Eskom tender documents show that the same businessman owned stakes in two different oil suppliers, reports the Sunday Times.
FFS Refiners and Kepu Trading are part-owned by businessman Mkhuseli Faku, and earned nearly R5 billion from Eskom between October 2018 and March 2021.
An Eskom insider told Sunday Times that this would usually automatically disqualify both companies from bidding, but Faku says that assertions that the companies colluded are slanderous.
“There is no law prohibiting the ownership of shares in various companies or serving as a director on the boards of various companies,” said Faku.
“This is true even for companies that are competitors or potential competitors of one another as long as adequate protection mechanisms are in place to safeguard the exchange of information, including competitively sensitive information.”
Faku said he had not declared his interest in FFS to Eskom because it had not been asked of him when Eskom approached Kepu Trading for emergency oil last year.
Eskom spokesperson Sikonathi Mantshantsha said FFS Refiners CEO Andrew Canning reported the matter to Eskom two weeks ago, and told Eskom the company had only become aware of Faku’s relationship with Kepu Trading in July.
“Proper disclosure is key in Eskom’s procurement guidelines, and all the prospective tenderers are aware of this key governance principle,” said Mantshantsha.
“Given the new developments, Eskom will conduct its own investigations into all the aspects of this matter and take appropriate action against any party that may have contravened any of the governance principles.”
Mining companies plan a future without Eskom
Eskom’s woes extend far beyond dodgy tenders, which is why mining companies are considering spending up to R40 billion to develop power generation capacity that would reduce their reliance on Eskom.
This follows President Cyril Ramaphosa’s announcement earlier this year that plants providing up to 100MW of power capacity can be constructed without generation licenses.
Roger Baxter, CEO of Minerals Council South Africa, said the mining industry could construct up to 2,000MW of power generation capacity to keep their systems running.
“This would be a game-changer for South Africa going forward,” said Baxter in a webinar earlier this month.
Mining companies also need to pay more attention to climate issues, meaning the construction of non-coal power plants is even more important to them.
“Unless South Africa changes its energy mix, it’s not going to sell its products,” said Sibanye Stillwater CEO Neal Froneman.
“The country has no option. It will be excluded from the rest of the world if we don’t transition in the right way.”
Coal plants are not just bad for the environment, however. South Africa’s older coal-powered stations are at risk of crippling issues that could exacerbate load-shedding.
For example, one of Eskom’s largest power plants, Kendal, suffered a major fire earlier this month.
“Upon initial investigation, it was determined that the generator transformer had caught fire,” explained Eskom.
“The fire damaged the cables to the main cooling water system on the west side of the power station.”
Situations like these place an even greater load on the national grid than is already the case.