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Tegeta report: Eskom rebukes Treasury

Energy
Johannesburg - Eskom has hit back at the National Treasury after it released a draft report on the power utility’s contract with Tegeta Exploration and Resources, saying the report had “patent errors of fact”.

In its response, which Business Report has seen, Eskom questioned the Treasury’s understanding of the information it had provided to the department.

The power utility said the Treasury had not sought a meeting with its primary energy officials for “clarity and context on the information (and) documentation provided”.

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“Eskom believes that had the Treasury constructively engaged Eskom during the review process, certain of its conclusions reached in the Compliance Report, which are patently wrong, could have been avoided,” Eskom said in the letter dated Friday.

It said the Treasury’s assertion that Eskom had overpaid for coal demonstrated lack of understanding and appreciation of coal-supply agreement. “Any payment to Tegeta was in accordance with the coal-supply agreement,” Eskom said.

It said the Treasury could review the coal-supply agreements of other suppliers such as Just Coal and Shanduka Coal, “which will indicate that there is nothing untoward about the terms of conditions in the Tegeta coal-supply agreement”.

The rebuttal comes as tensions and public spats escalate between Eskom and the Treasury over the review of processes followed in the appointment of Tegeta. The department last year publicly lambasted Eskom for not co-operating with its investigations.

In the document, titled “Report on the Verification of Compliance with SCM Framework - Appointment of Tegeta Exploration and Resources”, the Treasury alleged that Eskom had given Tegeta preferential treatment. It also regarded as fruitless and wasteful expenditure payments made to Tegeta for coal from Brakfontein and Optimum mines.

Read also: Eskom, Tegeta: details sought

The Treasury circulated the draft report to Eskom, Tegeta, Parliament’s standing committee on public accounts, the auditor-general and the public protector.

The Gupta family and President Jacob Zuma’s son Duduzane own Tegeta.

Eskom said the Treasury should not refer to payments to Tegeta as fruitless and wasteful expenditure, charging that it did not understand that the price was calculated on a monthly basis.

Eskom said the Treasury did not have enough information and documents to make findings on the controversial advance payments the public utility made to Tegeta. The advance payment had been dealt with in the former public protector’s State of Capture report, Eskom said.

The State of Capture report raised concerns about Eskom’s dealings with Tegeta. In the aftermath of the release of the report, former Eskom chief executive Brian Molefe resigned. The report had questioned Molefe’s proximity to the Gupta family.

Eskom also denied that the Tegeta coal contract did not come into effect because Tegeta had not conducted a combustion test prior to March 31, 2015.

“Eskom does not understand on what basis the Treasury comes to this conclusion. Eskom conducted the combustion test for the Majuba Power Station and a copy of the report in respect of the combustion test was made available to Treasury during the review process. “Tegeta provided Eskom with the required samples to conduct the combustion test,” Eskom said.

Read also: Eskom should toe the line, Gigaba says

In the letter to acting chief procurement officer, Schalk Human, Eskom stopped short of labelling the Treasury’s report premature, saying the department released the report even though Eskom was still collating information that had been requested on March 23.

It said the Treasury did not have enough information to make a finding on the coal supply from Optimum Coal to Hendrina Power Station and the advance payment of R587 million from Eskom to Tegeta.

Eskom said it was surprised the Treasury had released the report, despite an undertaking in late January by axed finance minister Pravin Gordhan it would be given to Eskom for comments before finalisation.

BUSINESS REPORT

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