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Tegeta-Optimum merger approved with condition

Feb 22 2016 20:41
Dane McDonald and Matthew le Cordeur

Cape Town – The Competition Tribunal on Monday approved the controversial merger between the Tegeta Exploration and Resources, whose shareholders include President Jacob Zuma’s son and the Gupta family, and Optimum Coal Mine.

Tegeta agreed to buy Optimum for R2.15bn in December 2015 after Glencore had placed the mine under administration because it said it couldn’t make a profit because of the terms of a coal supply deal with Eskom.  

According to a Bloomberg report Tegeta is 64% owned by by Mabengela Investments, which in turn is 45% owned by Duduzane Zuma. Tegeta is a joint venture between the latter and the Guptas’ Oakbay Investments.

The merger was approved with a condition that prohibited “merger specific retrenchments” and imposed a set of “monitoring conditions” on the parties.

Aside from employment concerns the Commission found that the merger was unlikely to lessen competition in the market “as they were relatively small players when compared with rivals such as Anglo American and Exxaro Coal”.

Tegeta will supply coal to three Eskom power plants: Hendrina, Komati and Majuba.

Treasury to probe Eskom coal contracts

The Optimum Coal Mine sale has thrust Eskom’s coal contracts into the spotlight, with the Sunday Times reporting that Finance Minister Pravin Gordhan “…will direct the National Treasury to scrutinise all coal-supply contracts awarded by Eskom.”

Eskom CEO Brian Molefe said while he was surprised with Treasury’s investigation of its coal supply contracts, the power utility will cooperate, he said on Monday.

Molefe's surprise comes as Eskom has already started this process with Treasury, Eskom said.

It submitted contracts to Treasury for coal and diesel including a register of payments made to various suppliers in 2015 after a request from the department on 25 June 2015, Eskom said.

It said Treasury visited Eskom’s head office on 23 July 2015 to clarify certain information they needed, and to also get additional documents which could not be sent electronically because of their size.

Treasury’s last request for additional information from Eskom was on 21 October 2015, which was duly submitted, said Eskom.

Eskom said it has demonstrated a serious commitment to deal with corruption and maladministration issues.

All eyes on the Guptas

The Guptas are increasingly making headlines due to deals that are linked to President Jacob Zuma’s son Duduzane and their perceived influence over the president.

Media commentators have questioned their alleged influence over cabinet appointees Mosebenzi Zwane (mines minister) and Des van Rooyen (Finance and Cogta), their sponsorship of the SABC breakfast show through the New Age and recent coal deals.

It was reported this weekend that Gordhan would not partake in the New Age Breakfast show on SABC after his budget speech this Thursday.

The New Age is a newspaper owned by the Guptas, which does not share its circulation publicly, but is circulated in government departments and state-owned entities.

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