Eskom has dismissed allegations from mining and energy advisor Ted Blom that a recent coal supply agreement with Seriti Resources is corrupt.
Last month, Seriti Resources announced that Eskom agreed to amend the existing Duvha coal supply agreement, adjusting the coal price from R280 to R550 per ton from 1 June 2021.
The agreement, which will run until 31 December 2024, includes an annual escalation in line with the producer price index.
This paved the way for Seriti Resources to buy SA Energy Coal from Australia-based South32. SA Energy Coal supplies most of the Duvha power station’s coal requirements, which contributes 2,875MW to the grid.
Commenting on this deal, Blom told Gareth Cliff it is a perpetuation of the corruption which was seen with Eskom and the Gupta family.
He alleges that Eskom CEO Andre de Ruyter “perfected” the corrupt dealings around coal when he signed the new Duvha coal supply agreement.
“This is a corrupt deal because the investors in Seriti are Batho Batho Trust and Thebe Investment, both investment arms of the ANC,” Blom said.
“So now you have the ANC supplying expensive coal to Eskom, and lots of it – 8 million tons a year minimum.”
“That is going on right under our noses, signed off by De Ruyter, with a big smile.”
To understand Blom’s allegations, it is important to look at Seriti Resources’ shareholding.
Seriti is a 91% black-owned and controlled mining company co-owned by four black shareholders – Masimong Group, Thebe Investments, Zico, and Community Investment Holdings (CIH).
Blom’s allegations are based on one of these shareholders, Thebe Investment Corporation. It was founded in 1992 as an ANC investment company with the Batho Batho Trust as its sole shareholder.
The Batho Batho Trust has strong links to the ANC. The initial trustees included ANC heavyweights Nelson Mandela, Walter Sisulu, and Beyers Naude.
Secret ANC documents uncovered in 2010 revealed that the Batho Batho Trust was intended to “receive dividends” for the ANC.
Over the years, Thebe Investment Corporation’s shareholding changed, and the Batho Batho Trust currently only holds 46.79% of the company.
Other shareholders include the employee equity participation scheme, Main Street 1485, which owns 23.54%, and the management equity participation scheme Main Street 1547, which owns 16.66%.
Smaller shareholders include Sanlam Private Equity (9.66%), Umhlomulo Equity Participation (2.44%), and I Share Holders (0.89%).
The coal supply agreement Blom is referring to is closely linked to SA Energy Coal.
In June 2019, SA Energy Coal invoked the hardship clause in the coal supply agreement with Eskom, citing significant financial losses.
These losses, it said, were a consequence of selling coal to Eskom below its cost of mining.
Eskom conducted a review and due diligence on the claim and confirmed that the mine was loss-making, with an increased risk of failure.
Seriti Resources, which was looking to acquire SA Energy Coal at the time, wanted a much higher price for coal from Eskom.
Seriti Resources CEO Mike Teke said in April he wanted the price of coal to Eskom increased from R280 per ton to R550 per ton.
Teke got his wish. In May, Eskom announced it had approved the higher coal price for its Duvha power station with effect from 1 June 2021.
Eskom also gave consent to South32 SA to sell its majority shareholding in SA Energy Coal to Seriti Resources.
Seriti Resources subsequently acquired the coal assets of South32 SA.
Commenting on the deal, Eskom said due to the strategic importance of securing the coal supply for Duvha, they agreed to a modification of the coal supply agreement (CSA) until 31 December 2024.
“The modification of the CSA secures the continued use of SA Energy Coal’s infrastructure at the mine so that alternative coal supplies can be delivered over conveyor into the power station,” it said.
Eskom spokesperson Sikonathi Mantshantsha dismissed Blom’s allegations that the Seriti Resources deal is corrupt.
“This transaction is above board, meets all the legal and regulatory requirements, and has received all the requisite approvals, including that of the National Treasury,” Mantshantsha said.
“Securing the continued supply of coal to the Duvha power stations is in the best interests of Eskom and its customers, the people of South Africa.”
Mantshantsha said Blom is within his rights as a citizen to hold Eskom and its management team accountable.
However, he said, “none of that gives Blom any right to make defamatory accusations about corruption lightly, and without any basis”.
“The individuals so defamed have taken note of Blom’s repeated defamatory statements,” he said.