In the two years that Gupta-owned mines were under the controversial family’s control they under-supplied Eskom by nearly four million tons of coal – with zero consequences.
Instead, Gupta-owned Tegeta Resources and Energy exported the four million tons at an average price of R800 to R1 000 a ton, netting a profit of around R3bn, which was quickly stripped out of the mine and out of the country.
Now, amid a coal shortage and years after the fact, Eskom has imposed a R2.6bn penalty for Tegeta’s “persistent undersupply”, revealing a key failure by the power utility to enforce its coal contracts with the Gupta mines.
Meanwhile, the Guptas and their profits from the coal exports have long since left the country, while millions of South Africans sat at home over the weekend taking turns to be without power for hours on end.
On Monday morning, Eskom announced load shedding would continue this week. It steadfastly maintains this is as a result of unexpected breakdowns and planned maintenance, caused in part by strike action earlier this year.
The looming danger now is coal shortages, which could result in more load shedding. According to Eskom, coal shortages pose a very real risk to contributing to more power constraints in the near future. But it is adamant that current load shedding was brought on by strike action as well as breakdowns and scheduled maintenance at other power stations.
In mid-November 2018, Eskom had stockpiles of less than 20 days at 11 of its 15 coal-fired power stations. Five of these 11 power stations had stockpiles of less than 10 days.
Until earlier this year, Tegeta supplied three of these power stations with coal, including Arnot, Hendrina and Komati.
Hendrina and Komati both relied on Optimum and Koornfontein mines for sustainable coal supply.
They are among those which are severely affected by the coal shortage, which is likely to worsen as the rainy season in Mpumalanga sets in.
Gupta-owned mines, all of which were placed under business rescue in February, under-supplied Eskom between April 2016 and March 2018 nearly every month.
More recently, as a result of the penalties levied by Eskom, business rescue practitioners started cutting off supply altogether.
Internal production figures and Eskom supply figures for Hendrina and Komati, among others, show that it was short-changed by the Gupta mines for two years as a coal shortage crisis loomed on the horizon and Eskom officials did not act.
Eskom must now scramble to procure coal on an emergency basis to make up the shortfall, at prices higher than what the utility can afford in the long run.
But cash-strapped Eskom revealed that its debt had grown from R40bn to R400bn during an announcement of its interim financial results this week. Profits have declined since September 2017 from R8.9bn after tax, to just R1bn.
Eskom chairperson Jabu Mabuza admitted that the task of repaying the debt seemed “impossibly high”.
The cost of load shedding? Between R20bn and R80bn a month.
A News24 investigation has found that Eskom’s current coal crisis was caused largely by Eskom’s failure to enforce its contracts with Tegeta. Eskom agreed that Tegeta’s under-supply contributed to the current coal shortage.
According to internal production figures for Optimum and Koornfontein and the total tonnages of coal delivered by Tegeta and invoiced and paid for by Eskom between April 2016 and March 2018, Optimum, Koornfontein and Brakfontein mines (all owned by Tegeta) collectively under-supplied 3.8 million tons of coal to Hendrina, Komati and Majuba power stations.
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