Former Eskom chairperson Zola Tsotsi bent the utility’s rules to award a R400 million-a-year coal supply contract to the government-connected Gupta family. This is according to a report in the Sunday Times.
The Sunday Times reported that Tsotsi, who quit as Eskom boss on 31 March “in the interests of unity”, awarded the coal deal to Gupta mine Brakfontein in Mpumalanga – despite the mine not having a full water licence.
According to the paper, Tsotsi also pressured Eskom to sign a coal supply deal worth R500 million a year with another Gupta mine, Vierfontein.
The news of the coal deals comes after a week of load shedding by Eskom owing to its inability to meet South Africa’s power needs, and energy experts warning of disastrous effects due to the implementation of lucrative coal and diesel supply deals which benefit politically-connected groups.
The report further states that Tsotsi exceeded his powers when he personally signed an acknowledgement of debt to Japanese transformer maker Sumitomo – a mistake which could cost Eskom R300 million.
“At the heart of these contracts lie powerful political and business interests, especially relating to the Gupta family,” said an Eskom source.
Another source said Tsotsi “consistently overstepped his boundaries” to act at the bidding of “the Guptas and other well-known and politically powerful interests interested in Eskom’s contracts”.
Companies who supply coal to Eskom must meet strict coal quality and water licensing criteria, which the Gupta mines do not, according to the report.
According to sources, Eskom previously rejected a coal deal with Brakfontein because it produced poor-quality coal, and a bid in 2012 by the mine was turned down because it did not comply with various laws.
Eskom stated in a 2014 integrated report that poor-quality coal results in increased emissions, coal ash, and wear on power plants.
Tsotsi was involved in the suspension of four Eskom executives, including CEO Tshediso Matona, in March, after which he quit as a motion of no confidence in him was debated by the board.
The full report is available in the Sunday Times of 19 April 2015.