The Zondo commission has heard how Tegeta only paid R254 million of the R2.1 billion coal penalty which it was fined by Eskom for poor coal quality. Picture: Nokuthula Mbatha/African News Agency/ANA

Johannesburg - The Zondo commission has heard how Gupta-owned Tegeta only paid R254 million of the R2.1 billion coal penalty which it was fined by Eskom for poor coal quality. 

Snehal Nagar, an Eskom employee for its primary division, told the commission that he was asked to sign off on a memo which would drastically reduce the fine imposed on Tegeta owned Optimum Coal Mine for poor coal quality. 

The fines were originally charged when Optimum was owned by mining giant Glencore. But, in late 2015 Glencore sold the mine to Gupta-owned Tegeta. While inheriting all of the assets owned by Glencore's Optimum Holdings, Tegeta also inherited the huge fines that Eskom had charged Glencore. 

The fines amounted to about R2.1 billion. 

Nagar said he received a memo from former Eskom head of legal Susan Daniels who insisted that the fine amount is recalculated as Eskom was intent on settling with Tegeta regarding the fine amount. 

Nagar said he had some reservations about signing the memo as he had agreed that the original amount of the fine of R2.1 billion was correct. He took the commission through spreadsheets explaining how the calculations were decided. 

He said he received another email communication from Daniels who told him that it was settled that the amount that should be paid is R254 million. Nagar said that was the amount that was paid. 

It is still unclear why some Eskom executives had worked to decrease the fine payment. 

Earlier, Nagar had told the inquiry how he and his colleagues had helped "fool the system" at Eskom in order to quickly prepay R659 million to Gupta owned Tegeta for coal it had yet to deliver. 

Nagar said on April 13, 2016, while he was on his way to Pretoria he got a call from a Maya Naidoo, general manager at Eskom finance division. Naidoo instructed Nagar to ensure that an R659 million payment was made within two to three hours. 

"On April 13 I received a call from Miss Naidoo. She instructed us to make a payment that was approved by the tender board committee. I told her we need the supporting documents and for the transaction. I also told her that other structures need to be on board to implement the payment," he said. Naidoo then told Nagar that she had already made sure that their structures were in place. 

"What the team did was they amended a purchase order of the Brakfontein contract to reflect an order of R659m. The payment to Tegeta was effected on the Brakfontein contract," Nagar said.

Nagar admitted that it was unusual to have such a rushed payment. When asked by the commission's evidence leader, Advocate Philip Mokoena, whether there was a budget for such a payment, he said there was a budget to buy coal not necessarily for the prepayment. 

Mokeona introduced documents to Nagar which showed that even before a Tegeta board meeting resolved to approach Eskom for a prepayment, Eskom's tender board committee had approved for prepayment to be paid. 

During this time Oakbay Resources/Tegeta was in the process of purchasing Optimum Holdings from mining giant Glencore for over R2 billion. Tegeta was short of the full amount and the R659 million prepayment was meant to cover the shortfall.  

Nagar concluded his testimony on Tuesday. 

The commission will resume on Friday.