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Eskom approached Tegeta before it had a water licence, MPs told

May 10 2017 14:00
Liesl Peyper

Cape Town – Eskom approached Tegeta Exploration and Resources to supply coal before the company received a water licence for its mining operations, according to Solly Tshitangano, chief director of supply chain governance at National Treasury.

That was just one of a number of supply chain management procedures that Eskom contravened in its contract with Tegeta Exploration and Resources - a company owned by the Gupta family and President Jacob Zuma's son Duduzane. 

Briefing Members of Parliament who serve on the standing committee on public accounts (Scopa) on Wednesday, Tshitangano presented auditing company PricewaterhouseCoopers’ (PwC's) report on the supply chain management processes involving Eskom’s contract with Tegeta.

READ: Damning PwC report on Gupta-linked Tegeta deal 

Tshitangano said during the briefing that the report questioned the fact that Eskom started engaging Tegeta about a possible contract even before it had received a water licence - a prerequisite according to government’s supply chain management processes. 

He pointed out though that the coal supply agreement with Tegeta was signed on March 10 2015, after the water use licence had been granted.

A burning issue emanating from the PwC report was the fact that although Eskom invited competitive bids for coal supply, it approached only Tegeta. 

The initial value of the contract was R3.7bn, Tshitangano said, and Eskom later intended on expanding it to a further R2.9bn for the Brakfontein Colliery. 

“In August 2016, Eskom wanted support from National Treasury (for the expansion), which was not supported,” he said.

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

Tshitangano pointed out that the review of the contracts Eskom entered into with Tegeta was two “parallel processes”. 
Eskom approached PwC to conduct an investigation in September 2015 and PwC issued its report on November 26 2015.

National Treasury did its own investigation, also starting in 2015. 

The PwC report stated among other things that supply chain management processes were flouted, and that the contract contained discrepancies. In addition, Tegeta started operating before on-site health and safety valuations could take place. The assessments only took place two-and-a-half months after the contract had been signed. 

READ: Eskom hits back at Treasury over coal deals 

Tshitangano told journalist after the briefing that National Treasury received submissions from Eskom and Tegeta on April 21 and that it is still assessing the input before it will release its final findings on the matter.

“But our report looked at the same things as the PwC report did. We looked at demand planning and if there’s budget for it, the bid specification, and whether the bid had been evaluated and adjudicated by a committee. We checked if there had been compliance – from stage one to the last one,” Tshitangano said. 

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