Pravin Gordhan explains Eskom claim against Optimum, R4bn overpayments on Kusile contracts

07 July 2020 - 14:11 By ERNEST MABUZA
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Public enterprises minister Pravin Gordhan.
Public enterprises minister Pravin Gordhan.
Image: Trevor Samson

Public enterprises minister Pravin Gordhan has written to the ANC chief whip in parliament to explain the Eskom claim against Optimum and the R4bn overpayment by Eskom to contractors at Kusile power station.

“There has unfortunately been ongoing misunderstanding on this (overpayment) matter and the amount of R5bn that Eskom is claiming in Tegeta Business against coal not supplied by the Optimum mine,” Gordhan said in the letter to Pemmy Majodina.

Gordhan wrote the letter to Majodina, dated June 6, to clarify the status of the two matters.

Gordhan said Optimum — which has been supplying coal to Hendrina power station — was placed in business rescue in 2018.

He said Eskom had submitted a claim of about R5.5bn against Optimum in the business rescue proceedings.

The claim was for undelivered coal for February 2018 to December 2018 and for poor coal supplied between September 2016 and January 2018.

Gordhan said when the creditors met last year, they contended that Eskom's claim was inflated.

An arbitration was held, which in March determined that Eskom's claim was R1.2bn.

“Eskom’s voting share was determined at 24% to be exercised by Eskom in any manner it wishes to do,” Gordhan said in the letter.

Gordhan also attached a report to deal with the R4bn overpayment on the construction of the Kusile Power Station.

The report, provided by Eskom, indicated the firms and contracts that received overpayments.

It also detailed the status of the employees responsible for overpayments, the current status of the recovery of funds and the cases which have been referred to the National Prosecuting Authority.

The power utility said the investigations it was conducting, together with the Special Investigating Unit and law firm Bowmans, were ongoing and incomplete at this stage.

It listed four contractors involved in these investigations and the estimated overpayment amounts.

They are ABB (estimated overpayment R1bn), Tenova Mining (R735m), Tubular Construction Projects (R1bn) and Steffanuti Stocks Basil Read JV (R1bn).

The report also mentioned various site service contracts outside the scope of the SIU involving estimated overpayments of R180m.

On the ABB contract, Eskom said the company was appointed using a closed tender procurement strategy.

However, once the execution of works commenced, ABB was issued four variation orders with no substantiation documentation or records.

Eskom said numerous employees including the then project director, employer’s representative and contract managers are being investigated by the SIU.

It said ABB also conducted its own investigations.

Eskom said a number of meetings took place during 2019 and 2020 during which the parties discussed the process for establishing the value of the overpayment made to ABB.

“Initial engagements with ABB have resulted in ABB verbally offering to pay back approximately R240m,” the Eskom report said.

In the other three instances of overpayments, Eskom said people responsible for these overpayments had resigned.

“For the purpose of clarification, it must be noted that once an Eskom employee resigns, he or she is outside Eskom’s scope, and the law enforcement agencies then need to take over the process,” Eskom said.

However, Eskom said it was supporting law enforcement agencies in pursuing civil claims against former employees involved in all the contracts.

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