Eskom’s ‘quiet’ R564 million Gupta bailout: report

Eskom has “quietly” awarded Gupta-owned mining company Tegeta Exploration a contract worth R564 million, effectively saving the Gupta company from business rescue, the City Press reported.

When the Gupta family took over the Optimum coal mining operations in March 2016 for R2.2 billion, the group was in business rescue (initiated by former owners Glencore) standing to lose R100 million a month.

Now thanks to the timeous contract award from Eskom, the company will leave business rescue processes in August, the City Press said, calling it a “financial miracle”.

With transport costs taken into account, Eskom will be paying around R700 million for coal from the Gupta company, to supply its Arnot power station.

According to the report, the coal is the most expensive per ton that Eskom is forking out for. Eskom refused to renegotiate prices at a similar level for the Hendrina power station when Optimum was in the hands of Glencore, which forced the operation into business rescue in the first place.

Optimum must supply coal to Hendrina at R150 a tonne until 2018.

Eskom has insisted that the Gupta company was not getting any special treatment. On Saturday, Eskom board chairman Ben Ngubane said that Tegeta had in fact saved the power utility billions of rand.

“Eskom rejects any insinuation of favouritism towards suppliers such as Tegeta who are willing to step in to avert the coal supply crisis and allow Eskom to meet the winter demand,” Ngubane said.

“Eskom stands firm by its process undertaken to conclude extensions of its coal supply agreements with its suppliers. I am satisfied that due process has been followed and we can be proud of the savings achieved by the executive team to date,” he said.

The Gupta family have been accused of using their political influence to secure lucrative contracts with the state. The family have close ties to President Jacob Zuma and his son, Duduzane, and have several business interests tied to state owned enterprises.

You can read the full story in the City Press for 12 June 2016.

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Eskom’s ‘quiet’ R564 million Gupta bailout: report