extraordinary lengths” to see that the Gupta family scored a R4-billion coal supply deal from the parastatal.
Tegeta has reportedly agreed to pay R2.15 billion for the mining operation, which would cover most of the company’s R2.55 billion debt.
Tegeta moved to buy Optimum after current owner, Glencore, was forced to sell the loss-making operation due to restrictive Eskom contracts and billion-rand fines imposed on it by the utility.
Glencore and Optimum were under contract to supply coal to Eskom at R150 per tonne until 2018. The mining groups wanted a new contract with Eskom paying a cost price of R450 per tonne.
Eskom refused, and sought legal action against the mining group, imposing additional fines.