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'Whatever happens, happens' - Brian Molefe on his future as Eskom CEO

Brian Molefe: Resigned, retired, retrenched, retained...? (Pic: Gallo Images)
Brian Molefe: Resigned, retired, retrenched, retained...? (Pic: Gallo Images)
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30 May 2017

Instead of concluding, Eskom chair Ben Ngubane causes a stir as he claims that Eskom lost R513m in negotiated savings due to National Treasury.

30 May 2017

Scopa chairperson Themba Godi: PwC report shows non-compliance with Tegeta coal contract. The minister has come with a possible solution so that we don’t have doubts about what has happened and what is happening. The SIU investigation will give a comprehensive picture of what is happening. The auditor-general doesn’t have the capacity.

30 May 2017

Solly Tshitangano, chief director of supply chain governance at National Treasury: We have wasted a lot of time checking the non-compliance. We only got the PwC report in 2017.

30 May 2017

Lynne Brown wants a judge to head up investigative SIU investigation that will look into Tegeta claims and other coal contracts. Eskom chair Ben Ngubane said the board will love an investigation. "There is nothing we have done wrong," he said.

30 May 2017

Public Enterprises Minister Lynne Brown has confirmed that she is implementing a Special Investigating Unit investigation into Eskom. "I am implementing an SIU investigation to look at all the reports since 2007. There are seven reports. Many of the recommendations have been resolved. But does it change the systematic process at Eskom."

30 May 2017

Scopa ANC member Vincent Smith to DPE Minister Lynne Brown, DPE director general and Eskom chair Ben Ngubane: Scopa is not going to call you out of malicious compliance. We are informed by the PFMA. Yours is to prevent fruitless and wasteful expenditure. The chair of the board, the minister and accounting officer must be aware that there will be  consequences if all of us knowingly flouted the PFMA. Be aware right upfront. We are three years into those 10 years (of the Tegeta contract). Are we going to wait for another few years before we realise it was fruitless. The board will be implicated. Go and think about what is happening here and find a solution.

30 May 2017

The EFF wants Eskom to cancel the Tegeta R4bn Brakfontein Colliery coal contract.

30 May 2017

The copy and pasting of Eskom's 10-year, R4bn coal contract with Gupta-owned Tegeta comes after a PwC report stated among other things that supply chain management processes were flouted, and that the contract contained discrepancies. In addition, Tegeta started operating before on-site health and safety valuations could take place. The assessments only took place two-and-a-half months after the contract had been signed.
FULL STORY

30 May 2017

Scopa ANC Mnyamezeli Booi: Now the chair of the board says there was a catastrophe. That doesn’t help me. We are here dealing with Tegeta contract. People there couldn't write a contract for 10 years. The CEO says these issues were raised and being resolved. Even Brian talks about consequences. What about the contract. It was copied and pasted. How can you write a contract at that level.

30 May 2017

Eskom chair Ben Ngubane: Eskom went through a terrible time. We appealed to the minister to bring us a tested CEO. She brought Brian Molefe from Transnet. We were on the verge of a national catastrophe. And Brian came to Eskom. He sat at Eskom from 05:00 to 22:00 every day to resolve the issues. That is why we value him.

30 May 2017

Ayanda Nthetha, senior general manager of primary energy at Eskom: The negotiations with the supplier was to see if they meet Eskom requirements. For Eskom, this means they must be 51% black owned. They (Tegeta) then gave us a letter that showed how they would get to 51% black ownership. PwC said this letter should be a part of the agreement. It should be included in coal contracts going forward.

30 May 2017

Scopa ANC Mnyamezeli Booi: We want to see if there are weaknesses in Eskom. If you plaster over it, how will we give the right recommendations to fix Eskom.

30 May 2017

Scopa ANC Mnyamezeli Booi: What professionals would write such a poor contract? You want us to put cement over it and move on.

30 May 2017

Eskom agrees with PwC finding regarding lack of BEE letter in Tegeta deal. Eskom says it fixed this issue and included the BEE letter in agreement.

30 May 2017

Scopa ANC Mnyamezeli Booi: Who was on negotiating team? There are discrepancies about how Tegeta got this deal.

30 May 2017

Eskom CEO Brian Molefe: "Awarding without a tender is an unsolicited bid. The rules designed by Eskom in 2008 allowed Eskom to procure coal without a contract in place on an emergency basis. Cost plus mines did not go through competitive process to get advantage they have. We spent R75.4bn on mines that are not black owned. We have now changed that. We don’t do cost-plus mines anymore and tenders have to be competitive bids."

Eskom chairperson Ben Ngubane: "Remember the terrible load shedding in 2008. This is what allowed unsolicited bids. We shouldn’t have such pressure. But now there is risk of load shedding again as we are not getting authorisation to stock pile coal for winter."

Brian Molefe: "When we did get allegations that Tegeta coal was not up to standard, we suspended contract in August in 2016. We had to send coal to South African Bureau of Standards. When it came back, we lifted the suspension. So they didn't get preferential treatment."

30 May 2017

Eskom official: Tegeta’s Brakfontein Colliery coal contract is a 10 year contract from 10 April 2015 and the value is about R4bn. The base price is R13.15 per gigajoule. It is subject to escalations.

30 May 2017

Eskom head of legal Suzanne Daniels: Treasury notes to not apply to Eskom. We do have provisions for unsolicited bids. Coal has specific conditions. Eskom has a system of annual declaration of interest.

30 May 2017

DA Scopa member Tim Brauteseth:

"Treasury note 11 of 2008 deals with unsolicited bids. There was this mandate from before; it was the people before us doing the wrong things. You can’t say you were using a previous mandate. If you concentrated on this, you would know you are wrong.

"Unsolicited bids: this means you use a list of pre-approved suppliers who you know will comply. 2.2E of Treasury note 11: there has to be a declaration of interest. You have to use an unsolicited bid when you have done a feasibility study, is innovative, cost effect – must be a product that is not common. Coal is all over the place.

"You did this to allow Tegeta to sneak in. Why did everyone else (33 other supplies) have to go through the procurement process. Only Tegeta was approved."

"I believe you will not be able to show that."

30 May 2017

Scopa ANC member Vincent Smith: Health and safety checks were not able to occur as the mine was not at the time operating. Why did it happen eight days later?

Ngubane: If there are no operations going on, then there is nothing to inspect?

Solly Tshitangano, chief director of supply chain governance at National Treasury: (Citing Pg 192 (#38) of PWC report) Proof there was non-compliance. Was this recorded in Eskom's books. If not, why not? Why was it not red flagged in their annual reports. Why are they not in the audit. Tegeta should have operated the mine before getting the contract. Eskom still signed the contract on 10 March. That is why Health and Safety was not in place.

Scopa ANC member Vincent Smith: Tegeta was not on their supplier list, even though it was not on their supplier list.

30 May 2017

Scopa ANC member Vincent Smith: Department of Water said (after Tegeta contract was signed) that Tegeta does not comply with conditions with water use licence. How do you have a valid use licence. How is this possible? “The mine does not submit the required documents specified by the water licence,” the report says.

Eskom chair Ben Ngubane: Departments … conduct repeated visits to mining sites to see if people hold mining licence are complying with water use licence. There will be further inspections to see if I am complying.

Eskom CEO Brian Molefe: It is like driving over the speed limit when you have a valid drivers' licence.

Vincent Smith: It doesn't make it right. If the Transport Department doesn't give you a ticket, Parliament will give you a ticket. You can't expect Scopa to accept that.

Molefe: I unreservedly apologise.

30 May 2017

Responding to the report that shows Eskom approached Tegeta Exploration and Resources to supply coal before the company received a water licence for its mining operations, an Eskom official said: At time we signed contract, they had valid water use licence. The coal contract was signed in March 2015. The valid water usage licence was signed in December 2014.

30 May 2017

Eskom CEO Brian Molefe in Parliament on Tuesday:

<p><strong>Eskom CEO Brian Molefe in Parliament on Tuesday:</strong></p><p></p>

30 May 2017

Eskom CEO Brian Molefe: Issue of record management was identified by PWC as a problem. It has since been resolved. It was between 2013 and 2015.

30 May 2017

Eskom CEO Brian Molefe said earlier: We agree with observations (by the PWC report) we have made. Those issues relate to point of where the contract was being negotiated between 2013 and 2015. PWC pointed out these things that you are pointing out (conflict of interest, etc) and we have since fixed them. It is not so that conflict of interests are not done (fixed). We have made sure these things do not get repeated again in Eskom.

30 May 2017

DA MP Natasha Mazzone: An urgent Eskom board meeting was called to approve pre-payment to Tegeta. The same day Tegeta said it was short to buy Optimum. Mathsela Koko lied openly on TV and in Parliament when he refuted that R600m pre-payment was conducted. Why did he lie? 

The chairperson of Scopa has asked the MP to "park it" and that the question will be responded to later, as issues now are to do with PWC 2016 report.

30 May 2017

Ben Ngubane: In 2008, the Eskom board elected a mandate for sole signatuary in terms of emergency coal supplies. There was no need for competitive bidding. Four stations now put us at risk of going into load shedding now because we changed this. The consequences may not be very good for SA.

30 May 2017

A burning issue emanating from the PwC report was the fact that although Eskom invited competitive bids for coal supply, it approached only Tegeta. 

The initial value of the contract was R3.7bn, Solly Tshitangano, chief director of supply chain governance at National Treasury, told Scopa on 10 May.

Eskom later intended on expanding it to a further R2.9bn for the Brakfontein Colliery. “In August 2016, Eskom wanted support from National Treasury (for the expansion), which was not supported,” he said.

FULL STORY

30 May 2017

Scopa ANC Mnyamezeli Booi early slammed Brian Molefe for interrupting Scopa: "He (the Scopa chair) gives you the right to speak. Please respect our chairperson."

30 May 2017

Ben Ngubane: I don’t know how this whole thing (that Eskom is not engaging with Treasury) came about. We are informed by CEO, CFO – every time Treasury raises a query, they answer it. It may take time. We always co-operate. Why would we not co-operate. They could come at sit at Eskom – there is nothing hidden.

ANC MP Kekana: Do you have evidence to prove that the request from Eskom was dealt with by your team with regards to Tegeta?

Ngubane: Can they provide you from NT and the responses that were sent to NT. That would put this in final perspective. There has been a number of engagements. All the issues have been addressed.

30 May 2017

ANC MP Ezekiel Kekana is asking the tough questions. He said allegations from PWC report are that Eskom didn’t follow supply chain management on Tegeta Brakfontein coal mine. Is that correct? Eskom CFO Anoj Singh said legal advice is that they are compliant with PMFA and Treasury procurement policy.

30 May 2017

Brian Molefe speaks

After much debate about whether Eskom CEO Brian Molefe could address Scopa - which is trying to ask specific questions about the Tegeta coal contracts that stem from a PWC report findings - the committee allowed the embattled chief executive to speak:

"The engagement with Tegeta on the Brakfontein Colliery actually started in May 2013. The negotiations went on for two years and a contract was signed in March 2015. I wasn’t (involved signing this).

"Management of Eskom decided we are not happy with control environment with coal contracting space.

"We commissioned an internal audit report through PWC to look at environment in coal contracting space. These four companies were identified. Treasury announced it was also conducting a review of coal.

"In November 2015, PWC made recommendations – 48 control issues and observations that we had to attend to. Those were presented to us and we attended to them.

"The audit risk considered the findings from the PWC report. We started implementing measures. In November 2016, 39 of the 48 issues were addressed.

"We called PWC to come back to see if we had adequately addressed issues. Nine issues had not been addressed. Only three remain.

"We still do not have a report from Treasury. We gave PWC report commissioned by us to correct the mistakes that had been in contracting. It was the report that treasury gave to Scopa. We are still awaiting Treasury’s final report. We do not agree a lot of their findings because they have a misunderstanding with the process.  

"Before I am unceremoniously stopped, the allegation that we didn’t cooperate with Treasury is not true."

30 May 2017

Eskom CEO Brian Molefe: To answer questions without context for us is difficult.
Scopa chairperson Themba Godi: We are asking our own questions.

30 May 2017

30 May 2017

ANC MP Ezekiel Kekana: Why did you commission the PWC report?

Eskom chair Ben Ngubane responds: “Eskom does this from time to time. Our audit committee doesn’t have capacity to do massive audits. Coal prices are the main drivers in the rise in electricity tariffs. They are the biggest cost centre at Eskom.”

30 May 2017

On May 10: Eskom approached Tegeta Exploration and Resources to supply coal before the company received a water licence for its mining operations, according to Solly Tshitangano, chief director of supply chain governance at National Treasury.
Eskom approached Tegeta before it had a water licence, MPs told

30 May 2017

On May 10: Eskom’s contract with Tegeta Exploration and Resources for the supply of coal contained discrepancies, was poorly drafted and was in contravention of supply chain management procedures, according to a report done by PriceWaterhouseCoopers (PwC).

Damning PwC report on Eskom’s Gupta-linked Tegeta deal
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