Eskom, Oakbay defend coal contract after prepayment admission

Cape Town – Eskom and Gupta-owned Oakbay went to great lengths to defend themselves on Sunday after a senior Eskom executive admitted on Carte Blanche that the state-owned company agreed to prepay Oakbay-owned Tegeta R586m for coal in 2016, which reports claim was days before the R2.15bn acquisition of Optimum Coal mine.

Confronted with evidence of the prepayment agreement, Eskom’s head of generation Matshela Koko had to apologise to Carte Blanche journalist Devi Sankaree for making a "mistake".

After at first denying the prepayment, he said: "Let's say I made a mistake."

Eskom spokesperson Khulu Phasiwe was quick to point out to journalists on twitter on Sunday that “he (Koko) said he wasn't sure if the money was paid, and asked for more time to verify this, which we did on 8 June”.

Eskom and Oakbay were at the centre of a media storm on Sunday, which started with a City Press morning lead and ended with a News24 Video interview with Oakbay CEO Nazeem Howa.

In between this, a flurry of press statements by Eskom and Oakbay were issued, while Howa took to ANN7 TV to defend the company before the hard-hitting investigative piece by Carte Blanche at 19:00.

City Press reported on Sunday that in April Eskom awarded the contract to Tegeta to supply the Arnot power station with 1.2 million tonnes of coal over six months. Tegeta received this contract after a nine-month delay by Eskom in awarding a permanent supply contract to replace an Exxaro contract that had expired at the end of 2015.

The issue around the coal contracts is linked to a question some have been asking: How did Oakbay and Tegeta fund the deal to buy Glencore’s Optimum Coal mine for R2.15bn?

“The prepayment deal is particularly controversial because it appears to have been signed just days before Tegeta unexpectedly came up with R2.15bn in funding to buy Optimum mine,” City Press journalist Susan Comrie wrote late on Sunday.

Read: City Press stands by its story after Eskom criticism

However, Howa countered this concern on Sunday, when he gave some clues to News24 about how he says Oakbay funded the acquisition.

“It was done through a combination of banks, debt and our own internal funding,” he said.
“We approached the local banks in December last year,” he said. “None of the local banks would help us. So we went to a foreign bank.”

He would not name the bank that helped them because as “as soon as we approach any bank to assist us, there is huge pressure on them not to assist us. For that reason, we have to protect our banks right now.”

WATCH: Exclusive interview with Oakbay CEO Nazeem Howa

Oakbay is over scrutinised - Howa

Howa told News24 he believes Oakbay is being unduly targeted by media and over scrutinised by government.  

“We are over scrutinised compared to anybody else,” he said. “I was very, very surprised to see the Eskom statement (on Sunday).

It revealed that “all of our contracts had been audited by the auditor-general of South Africa and National Treasury. Why would Tegeta’s contracts be singled out for that scrutiny? Why would you not look at the other 80%?”

READ: Eskom responds in detail to Gupta coal contract allegations

Asked if Oakbay and Tegeta would bid for more Eskom contracts, Howa said: “We are going to be on the hunt.”

“Our expectation is that we should have the same rights as anybody else to bid for Eskom. Don’t because you want to link us to Guptas or Zuma exclude us.”

His message was similar to Koko’s message in his interview on Carte Blanche, when he said the Guptas should not be treated differently to anyone else and Tegeta should be treated fairly.
When you are not white - Howa

Howa believes Oakbay was unsettling the coal industry, which has been dominated by white capitalism.

“The difficulty facing us is when you – my apologies for saying it – when you are not white and you come into that environment, people always question how you are going to do that,” he said.

“We are going to do it through hard work, through innovation, through entrepreneurship.

“The amount of times we’ve been questioned, ‘if so-and-so couldn’t do it, how can you do it?’ We bring a different approach to our business. We bring a different kind of excitement around the business,” he said. 

"Let’s deal with this issue of state capture," said Howa. "The issue of state capture is absolute nonsense."

READ: Eskom contract 'helps turn Gupta, Zuma coal mine around'

Eskom said on Sunday that “all its contracting relationships are concluded on sound commercial principles and considerations”.

“In addition, all the Tegeta coal contracts with Eskom have been extensively audited by various agencies, including National Treasury.”

Regarding prepayments, Eskom said this “is a common commercial practice that is used widely and not unique to Eskom contracts. It is used in in large projects, coal mining contracts and emergency supply contracts”.                

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