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Eskom refutes allegations of blindsiding Exxaro in the Arnot coal contract

Posted on Monday, 20th Jun 2016

“Despite a sensationalist headline titled ‘How Eskom bailed out the Guptas’ the City Press newspaper offers no evidence to support its wild allegations,” the state-owned company said in a statement.

In a “desperate effort to substantiate its claims” the newspaper alleged that Eskom had “blindsided” Exxaro Resources by informing them that their contract to supply coal to Arnot power station in Mpumalanga would not be renewed.

The newspaper further stated that Eskom’s decision to delay awarding the long-term contract until it had satisfied itself that all bidders met all the conditions stipulated in the tender was evidence that “Eskom is helping to bail out Tegeta’s new mine”, Eskom said. There have recently been allegations from various quarters that Tegeta Exploration and Resources, which is owned by the Gupta family and President Jacob Zuma’s son Duduzane, is being favoured to supply coal for Eskom power stations.

However, in its statement on Sunday, Eskom insisted that all its contracting relationships were concluded on sound commercial principles and considerations. In addition, all the Tegeta coal contracts with Eskom had been extensively audited by various agencies, including National Treasury. Regarding the Arnot coal supply contract, City Press had “deliberately” downplayed the fact that Exxaro had a 40-year contract with Eskom to supply coal to Arnot power station.

The contract was not cancelled but in fact expired at the end of December last year. In August last year Eskom issued a request for proposals (RFP) and bids from all interested parties were received before the closing date of October 2015. Exxaro had previously been quoted in media reports as saying that it had not submitted its bid, and so did Tegeta. “Any suggestions that Eskom had ‘blindsided’ Exxaro are baseless, malicious, and misleading,” Eskom said. “The reported coal diversions to Arnot power station from the Optimum coal mine [a Tegeta subsidiary] actually refer to the export grade coal that is not suitable for Hendrina power station. Optimum coal mine produces coal for both domestic and export markets. Because of the low commodity demand, Tegeta is selling some of that coal to Arnot. There’s nothing untoward about it.” While the evaluation of the long-term contract was still underway and expected to be completed in September this year, Eskom had in the interim contracted seven suppliers to deliver coal to Arnot until September. “Although the media has generally focused on one supplier, namely Tegeta, Eskom has named the other six suppliers as well, and they are: South32 (Becsa), Exxaro, Glencore, Keaton Mining (Pty) Ltd, Hlagisa Mining, and Umsimbithi Mining.

In April, four of the seven suppliers, namely Exxaro, Hlagisa, Umsimbithi, and Tegeta remained supplying Arnot while the balance of the suppliers indicated were redirected to supply their original designated power stations. “This information was provided to the City Press with details of how much coal each of these companies had supplied to the Arnot power station for the month of April. City Press chose not to use this information because it would stand in the way of their scoop. It is for this reason that we’re considering taking the matter to the Press Ombudsman for adjudication,” Eskom said. 



Posted in Engineering News

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