Court declares major Gupta-era coal contract with Eskom invalid

An electricity pylon (iStock).
An electricity pylon (iStock).

The Special Investigations Unit has secured a high court order setting aside a contract worth R3.7bn between the formerly Gupta-owned mining group Tegeta Exploration & Resources and state power utility Eskom, according to the Ministry of Justice and Correctional Services.

The SIU is an investigative body that conducts investigations at the request of the president.

The agreement entered into in March 2015 for the supply of coal to Majuba power station for a decade was declared unlawful, invalid and of no legal force, said the ministry. At the time Tegeta was owned by the Gupta family. The company is currently in business rescue.

Minister of Justice and Correctional Services, Ronald Lamola, said in a statement on Friday that the fight against corruption would "not be won without action by law enforcement agencies".

"Maladministration often lays the basis for corruption to thrive at a great expense to the fiscus and ultimately service delivery and we are encouraged when efforts to recover resources of the people of South Africa are intensified and yield results," said Lamola. 

The ministry said the court order further grants the SIU leave to institute legal proceedings. 

Tegeta's relationship with Eskom has been probed at the ongoing judicial commission of inquiry into state capture.

In March 2019 the commission heard that Eskom's board tender committee in April 2016 resolved to make a R659m prepayment to Tegeta before the mining company's own board signed off on approaching the power utility or a contract was in place. 

An Eskom official was instructed to complete the payment within just 1 hour and 22 minutes, which he described as "startling". But he went along with it as the instruction came from the top of the company he said at the time. 

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