Gupta mine shutdown won't leave SA in darkness: Eskom

23 February 2018 - 06:54 By Ernest Mabuza
subscribe Just R20 for the first month. Support independent journalism by subscribing to our digital news package.
Subscribe now
Optimum Coal. File photo.
Optimum Coal. File photo.
Image: Jeremy Glyn

South Africans do not need to fear periods of darkness due to the shutdown and failure of the Gupta-owned Optimum Coal Mine to supply coal to Eskom.

The power utility said it’s capability to generate power from its Hendrina power station will not be affected despite Optimum’s shutdown failure to supply the power utility with coal from February 17. Optimum is the majority coal supplier to Hendrina.

Eskom revealed on Thursday that Optimum‚ which supplies 80% of its coal needs for Hendrina‚ had indicated last week it would be unable to continue supplying coal as it had operational and financial challenges.

From Wednesday‚ workers at the mine downed tools as they demanded answers about whether they would receive their monthly salaries due on Friday.

The mine's CEO George van der Merwe held a meeting with the workers on Thursday but could not guarantee that they would be paid. He cited problems encountered with the Bank of Baroda‚ the only bank that has been handling the Gupta-owned company's accounts.

The country's banks have cut down ties with Gupta—owned companies‚ citing reputation risks.

Baroda will leave South Africa at the end of March.

Eskom spokesman Khulu Phasiwe said the small operators‚ which are supplying 20% of Hendrina's coal supply needs‚ have indicated they were willing to increase their output.

"There is also coal from other mines that is supplied to nearby power stations that will be diverted to Hendrina to mitigate against the shortage of supply.

"We are okay. We do not have any risk of coal shortage in the medium term‚" Phasiwe said.

However‚ he said these stopgap measures Eskom had taken were not sustainable in the long-term.

"The ideal solution is to have the majority supplier continue with providing us with coal. We are hopeful that Optimum will resolve its issues and resume with supplying coal‚" he said.

Eskom did not pay Optimum from the end of January after the mine failed to meet its quota in terms of the parties' service level agreement. It had imposed a penalty of R105-million on Optimum for its failure to supply Hendrina with 270 000 tons per month.

Phasiwe said Optimum only supplied 118 000 tons of coal for January‚ about 43% of what it is meant to. “We imposed a fine of R105-million for January‚ and their invoice for January was R52-million. Because the penalty was higher than the invoice‚ it would have been reckless to extend money to a defaulting party‚” Phasiwe said.

He added that Optimum's coal supply contract is going to expire in December.

subscribe Just R20 for the first month. Support independent journalism by subscribing to our digital news package.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.