'Mafia' groups are selling Eskom junk coal, Gordhan says

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Public Enterprises Minister Pravin Gordhan. Picture by Jeffrey Abrahams
Public Enterprises Minister Pravin Gordhan. Picture by Jeffrey Abrahams

The authorities are set to tackle “mafia” groups that have compromised Eskom’s operations and contributed to nationwide blackouts, Public Enterprises Minister Pravin Gordhan said.

The state-owned company has called for more arrests to apprehend people suspected of corruption involving the state-owned company. The police on Tuesday apprehended two former employees of Swiss industrial firm ABB Ltd. and their wives for alleged graft linked to more than R500 million of contracts with Eskom. 

“You’ll begin to see more and more visibly push back in this particular regard from the various authorities,” Gordhan said in an interview at Bloomberg’s Johannesburg office.

Law-enforcement agencies have identified a "coal mafia" in the north-eastern Mpumalanga province - home to one of the world’s biggest fossil-fuel-burning power plants - that has infiltrated the structures of legitimate companies and set up parallel operations in illegal mining and coal supplies that have thrived, Gordhan said. That’s resulted in Eskom receiving sub-standard loads of the fuel, including pieces of metal and rubble that damage its plants, he said.

The authorities are also investigating cases in which Eskom is billed for thousands of liters of fuel oil, which is used to run power plants, that aren’t delivered. And probes are underway into instances in which employees are suspected of operating in cahoots with companies to ensure that plant operations are disrupted, to secure a constant flow of work for contractors, he said.   

The damage caused by the corrupt practices are among the factors that last month drove Eskom to deepen power cuts to the worst level in almost two years, Gordhan said. The utility, responsible for most of South Africa’s power, has implemented nationwide outages in all but one month this year and has so far instituted rolling blackouts for 24 consecutive days.

Eskom didn’t immediately respond to an emailed request for comment. 

- With assistance from Paul Burkhardt.


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