QUICK TAKE: 10 things you should know about Eskom's Tegeta contract


The report by Parliament’s portfolio committee on public enterprises on its inquiry into Eskom painted a bleak picture of a state-owned entity where governance structures were allowed to disintegrate, threatening its viability.

The questionable 2016 contract with formerly Gupta-owned Tegeta Exploration and Resources, which ran into operational challenges, was a key subject of the report.

Supply constraints experienced by Tegeta have been blamed, in part, for the current low coal stock piles at Eskom power stations, contributing in turn to load shedding.

Below are 10 key takeaways from the inquiry report (which you can read in full here) regarding how the controversial Tegeta contract was handled by Eskom executives.

1. According to the report, there was evidence of undue preferential treatment of Tegeta, with respect to operational licensing and procurement terms.

2. At the centre of the controversy was a questionable "pre-payment" for coal from the Optimum Coal Mine, made by Eskom in favour of Tegeta.

3. The purchase of Optimum Coal Holdings shares by Tegeta would likely not have been possible without Eskom’s pre-payment.

4. Eskom’s guarantee of R1.6bn to Tegeta, facilitated by chief financial officer Anoj Singh and approved by the board, was described as questionable and potentially unlawful.

5. Eskom executives and the board were described as acting in an unusual and potentially improper way in their dealings with Tegeta. The role of the Ministry of Mineral Resources under Mosebenzi Zwane, alleged to have flown to Switzerland to facilitate the sale of Optimum by Glencore, is described as "unusual and potentially improper".

6. The minister's facilitation of the approval of the transfer of Optimum Coal Holdings to Tegeta was done in an unusually short period of time.

7. Similarly, the speed with which Tegeta received the necessary approvals from the Competition Tribunal of South Africa (two months) and the Department of Mineral Resources (3.5 months) was noted as unusual.

8. It was unclear why Eskom acted against its financial interest, allowing Tegeta to extract a profit by selling coal to Eskom at a higher price than Tegeta was able to obtain such coal from Optimum Coal Mine.

9. It remained unclear why law enforcement agencies seemed to have delayed conducting investigations or instituting action in relation to widespread allegations of criminal conduct by individuals at Eskom, Tegeta and their associates.

10. A set of executives and senior staff appeared to have been part of a network that actively participated in irregular, corrupt and/or otherwise unlawful contracts and processes at Eskom, the report noted.

The report recommended that former Eskom board chairs Zola Tsotsi, Ben Ngubane, Matshela Koko, former interim board chair Zethembe Khoza, former CEO Brian Molefe, former CFO Anoj Singh, former acting CEO Sean Maritz and former board members Pat Naidoo and Devapushpum Naidoo should be requested to appear before the judicial commission of inquiry into state capture chaired by Deputy Chief Justice Raymond Zondo.

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