File picture: Reuters/ Mike Hutchings
File picture: Reuters/ Mike Hutchings

Eskom misled Treasury to extend Tegeta contract, inquiry hears

By Zintle Mahlati Time of article published Mar 11, 2019

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Johannesburg - The Zondo commission has heard how Eskom mislead National Treasury in order to extend its coal supply with Gupta-linked Tegeta which cost an additional R2.9 billion. 

Gert Opperman, a coal supply manager at Eskom, confirmed to the commission that Treasury was misled when Eskom applied for alteration of a coal supply contract it had with Tegeta. 

Advocate Kate Hofmyer, for the commission's legal team, read out a report which found that there were issues with the coal supplied by Tegeta's Brakfontein coal mine. 

The report found that the sulphur levels contained in the coal were of concern. The report advised that Eskom should not accept coal until more tests were done. 

After this report, Eskom applied for an extension for the amounts of coal supplied. The cost related to this contract would be R2.9 billion. 

Opperman told the commission that he was not aware of Eskom's request to Treasury. In the submission to Treasury, Eskom said the coal quality met the standard requirements. Opperman said this assessment was not true. 

Earlier, Opperman told the commission that he was called by former Eskom executive Matshela Koko who pressured him to accept substandard coal supplied from Tegeta's Brakfontein mine. 

 Opperman is a coal supply manager at the power utility and he was in charge of the Brakfontein contract. 

Opperman said there was pressure from Tegeta's representatives in 2015, through a series of emails, that he send out a stockpile on the coal to be received from the Brakfontein mine. 

He told the commission that he made it clear to Tegeta that he would not accept the stock as it did not meet the standards. 

He said after that he received a call from Koko telling him to accept the coal from Brakfontein and engage with Majuba power station on using the stock. 

Opperman consulted with his boss who also agreed that poor coal quality could not be accepted. He said he did not ask Koko why the latter wanted him to approve the use of poor coal for Majuba power station. After Koko's insistence, Majuba with the support of Opperman decided to accept the poor coal stockpile. 

"I received a phone call from Mr Koko asking me that I must please engage the Majuba power station to accept this product. I engaged by senior Mr Ncube on what I must I do because this was an instruction that I must perform outside of the mandate of the contract. He encouraged me to engage the power station. I drafted a follow-up email that would support the dispatch of coal from Brakfontein to Majuba. Majuba power station responded agreeing that stockpile could be dispatched," said Opperman.

The commission has also heard testimony from former Eskom employee Johan Bester. He told the inquiry about Eskom's negotiations over the Brakfrontein contract. 

Bester said Tegeta had offered to supply coal for five years but later requested a 10-year contract. He said the financial assessment done on Tegeta showed that Eskom should not enter into an agreement with the company. 

Even with the advice, Eskom signed a ten year deal with Tegeta. Bester said he was told by a Mr Mboweni that if he did not sign the contract he would get some to do so. Bester expressed his concerns about the rush to sign the contract with Tegeta. 

The commission resumes on Tuesday. 

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