Lamu coal plant

On Monday, South African state-owned power utility, Eskom, announced its decision to terminate six coal transport agreements with effect from 3 February 2017. This decision is part of its ongoing campaign to ensure clean governance, the parastatal said in a statement.

Amongst the impacted suppliers are Constructibility 10CC, Fastrak, IM Monokoane, NJM Transport, Lamavuso and Dhlams & Dhlams.

Coal transportation routes and contracts

Eskom is moving about 40Mt of coal using two road transportation channels: FCA (free carrier arrangement/agreement), which involves transporters that are directly contracted to Eskom.

Currently 58 of these transporters are running under a four year contract that commenced in April 2014, ending in March 2018.

The rest of the road deliveries are done by the mines through a model that is normally referred to as Delivered “DEL” within Eskom. In this instance, transporters are directly contracted to the mines for the delivery of coal as opposed to the ones directly contracted to Eskom (FCA), the utility explained.

Suspicious behaviour draws attention

Following a tip-off in July 2016, elaborated Interim Group Chief Executive Matshela Koko, Eskom undertook a limited investigation into allegations that some FCA transporters had unlawfully introduced additional trucks into the coal road transportation system.

As a result of this investigation, six FCA transporters were suspended between 14 July and 07 September 2016, for 7 weeks.

“Considering the discrepancies that surfaced during this limited investigation, Eskom commissioned an independent investigation into the unlawful introduction of additional trucks by FCA transporters,” Koko explained.

Koko said it has since emerged during the course of the secondary investigation that the conduct of the six transporters has severely prejudiced compliant FCA transporters.

“This conduct has gravely deprived compliant transporters to a fair and equitable distribution of coal that was available to be hauled to Eskom’s power stations,” Koko said.

Koko emphasised that Eskom will continue to make decisive decisions to ensure compliance with the policies of the utility so as to achieve “unimpeachable procurement decisions across the company’s entire value chain”.