Crib notes: This is why Eskom's got beef with treasury
Take the beleaguered state-owned power utility, add some handshakes with a Gupta coal supplier and a few raised eyebrows in treasury, and you’ll have the makings of a powerful public spat that has the government ripping itself from the inside out. The public war between Eskom and treasury has heightened factionalism in the ANC, but why, oh why, is there so much drama and energy being expelled when the nation is still scarred from load-shedding?
Te-get-a bit of coal
On Tuesday, some poor soul from Eskom jumped into a car and rushed to meet the 5pm deadline to deliver contracts from the power utility’s coal deal with Tegeta Exploration and Resources to treasury.
Tegeta, as you may have heard, is owned by that one family most South Africans have beef with: the Guptas.
Eskom struck a deal with the company, reportedly to the tune of more than R400-million, for the supply of coal over the next 10 years.
When treasury stepped in to review Eskom’s contracts with Tegeta, things became tense. Eskom politely promised to co-operate with treasury and supply all the information they needed. But that didn’t happen and on Tuesday afternoon, Public Enterprises Minister Lynne Brown ordered Eskom to deliver the contracts. The power utility caved in.“We will submit the information, even though the board has not sat down to formally consider the outcome of the report,” Eskom spokesperson Khulu Phasiwa told Talk Radio 702.
Brown’s demand came after the relationship between Tegeta and treasury had started to edge closer to the cliff in recent weeks.
‘Show us the documents’
When finance shadow minister David Maynier, of the Democratic Alliance (DA), filed an application under the Promotion of Access to Information Act (Paia) for treasury to make documents from its investigation public, the tussle heated up. Tegeta refused and treasury forwarded the response to Maynier, who then filed a second Paia application.
“The report seems to portray a unilateral effort by your department to severely prejudice our business and our commercial relationship with Eskom,” Tegeta director Ravindra Nath told treasury on June 23.
But it didn’t stop there. Tegeta threatened to interdict treasury if they released any of the information from the report they are compiling on the Eskom deal.
“We will consider obtaining further advice in launching an urgent application to interdict you from releasing the report until it has been subjected to the scrutiny of all parties concerned,” Nath said.
Maynier released Tegeta’s threats to treasury last week and since then it’s become one big mess of a power struggle.
Trying to have the last word
In August, Eskom released a statement saying that it had been co-operating with treasury’s investigation and nothing has been amiss on their part.
“National treasury started an investigation into Eskom contracts with Tegeta in July 2015. Eskom wants to reiterate that it has been co-operating with national treasury,” the power utility said in a statement.
But treasury side-eyed Eskom and broke down some of the ways Eskom has failed to honour their end of the bargain.
“National treasury has also noted with concern the statement issued by Eskom on August 28 2016, suggesting that it has been co-operating with the process of reviews of the coal contracts. The national treasury would like to categorically state that its efforts have met resistance,” reads the statement from treasury.
Treasury said that it had sent a report from its investigation into the Tegeta deal to Eskom CEO Brian Molefe and the power utility’s chairperson, Ben Ngubane. Treasury requested that they comment on the report, but so far there has been no response.
Eskom has also failed to send over a list of payments made to and invoices received by Tegeta from September 2015 to April 2016 and the power utility has yet to withdraw a statement saying its finances had been audited by treaury because “clearly that was not the case”, treasury said.
Why is any of this necessary?
So far, not too much is known about treasury’s report. The Sunday Times this month said the report reveals Eskom paid Tegeta more than R130-million for subpar coal it couldn’t use. There’s also the concern around the involvement of a Gupta company supplying a state-owned enterprise and the allegation that Eskom made advance payments to Tegeta.
Tegeta is controlled by Gupta-owned company Oakbay Resources and Mabengela Investments, where Duduzane Zuma, President Jacob Zuma’s son, is the director.
Treasury’s investigation into the deal is part of its bid to clamp down on corruption. With the Guptas and the president’s son involved, speculation is rife that the deal has become yet another sign of a possible state capture.
The way forward
On Wednesday, MPs questioned Molefe on the power utility’s deal with Tegeta. Molefe said that without any evidence of wrongdoing from the Guptas, Eskom could not blacklist Tegeta.
“Until we can give reasons to blacklist them, if they bid for a transaction and apply for a tender, we have to consider them,” Molefe said.
“By saying so, that makes me a captured person,” he added.
“I am captured by the constitution.”
The power utility has also adhered to Brown’s demand that they deliver documents to treasury. The 172-page package includes all contracts involved in the Tegeta deal. At 4pm on Monday, Eskom’s spokesperson was confident the pages would be there by the 5pm deadline.
“We have dispatched a driver to go and deliver the documents. It is a relatively thick document so we could not send it by e-mail but it will be delivered before 5pm today.”
Treasury will continue its investigation. Brown has said that once the investigation concludes, action will be taken against those accountable if anything is amiss.
For now, all eyes are on Eskom and Treasury to see what happens next. The Guptas may be busy planning their escape from South Africa, but the chase is still on to see just how deep the family has potentially reached into the pockets of the state and how it affects South Africa’s energy provider.