Eskom got it wrong. Kusile billions have nothing to do with Gupta mine

Kusile Power Station. Picture: Getty Images
Kusile Power Station. Picture: Getty Images

Eskom’s R4 billion overpayment saga has nothing to do with the dispute between the national power utility and Gupta-linked Tegeta Exploration and Resources over the delivery of substandard coal, Public Enterprise Minister Pravin Gordhan says.

This came after Parliament’s standing committee on appropriations demanded an explanation from Eskom over the “overpayment”, which the committee had last year been told was an “administrative error” and negotiations were under way to recoup the money, according to chairperson Sfiso Buthelezi.

However, Buthelezi had mistakenly stated that the figure was R5 billion and during a subsequent meeting the committee secretary confirmed in the records of the onsite visit last October at Megawatt Park that the correct figure was R4 billion. The money was related to work at Kusile Power Station in eMalahleni in Mpumalanga.

On June 5 the office of Public Protector Busisiwe Mkhwebane received a formal complaint that Eskom had “in error” made an overpayment of, variously, R4 billion or R5 billion to an undisclosed contractor or contractors.

The amount of R5 billion that Eskom is claiming in Tegeta business against coal not supplied by the Optimum mine
Pravin Gordhan

In a letter on Monday to ANC chief whip in Parliament Pemmy Majodina, Gordhan referred to various meetings and correspondences between Eskom and different committees of Parliament on the matter of a R4 billion overpayment on various contracts at Kusile power station construction project.

“There has unfortunately been ongoing misunderstanding on this matter and the amount of R5 billion that Eskom is claiming in Tegeta business against coal not supplied by the Optimum mine,” he said, adding that he wrote to “clarify the status of each of the above matters”.

He said records provided by Eskom showed the names of the firms (and contracts) that received the overpayments as well as the status of the employees responsible for the overpayments and “most of them seemed to have resigned before disciplinary actions can be taken”.

On the attempts to recover the funds Gordhan said that there were cases which were before the Special Investigating Unit, police and the National Prosecuting Authority. There were also “matters which are the subject of further forensic investigations [and] instances in which negotiations between Eskom and certain companies are taking place”.

“The department and Eskom will appraise Parliament of further developments on this matter once substantial milestones have been achieved,” he said.

After City Press published the story on May 31 referring to the R5 billion mentioned by Buthelezi, Eskom issued a statement saying that the R5 billion was the total value of Eskom’s claim against Tegeta, which was in business rescue.

Read: Eskom dodges question on company that got R5bn overpayment

Spokesperson Sikonathi Mantshantsha said: “This contract was concluded years ago and was set aside by the high court earlier this year. Eskom is participating in the business rescue proceedings to recover the funds. We will obviously respect Parliament and welcome the opportunity to clarify the matter. We will fully cooperate and make representations to the committee when called on to do so.”

In the complaint to Mkhwebane, advocate Vuyani Ngalwana wanted an investigation into, among others, the seven coal suppliers said to have been identified for charging Eskom “too much” and to what extent those contracts are being renegotiated.

Ngalwana also questioned the basis for [Gordhan] refusing to disclose to Parliament the prices that companies that supply Eskom charged for coal supplies, and wanted both the energy minister [Gwede Mantashe] and the [Gordhan] to disclose that information to Parliament”.

This contract was concluded years ago and was set aside by the high court earlier this year. Eskom is participating in the business rescue proceedings to recover the funds.
Sikonathi Mantshantsha

He queried the circumstances surrounding the procurement of other forms of electricity sources in South Africa (such as renewable energy and nuclear) with independent power producers and the beneficiaries of those contracts.

He wanted Mkhwebane to also probe Eskom’s “evergreen contracts”, the impact of such contracts on the end users and the identity of companies involved.

Mantshantsha told City Press in May that Eskom could not disclose the names of seven companies that Eskom was paying for coal at way above the market price, saying “the contracts are confidential commercial documents that Eskom cannot reveal”.

“Each coal supply contract is negotiated on its own merit and the prices agreed upon are a function of that process.

“Renegotiating with them will be done in the same manner; the merits of each contract will determine the outcome,” he said.

The appropriations committee heard that coal contracts constituted the highest cost at Eskom, accounting for 54% of the budget, followed by operations and maintenance at 20%, labour at 10%, levies and taxes at 10% and material at 6%.


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