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(Photo by Gallo Images/City Press/Muntu Vilakazi)

Guptas cashing in on R564 million Eskom “bailout.” Report

Well would you look at that. A coal mining company owned by the Guptas and Zuma’s son Duduzane has been awarded a fat contract, saving it from business rescue.

Gupta UAE

(Photo by Gallo Images/City Press/Muntu Vilakazi)

City Press reports that Optimim Coal – co-owned by none other than el presidente’s son Duduzane Zuma and his besties the Guptas – was quietly awarded a R564 million contract by Eskom, just as the company was looking like it would have to shut its doors.

Earlier this year Tegeta Exploration and Resources – a subsidiary of the Guptas’ Oakbay Investments – acquired Optimum Coal and shortly after Eskom awarded the struggling Optimum Coal the multi-million Rand deal.

 “In March, the business rescue practitioners of Optimum Coal reported that the mine was projected to lose R100 million a month,” City Press reports.

Thanks to Eskom, however, Optimum is projected to recover almost completely within the next three months. Eskom, of course, has defended the contract with Optimum Coal.

Board Chairman Ben Ngubane has said that Tegeta – owned by Oakbay (29%), Duduzane Zuma (28.5%) and three other folks – has saved Eskom billions on Rand and on Saturday Ngubane rubbished claims by the media that Eskom showed favouritism towards Tegeta for its ties to none other than president Zuma.

 “Eskom rejects any insinuation of favouritism towards suppliers such as Tegeta who are willing to step in to avert the coal supply crisis and allow Eskom to meet the winter demand.”

“Eskom stands firm by its process undertaken to conclude extensions of its coal supply agreements with its suppliers. I am satisfied that due process has been followed and we can be proud of the savings achieved by the executive team to date,” Ngubane said.

He added that the utility regularly reaches out to coal suppliers about demand and requirements and volumes needed vary from time to time and contracts are signed based on that. He also added that Tegeta supplies less that 5% of Eskom’s total coal.

“The coal supply market is in need of major transformation as it has and continues to benefit a small monopoly of companies. This phenomenon is now under review as requested by the Minister of Public Enterprises in her recent budget speech and Eskom is determined to ensure that emerging black miners also benefit from Eskom’s buying power,” Ngubane said.

Ngubane added that Eskom’s supply mix was updated in April – the same time Tegeta bought Optimum Coal –, leaving the utility with a 2.1 billion tonne shortfall.

 “It must be noted that the Exxaro Arnot Colliery had a contract with Eskom to supply coal to Arnot Power Station for 40 years. This contract expired in December 2015. The cost of coal at date of expiry was R1,132/ton.”

“I am advised that Tegeta now supplies Arnot at an average price of R500/ton. The unit cost of coal supplied under this contract is at a discounted rate of 3%, resulting in a further saving to Eskom of billions of rand in an eight month period and ultimately, the consumer,” Ngubane said.

He added that Tegeta was simply picked as it was able to supply Eskom with what it needed at the time.

 “You will recall that this company also stepped in to avert a crisis at the Hendrina Power Station by offering to take the Optimum Coal Mine out of business rescue from Glencore thereby saving thousands of jobs and continuing the supply to Eskom.”