Brown said she had referred the Tegeta coal deal and all Eskom procurement from 2007 onwards to the SIU as the Eskom board and executives faced a tough grilling from the standing committee on public accounts (Scopa).
MPs accused Eskom of not following required laws and procurement procedures in awarding Tegeta a contract of R4billion at Brakfontein mine in Mpumalanga.
Scopa said the PricewaterhouseCoopers report, which was commissioned by Eskom, found that procurement procedures were not followed.
The MPs also charged that the transaction flouted the National Treasury regulations, Public Finance Management Act and Eskom’s own supply chain management procedures.
Eskom said despite this being a non-competitive bid, it was not the first time the power utility had done this.
Chief executive Brian Molefe, who made an appearance in Scopa despite questions being asked on his position, said the PwC report had led to some of the problems being addressed at Eskom.
Molefe said the quality of the coal was was approved by the South African Bureau of Standards (SABS) following complaints.
Tim Brauteseth of the DA said Eskom had flouted National Treasury regulations by engaging in unsolicited bidding with Tegeta. He said there was also no declaration of interests from some of the Eskom board members.
Vincent Smith of the ANC said Eskom did not conduct health and safety evaluation before it signed the contract with Tegeta. “The first health and safety evaluation was conducted eight days after the contract was signed. On-site visit was conducted two-and-a-half months after the contract was signed,” he said.
Some MPs said the contract was done hastily to ensure Tegeta got the contract while others insisted that it would have to be cancelled as directed by the PwC report.
They said the findings were clear that Eskom had flouted the laws and the contract was invalid. But Eskom said the National Treasury regulations of 2008 did not apply to Eskom at the time. It however admitted that declaration of interests was not done during this transaction.
Molefe said the contract was negotiated for two years before Eskom could sign the contract with Tegeta. The negotiations started in 2013 and the contract was signed in March 2015.
Molefe also defended non-competitive bidding by Eskom saying it was allowed within the company’s rules. “The rules of Eskom allowed for the procurement of coal for emergency basis without going through tender processes. Eskom has been doing this even when there is no emergency,” said Molefe.
Eskom board chairperson Ben Ngubane said this was precipitated by load-shedding in 2008 when they were forced to get into unsolicited bidding to procure coal on an emergency basis.
Molefe also defended the coal quality of Tegeta and said it complied with SABS requirements. “When we got information that Tegeta coal was not up to standard we suspended the Tegeta contract. When we got the coal back from SABS we lifted the suspension of Tegeta,” he said.
Brown said the SIU probe into Eskom’s procurement over the last 10 years would begin soon.