HomeIndustry SectorsFinance and PolicyNational Treasury report released ahead of Eskom comment

National Treasury report released ahead of Eskom comment

The Board of South African power utility Eskom, has noted with grave concern the release of the National Treasury report, to various stakeholders, prior to Eskom’s opportunity to provide comment.

The utility asserted that the Minister of Finance had made a commitment to afford Eskom an opportunity to provide comment on the investigation, in a letter dated 31 January 2017.

However, the parastatal highlighted in a statement that this did not materialise.

National Treasury report

Titled “Report on the verification of compliance with SCM legal framework – appointment of Tegeta Exploration and Resources (Pty) Ltd”, the report makes conclusions and sets out remedial actions to be undertaken by specific individuals and/or offices.

The utility said that they have been given until 21 April 2017 to provide comments on the report. The Board has to this end, been asked to work in consultation with the Office of the Chief Procurement Officer.

Eskom comment

In its announcement, Eskom sought to dispel certain sticking allegations. It vehemently denied the contention that Eskom and, in particular, its Chairman and erstwhile Group Chief Executive misled or lied to Parliament, noting that this allegation was not founded on the truth.

Eskom elaborated that the contract between Eskom and Tegeta was negotiated before the appointment of Brian Molefe and the current Eskom Board. Therefore, neither Molefe, nor Dr Ngubane were involved in the approval of this contract. Read more…

Generally, when Eskom discovers that a coal supplier is not supplying the required coal quality consistent with the contractual obligations, the utility investigates. In relevant circumstances, Eskom allows the mine to implement remedial action, the utility stated.

However, as a precautionary measure, Eskom suspends the offtake from the affected mine in order to investigate the root cause of the inconsistencies in the coal quality management process.

When a suspicion of the out of specification coal stock piles arose from July-August 2015, Tegeta was placed on suspension on 31 August 2015 to allow Eskom to investigate the coal quality issues.

The results of the investigation indicated that the coal quality received was within the contractual specifications and the suspension was lifted upon assessment of the coal qualities.

Circumstances can sometimes differ in these cases. For instance, when Just Coal CC – the majority coal supplier to Tutuka Power Station, was found to have been delivering inferior coal, consistently, Eskom placed Just Coal in breach of its contractual obligations and requested additional technical information.

Eskom afforded Just Coal until 23 March 2017 to provide the technical information and remedy the breach. Just Coal has failed to do so and Eskom has subsequently cancelled its contractual relationship with Just Coal. Read more…

Eskom has noted that it is not at liberty to make public any detailed public comment on the contents of the report given the fact that it is currently undertaking a certain prescribed procedure, as per the requirements of the report.


Featured image: photographer: Dean Hutton/Bloomberg

Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.