Gupta-linked Tegeta settles Eskom fine in arbitration

Johannesburg - Tegeta Exploration & Resources, a company part-owned by the wealthy Gupta family, reached an arbitrated settlement over a fine levied on its Optimum coal mine by power utility Eskom Holdings.

The R2bn penalty was originally issued to the mine’s previous owner, Glencore, which put Optimum into bankruptcy protection in August 2015 after Eskom refused to amend an unprofitable coal-supply contract and fined the producer because the fuel didn’t meet specifications. 

Tegeta, a company in which both President Jacob Zuma’s son, Duduzane, and members of the Gupta family, who are friends with the president, have indirect interests, completed the purchase of the mine last year.

“We are not at liberty to disclose the contents of the agreement but at least we can say that the matter is now resolved,” Khulu Phasiwe, a spokesperson for the utility, said by phone. “Details cannot be divulged but the arbitrator has made an award.”

Glencore spokesperson Charles Watenphul declined to comment. Representatives of Gupta-controlled Oakbay Investments, which owns a stake in Tegeta, didn’t immediately reply to an email seeking comment.

“At the time of this transaction, it was an insane coal price contract with an insanely large fine,” Peter Major, director and head of mining at Cadiz Corporate Solutions, said of the Optimum sale. It’s unlikely Tegeta would have bought the asset without expecting that the issues would be resolved, he said.

Peter Grauer, the chairperson of Bloomberg LP, is a senior independent non-executive director at Glencore.

Read Fin24's top stories trending on Twitter:

ZAR/USD
16.77
(-0.03)
ZAR/GBP
21.15
(-0.12)
ZAR/EUR
18.95
(-0.03)
ZAR/AUD
11.66
(-0.03)
ZAR/JPY
0.16
(-0.09)
Gold
1798.22
(+0.06)
Silver
18.69
(+0.13)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1961 votes
I am taking a hit, but should be able to recover in the next year
23% - 2569 votes
My finances have been devastated
34% - 3820 votes
It's still too early to know what the full effect will be
25% - 2749 votes
Vote