Gupta's Tegeta settles Eskom penalty for R2bn

Photo: Ian Landsberg

Photo: Ian Landsberg

Published Apr 11, 2017

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Johannesburg - Tegeta Exploration & Resources, a

company part-owned by South Africa’s Gupta family, reached an arbitrated

settlement over a fine levied on its Optimum coal mine by power utility Eskom

Holdings.

The R2 billion penalty was originally issued to the mine’s

previous owner, Glencore, which put Optimum into bankruptcy protection in

August 2015 after Eskom refused to amend an unprofitable coal-supply contract

and fined the producer because the fuel didn’t meet

specifications. Tegeta, a company in which both South African President

Jacob Zuma’s son, Duduzane, and members of the Gupta family, who are friends

with the president, have indirect interests, completed the purchase of the mine

last year.

“We are not at liberty to disclose the contents of the

agreement but at least we can say that the matter is now resolved,” Khulu

Phasiwe, a spokesman for the utility, said by phone. “Details cannot be

divulged but the arbitrator has made an award.”

Read also:  Eskom-Tegeta deal in best interests of SA

Glencore spokesman Charles Watenphul declined to comment.

Representatives of Gupta-controlled Oakbay Investments, which owns a stake in

Tegeta, didn’t immediately reply to an email seeking comment.

“At the time of this transaction, it was an insane coal

price contract with an insanely large fine,” Peter Major, director and head of

mining at Cadiz Corporate Solutions, said of the Optimum sale. It’s unlikely

Tegeta would have bought the asset without expecting that the issues would be

resolved, he said.

Peter Grauer, the chairman of Bloomberg LP, is a senior

independent non-executive director at Glencore.

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