Gupta family scores R4-billion coal supply deal with Eskom

Eskom went to “extraordinary lengths” to ensure the Gupta family scored a R4-billion coal supply deal from the parastatal. This is according to a report in the Sunday Times.

The reports states that the Gupta mine linked to the multi-billion rand deal had failed coal quality tests four times, before being awarded the lucrative deal on the fifth try.

Shortly after the deal was concluded, it is reported that four Eskom employees were suspended for questioning the quality of the coal.

The Gupta’s mining company, Tegeta Exploration and Resources, had tried since 2011 to score an Eskom deal, but had always been rejected.

A test in March on the company’s coal found it to be “within specifications, but risky” – which resulted in a 10-year deal to supply the Majuba power station being awarded to it.

Coal rejected

Two months after the Gupta-owned company started delivering coal, though, the supply was rejected due to poor quality.

On 31 August, Eskom sent a letter of suspension to Tegeta – complaining about the sub-standard coal.

However, after voicing “great concern” in the suspension letter, the temporary ban on the Gupta’s coal was lifted five days later.

Four Eskom employees, with over 50 years experience, involved in the quality control process were suspended. Two laboratories which conducted the coal quality tests, SGS SA and Sibonsiwe Labs, were also suspended by Eskom.

The Sunday Times reported that Tegeta claimed Eskom staff had colluded with laboratory staff to state the coal was sub-standard in order to extort a bribe from the Guptas.

Eskom said Tegeta’s coal had subsequently been tested by the SABS, and was found to be compliant.

Tegeta told the newspaper it operated “in line with corporate governance best practice”, but declined to comment on the issues surrounding its supply deal with Eskom.

The full report can be read in the Sunday Times of 13 September 2015.

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Gupta family scores R4-billion coal supply deal with Eskom