It was a crusher! Eskom reveals why Guptas got reduced fine on Optimum - as it happened | Fin24
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It was a crusher! Eskom reveals why Guptas got reduced fine on Optimum - as it happened

2017-07-19 11:22

Eskom CFO Anoj Singh has explained why Eskom reduced the R2.1bn fine to Tegeta - a company part owned by the Guptas.


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Last Updated at 12:01
19 Jul 14:31

Public Enterprises Minister Lynne Brown said on Wednesday:

"Eskom is in a better financial position than it was a year and two years ago. I have asked Eskom’s new leadership to roll up its collective sleeves and immediately address three operational matters: contract management, supply chain management, conflicts of interest & other matters that would improve the reputation of the company."

19 Jul 13:44
Eskom acting head of generation Willie Majola: We are not debating plans to shut down coal power stations.

19 Jul 13:40

Former acting Eskom CEO Matshela Koko will face disciplinary action, relating to tenders awarded to Impulse International while his stepdaughter was a director at the firm.

19 Jul 13:39

Eskom reduced a massive R2.1bn fine levied on partly Gupta-owned Tegeta because of a problem with the coal crusher, explained Eskom chief financial officer Anoj Singh on Wednesday.

19 Jul 13:35
Acting Eskom CEO Johnny Dladla said he has never been to Dubai. He says media can check with Home Affairs.

19 Jul 13:32
Former Eskom CEO Brian Molefe got a R9.467m bonus in 2016 and a R8.871m bonus in 2017.

19 Jul 13:30
Eskom financial statement shows that Eskom increased its annual and performance bonuses from R2.089bn in 2016 to R4.236bn in 2017.

19 Jul 13:27

Full presentation by Eskom:

19 Jul 13:26
Eskom chief nuclear officer David Nicholls: We will be able to start nuclear procurement as soon as government gives us the go-ahead.

19 Jul 13:22

No financial crisis at Eskom

Eskom CFO Anjoj Singh: If you look at cash to service costs, you look at operations and EBITA. You can see then that there is profitability. We successfully reduced use of diesel, which was R1bn a month (during load shedding). We also reduced cost of coal. It increased over the past five years. There has been a 100% cost in the price of coal of five years. But the last year, coal costs only increased by 3%. Coal suppliers are hurting in this process. But we still need tariff increases.

The financial results:

19 Jul 13:17

19 Jul 13:15
Acting Eskom CEO Johnny Dladla responds: We are not aware of any victimisation.

19 Jul 13:10
 EE Publishers MD Chris Yelland: Board spokesperson Khulani Qoma reported to board that CFO Anoj Singh should be removed from office. Apparently he is now being victimised. 

19 Jul 13:04
Eskom CFO Anoj Singh: we are not aware of Finance Minister Malusi Gigaba's comments on a soft loan. We have not requested financial assistance for Eskom.  It may be related to Eskom being able to continue signing Power Purchase Agreements with Renewable Energy IPPs. The liquidity is R20bn and Eskom is well within this.

19 Jul 12:59

Acting Eskom CEO Johnny Dladla

19 Jul 12:54
Eskom CFO Anoj Singh: The R1.6bn guarantee was put in place and then it expired, and then it was cancelled.

19 Jul 12:47
Acting Eskom CEO Johnny Dladla: This is why I have asked for a review. The answers given to Parliament's question, "Does Eskom have a contract with Trillian?" The reason given was no. The reason was because the contract was with McKinsey. Who then asked us to pay Trillian R490m. Scope is looking at governance and what value was derived from McKinsey/Trillian. I must be able to answer Parliament.

19 Jul 12:45
Acting Eskom chairperson Zethembe Khoza: The contract was with McKinsey (R900m). They then said we had to pay Trillian directly (this was R490m).

19 Jul 12:35
Eskom executive Thava Govender on the way forward on renewable energy: We must wait for IRP to come out in February 2018. We need to look at scale and pace of renewable roll out.

19 Jul 12:33
CFO Anoj Singh: There are no going concern issues with Eskom.

19 Jul 12:28

Eskom CFO Anoj Singh

19 Jul 12:27

19 Jul 12:27
Acting Eskom CEO Johnny Dladla: I have suspended work with McKinsey and am doing an investigation into this. They were not contracted to Eskom. They got R900m from Eskom. McKinsey is not on the premises as I am talking to you now.

19 Jul 12:22
This was 88.3% discount of the original fine it wanted Glencore was ordered to pay.

19 Jul 12:14

Why Guptas got reduced Optimum fine: It's all about the crusher

Eskom CFO Anoj Singh:

I want to know why the R2.1bn figure was put out in the first place. It was a demand to Optimum at the time. It was accumulated over a period dating back to 2012. The letter of demand was meant to keep the claim alive. The subsequent process was an arbitration process between Eskom and Tegeta to resolve disputes.

This was attempted with the previous owners (Glencore). The evidence has to be provided and legally acceptable. Eskom went into this process with legal opinion saying it should settle this claim. The underlying nature that gave rise to the claim was that Eskom was disputing coal quality from the mine.

The reasons for the poor quality was due to the sampling equipment that was changed in 2010. The change meant it was different than the original sampling equipment. The new design had a crusher, which increased the reject coal put in the plant. It gave a false positive of quantity of reject coal. This was the outcome of investigations over three to four years.

We realised the contract was punitive and poor quality coal was being delivered. That is why the amount ramped up so quickly. When we realised the crusher was the problem. We understood that we had sufficient information that crusher was causing this. That is why we went into settlement. The contract manager said the claim should be R700m. This was then discounted to R255.4m.

19 Jul 11:58

RECAP: Eskom takes action against Koko

Eskom board chairperson Zethembe Khoza said the board has instituted disciplinary action against former acting Eskom CEO Matshela Koko.

He was addressing media at Eskom's financial results presentation in Johannesburg on Wednesday.

Eskom's external auditors, SizweNtsalubaGobodo, reported the state utility to the Independent Regulatory Board of Auditors earlier this month, postponing its original financial results announcement. 

Eskom spokesperson Khulu Phasiwe confirmed that one issue related to Koko and the other to former CEO Brian Molefe.

Koko was placed on special leave in May pending an investigation by Cliffe Dekker Hofmeyr after concerns were raised about an apparent conflict of interest. Eskom awarded tenders worth R1bn to the company Impulse International, but it emerged that Koko’s stepdaughter, Koketso Choma, was a director in Impulse.

That report has not been made public yet, but Fin24 understands Eskom has met with investigators in preparation for steps against Koko.

19 Jul 11:54
Dladla: Unplanned breakdowns declined from 14.9% in 2016 to 9.7% in 2017.

19 Jul 11:53
Eskom's net profit in 2017 declines by 83% from R5bn to R1bn.

19 Jul 11:51

Eskom's financial statement:

19 Jul 11:50

19 Jul 11:48

19 Jul 11:48

19 Jul 11:48
Dladla: Units 4 and 5 at Medupi are synchronised, while unit 1 at Kusile has been synchronised. All units at Ingula are operating.

19 Jul 11:47
Dladla: Eskom achieved a cost saving of R20bn against target of R17bn.

19 Jul 11:46

19 Jul 11:46
Dladla: Eskom's own generation costs decreased by 8.5% to R60bn. Cash generated from operations increased by 23.1% to R46bn.

19 Jul 11:45

Dladla: We have produced positive results. New build is delivering to plan. Financial liquidity has been restored. Surplus capacity has increased and will continue to do Medupi and Kusile come online. We saw a 14.4% increase in EBITA. This was by achieving R38bn against a target of R30bn. There was a 7.9% revenue increase.

19 Jul 11:43
Dladla: We will be releasing R105bn in government guarantees to create better sustainability.

19 Jul 11:42

19 Jul 11:42
Dladla: Eskom ran without a CEO for a month. It didn't mean it wasn't running but it brought uncertainty externally.

19 Jul 11:41

19 Jul 11:40
Dladla: Dealing with perceived corruption will help in our overall performance.

19 Jul 11:39
Dladla: I have requested that decisions are not to be decided outside executive committee meetings. All decisions must be documented. No decision will be taken in some corners or by some individuals, without debate in exco.

19 Jul 11:38
Dladla :My commitment I can comfortably say I will strive to meet expectations of shareholders.

19 Jul 11:38
Acting Eskom CEO Johnny Dladla: Minister Lynne Brown voiced concerns about coal contracts and procurement.

19 Jul 11:37
Khoza: Eskom paid R490m to Trillian and R900m to McKinsey in consulting fees. R1.4bn in contracts will be reviewed.

19 Jul 11:36

19 Jul 11:36

19 Jul 11:35

SizweNtsalubaGobodo's actions in reporting Eskom is no small matter and Fin24 understands that the new board is itching to make a strong stand against corruption at the utility.

Matshela Koko was placed on special leave in May pending an investigation by Cliffe Dekker Hofmeyr after concerns were raised about an apparent conflict of interest. Eskom awarded tenders worth R1bn to the company Impulse International, but it emerged that Koko’s stepdaughter, Koketso Choma, was a director in Impulse.

19 Jul 11:32
Khoza: The board will pursue disciplinary process against Matshela Koko regarding Impulse.

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