Quality of Gupta-supplied coal to Eskom questioned at state capture inquiry

26 February 2019 - 17:15 By Amil Umraw
Tegeta's coal failed 29 out of 30 tests by the SA Bureau of Standards, the state capture inquiry heard.
Tegeta's coal failed 29 out of 30 tests by the SA Bureau of Standards, the state capture inquiry heard.
Image: Gallo Images/Thinkstock

Eskom's dodgy coal-supply contract with the Gupta family's Brakfontein mine came under the spotlight at the state capture inquiry on Tuesday when the utility's primary energy division boss, Daniel Mashigo, took the stand.

Mashigo told the commission that any deviation from the parameters of coal quality set out for each of Eskom's power stations could compromise the integrity of the plant.

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The question then remained as to whether Tegeta Exploration and Resources - owned by the Gupta family and Duduzane Zuma - put Eskom's Majuba power station at risk when it supplied poor coal for about three years.

Eskom irregularly awarded Tegeta's Brakfontein mine a lucrative decade-long contract, worth about R4.3bn, in 2015. Reports revealed that Tegeta started supplying coal to Eskom even though it had not met regulatory requirements and the agreement was concluded without a financial due-diligence report being completed.

The utility stopped receiving coal - which was also shown to be of poor quality - from the mine in February 2018 after Tegeta was placed in business rescue.

Mashigo testified that coal-quality parameters must be met in terms of its energy, ash and sulphur contents. If these are not met, it may damage the power plant.

"If the energy content is below what the power plant is designed for, you need more of the coal to achieve the same amount of power output. The more coal you utilise for a single unit of power adds on the ash burden percentage," Mashigo said.

"When you design the plan, you set out the type of fuel that needs to be utilised. It must be within the range to achieve the desire output. The moment you go outside that border you start having an impact."

He said if a coal supplier does not meet the requirements of the power station, the coal is rejected.

In the case of Tegeta's coal, the SA Bureau of Standards failed 29 of 30 coal samples from the Brakfontein mine.