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Eskom hits back at Gupta-owned Optimum coal theories

Apr 18 2016 07:07

Cape Town – Eskom said on Sunday that it will not increase the price it pays for Gupta-owned Optimum's coal in order to promote black economic empowerment.

Eskom spokesperson Khulu Phasiwe was commenting on a Netwerk24 story on Sunday that tried to unpack why the Guptas – through Oakbay Investments and Tegeta Exploration and Resources - would want to buy an unprofitable coal mine, steeped in debt and fines owed to Eskom.

READ: How Guptas, Duduzane Zuma could score from coal deal

“Eskom has said in (sic) more than one occasion that it would not renegotiate the current Optimum contract regardless of who the shareholders are,” Phasiwe said.

“Eskom emphasised that it didn’t matter who Glencore and/or the business rescuers would sell the mine to, all we were interested in was to ensure that:

- the contract remains valid until 2018;
- the price per tonne remains R150;
- the agreed volumes or quantity of coal per annum remain unchanged;
- the agreed quality of coal remains unchanged; and lastly,
- the R2bn penalty imposed on Optimum will remain in force and payable.

“None of these conditions have changed,” he said. “There are no plans ‘to increase the price Eskom pays for Optimum's coal from R150 per tonne to at least R225 per tonne in order to promote black economic empowerment’.”

Netwerk24 asked whether the inclusion of President Jacob Zuma's son Duduzana, who became the largest shareholder in Tegeta two weeks before the sale transaction was signed in December last year, would boost the price of coal.  

“This means ... Tegeta became a company under black control,” it said. “Eskom pays a premium of 50% on its purchases to black economic empowerment companies.”

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Last week, Tegeta Exploration and Resources paid the R2.15bn, which was owed in order to have the mine transferred to them.

At the same time Glencore paid R450m to the business rescuers Piers Marsden and Peter van den Steen.

This meant the bank debt of Optimum Holdings has been paid and Tegeta becomes the owner thereof.

City Press on Sunday also questioned how Tegeta plans to turn around a mine losing on average R108m a month.

Even the business-rescue practitioners appear unconvinced, Netwerk24 explained.

Although Optimum Coal Holdings will be taken out of business rescue, Tegeta appears to have failed to provide a convincing turnaround strategy for Optimum Coal Mine, which will remain under the stewardship of the business-rescue practitioners for the foreseeable future.

“Optimum Coal Mine will operate as a going concern under the operational control of the business-rescue practitioners until the practitioners are satisfied Optimum Coal Mine is no longer financially distressed,” the rescue practitioners said on Thursday.

City Press understands that no deadline has been set for coming up with a viable plan for the mine.

Oakbay Investments CEO Nazeem Howa said: “Tegeta’s immediate priority for Optimum is to increase production levels at the mine ... A core element of Oakbay’s business philosophy is to elicit more efficient levels of performance via its proven turnaround skills, which will immediately be put to work at Optimum.”

READ: Oakbay loses R6bn in value

Meanwhile, City Press also reported that the Guptas’ Oakbay Resources and Energy lost as much as R6.6bn since the day before the company announced that its former family representatives had resigned amid a mass exodus by local financial institutions.

Since last Thursday, Oakbay’s JSE share price has fallen by 31%. It was trading at R18.50 on Friday, which valued the company at R14.8bn.

This decline comes amid a crisis at the company following the loss of its auditor KMPG, bankers Absa and FNB, sponsor Sasfin and the resignation of Oakbay’s CEO and chairperson.


optimum  |  eskom  |  oakbay
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