Eskom’s dealings with the Guptas came under scrutiny this week when the Zondo commission of inquiry into state capture heard evidence about how the power utility allegedly propped up the infamous family’s mining interests.
The acting general manager of Eskom’s primary energy division, Dan Mashigo, dealt with the utility’s controversial 2015 coal contract with Gupta-owned Tegeta Exploration and Resources during his testimony on Tuesday.
Eskom allegedly gave Tegeta preferential treatment even though the coal it supplied from its Brakfontein mine did not pass quality checks. The agreement with Tegeta was initially valued at about R3.7-billion over 10 years. But the poor-quality coal posed a risk to Eskom’s Majuba power station, the commission, chaired by Deputy Chief Justice Raymond Zondo, heard on Tuesday.
Before hearing Mashigo’s testimony, evidence leader Kate Hofmeyr said coal scientist Mark van der Riet had submitted a statement to the commission shortly before his death. This, implicating Eskom’s former chief executive Matshela Koko in efforts to circumvent process in the testing of poor-quality coal from the Brakfontein mine, was submitted into evidence.
Van der Riet was suspended by Koko in 2015 after he was asked to investigate a dispute about tests done on Brakfontein coal samples. His suspension lasted 32 months.
Koko temporarily suspended the Brakfontein coal contract in the wake of Van der Riet’s investigation but days after the scientist’s suspension, Koko notified Tegeta that the suspension had been lifted.
Tegeta is now in business rescue and stopped supplying coal to Eskom in March last year.
The commission heard of another example of how the utility allegedly supported the Guptas’ mining interests when it seemingly backed their 2016 acquisition of Optimum coal mine from mining giant Glencore.
On Wednesday, Glencore executive Clinton Ephron related the events that led to Optimum going into business rescue, ultimately making the mine easy pickings for the Guptas.
Eskom allegedly financially crippled Optimum, which was the primary supplier of coal to the utility’s Hendrina power station, by subjecting the mine to more than R2-billion in penalties for allegedly delivering poor-quality coal and refusing to pay for coal until the penalties had been settled.
Ephron said Optimum had started promising negotiations with Eskom to set “more realistic” specifications for its coal supply agreement and to secure the supply of coal for the life of the Hendrina plant. But after the appointment of Brian Molefe as the utility’s acting chief executive in March 2015 the relationship between the mine and Eskom soured.
Optimum was forced into business rescue as a result. Gupta-linked Oakbay Investments managed to nab the mine, allegedly with the backing of then mineral resources minister Mosebenzi Zwane, for R2.15-billion.
Optimum has not supplied coal to Eskom for almost a year.