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Tears, Tegeta and nuclear dominate Eskom briefing

Nov 03 2016 18:44
Gareth van Zyl

Johannesburg - Drama engulfed state-owned power utility Eskom’s briefing on its financial results for the six months ended September 2016 in Johannesburg on Thursday.

The briefing came a day after the Public Protector’s report on state capture was released, heightening curiosity over how Eskom CEO Brian Molefe would respond.

READ: Public protector report, tears overshadow Eskom results

The state capture report said that almost a billion rands’ worth of prepayment by Eskom to Gupta-owned Tegeta Resources & Energy for a coal tender to supply Arnot Power Station was allegedly used to buy Optimum Coal Mine (OCM) from Glencore and that this may be corrupt, illegal and amount to fruitless and wasteful expenditure.

The Public Protector further said that it “appears that the Board at Eskom was improperly appointed and not in line with the spirit of the King III report on good Corporate Governance”.

Madonsela further explained that “it appears that the conduct of the Eskom board was solely to the benefit of Tegeta in awarding contracts to them and, in doing so, (Eskom) funded the purchase of Optimum Coal Holdings”.

The report went on to indicate that Molefe has links to the Guptas, as investigators found evidence that he made several phone calls to Ajay Gupta.

Cellphone triangulation has also pinpointed Molefe as visiting Saxonwold on a number of occasions - the upmarket Johannesburg area where the Guptas own a home.


An emotional Molefe looks on at Thursday's Eskom briefing. (Gareth van Zyl, Fin24)


Financial performance

All eyes in Eskom’s Megawatt Park then were on Molefe when he took to the stage, but he would only respond to claims in Madonsela’s report much later in the day.

READ: Eskom revenue jumps 10.5% to R97.1bn

Straight off the bat, Molefe decided to rather dive into Eskom’s financial results, which pointed to the company’s revenues increasing by 10.5% year-on-year to R97.1bn for the six months to end-September 2016.

Other highlights included that the company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 23.1% for the period to R31.5bn while plant availability increased from 71.23% to 78.5%.

Cash flow from operating activities rose 38.6% to R31.9bn and liquid assets surged 81.6% to R43.8bn. The company further boasted 15 months without load shedding.

“Eskom is now delivering excess electricity capacity to help stimulate South Africa’s economic growth,” said Eskom CEO Brian Molefe.

Worryingly though, Eskom further said that its municipal arrear debt increased from R6.5bn to R9.2bn.

Nuclear

Eskom and government have come under fire in recent months for seeking to pursue nuclear procurement, an initiative that experts have said would be too expensive for the country’s fiscus.

READ: Molefe: SA needs nuclear to avoid load shedding

Concerns have also existed in the public sphere that the controversial Gupta family is trying to get a slice of South Africa’s nuclear deal.

But Molefe argued that South Africa needs nuclear or it could risk facing future load shedding.

“We expect that by 2026 we will have problems again. Between 2022 and 2026 there will be a declining surplus,” he said.

“That is why we need to start with nuclear procurement now,” he added.

Molefe added that it would take five years to plan the nuclear procurement.

Tegeta and slamming the Public Protector

After sounding off his update on Eskom’s financial results, Molefe then got into the meat of the matter.

“Now there is a matter I wanted to talk about,” Molefe said.

READ: Tearful Molefe slams public protector's Saxonwold cellphone evidence

Before making these comments, Molefe provided his version on what had happened regarding the sale of Glencore’s Optimum mine to Gupta-linked mining company Tegeta.

He accused Glencore of previously trying to sell coal to Eskom at a rate of R570 per tonne, when he said the price should have been below R200.

Molefe said that subsequent to the sale of the mine, Eskom has been paying the cheaper rate. He further added that had he accepted Glencore’s price, the public protector would have scrutinised the deal and labelled it corrupt.

Molefe hinted that his current troubles with the public protector’s report could stem from his refusal to accept Glencore’s price for coal.

"Having said that, I've had time to apply my mind to this matter [of the state capture report]. I think it's all because we refused to give Glencore R570,” he said. “What pains me the most is that I never had the opportunity to explain to Thuli Madonsela what I have explained now,” he added.

Molefe also hit back at Madonsela’s report, criticising her for not allegedly properly consulting him.

"My cellphone reflects that I was in Saxonwold 14 times, close to the head of proverbial goats. My cellphone reflects I was in the area,” said Molefe.

"There's a shebeen there, two streets away from the Gupta(s). I will not admit or deny that I've gone to the shebeen.

"But there is a shebeen there,” Molefe added.

He then alleged that the public protector failed to get sufficient answers from him on the claims levelled against him.

"In my case the public protector has painted me with a corrupt brush,” he said.

The public protector’s report on Wednesday also called for a Commission of Inquiry into state capture, a matter that could take six months and put main actors in front of South African television screens.

"During that period my children will be taunted at school... when there is no basis,” Molefe added.

A teary-eyed Brian Molefe then broke down emotionally and briefly escaped backstage at Eskom’s Megawatt Park Franklin Auditorium before returning again to answer questions from journalists.

Media were requested to only ask questions about Eskom’s financial statements, but this request came as Eskom chair Dr Ben Ngubane had a word of warning.

“If we lose Brian, she [Thuli Madonsela] will take the blame," said Ngubane.

Read Fin24's top stories trending on Twitter:

tegeta  |  eskom  |  brian molefe  |  nuclear
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