'Nothing sinister' about refusal to extend Tegeta contract - Eskom

Cape Town - There is nothing sinister about the fact that National Treasury rejected Eskom’s request to extend a contract of Tegeta to supply coal to the power utility, Eskom spokesperson Khulu Phasiwe told Fin24.

“Eskom’s application for the contract extension was a temporary arrangement,” he added, “as the contracts of the other coal suppliers will be coming to an end by the end of September.”

The coal supply contracts of four companies – Tegeta, Hlagisa, Umsimbithi and Exxaro – all expire at the end of this month and Eskom approached them for a short-term extension. “Tegeta was first out of the blocks,” Phasiwe explained.

The amaBhungane Centre for Investigative Journalism reported on Thursday that National Treasury had denied Eskom’s request to have Tegeta’s contract extended. The extension was to the value of R855m.

The controversial Gupta family, who have strong links with President Jacob Zuma as well as his son Duduzane and Gupta business associate Salim Essa, own the majority of Tegeta.

Phasiwe pointed out that Tegeta not only supplied coal to the Arnot power station, but also to Komati in Mpumalanga. According to Phasiwe, Treasury granted Eskom’s request to extend Tegeta’s contract to supply coal to Komati. “The incorrect impression was created by saying Treasury rejected our application just because it was Tegeta.”

According to amaBhungane, Eskom previously loaded the same contract with a R586m extension that Eskom controversially paid upfront.

Finance Minister Pravin Gordhan had raised concerns about Eskom’s agreement with Tegeta, saying Eskom chief executive Brian Molefe wrote to Treasury three weeks ago requesting permission to extend the contract once more, this time by another R855m.

WATCH: 5 Questions for Eskom CEO Brian Molefe

The refusal to extend Tegeta's contract comes as Eskom handed over a document to Treasury on Tuesday evening, after the ministry said Eskom failed to cooperate with the process of reviewing the power utility’s coal contracts.

READ: Ngubane: Campaign to kill trust in Eskom

“To date, not only has Eskom failed to honour its undertaking to submit comments to Treasury’s report, but it chose to ignore correspondence and put (up) all forms of hindrances,” National Treasury said in a statement on Monday.

The review relates to Eskom’s coal contracts with Gupta-owned Tegeta, a company that has been accused of state capture due to the Guptas’ close links to President Jacob Zuma.

Ngubane said Eskom had given all the information National Treasury wanted. “Then they gave us a 172-page document and stipulated it be approved by the board,” he said. “Our next meeting is on September 21.”

CEO Brian Molefe said Eskom was simply trying to comply with Treasury’s instructions to ensure the report was approved by the board, which next meets on September 21. They sent it to Treasury without board approval.

READ: Why all hell broke loose with Treasury - Molefe

On Wednesday, Eskom confirmed that Treasury had denied its request, and that the Tegeta contract had not been extended.