Guptas strike black gold anatomy of a sweetheart deal

In April, the majority Gupta-owned

Tegeta Exploration and Resources
quietly scored a six-month coal
supply contract from Eskom worth
at least R564 million. A City Press
investigation has found that to
full this new lucrative contract, it
appears that Tegeta diverted a
portion of coal that they were
contracted to supply to Hendrina
power station, where Eskom pays
them R174/ton, to Arnot power
station 50km away, where Eskom
pays R580/ton for the same coal.
Eskom denies this, saying they
reduced the burn rate at Hendrina
power station to 425 000 tons a
month, allowing Tegeta to deliver
less. However, they also conrm
Tegeta has only delivered, on
average, 315 000 tons of coal a
month for the past three months.
'The commitment from Optimum,
going forward, is to meet the
Hendrina burn requirements,'
Eskom said.

Timeline: Dirty business

Hendrina power station

Arnot power station

Rietkuil

at Hedrina
power station

 September 4 2015
After the business rescue practitioners agree to
restart coal supply from Hendrina, Eskom CEO
Brian Molefe (left) boasted that he had called
Glencores bluff: We refused to pay them a price
that is higher than had already been contracted ...
They thought that by saying that they will stop
supplying, we will pay, jump up and down, and
sign an increase from R150 a ton to R530 a ton.

 August 12 2015
Eskom issues a request for
proposal for up to 5 million tons
of coal a year for Arnot power
station. The deadline for bids is
September 17 2015 and suppliers
will be asked to start delivering
on January 1 2016 or earlier

N11
R
35

MPUMALANGA

Pullens Hope

2015

A 50km truck
journey between
the power stations
via Hendrina takes
about 45 minutes
10km

R
38

Accurate Investments
(unknown UAE investor)

Oakbay Investments
(Guptas)

Fidelity Enterprises
(unknown UAE investor)

Mabengela Investments
(Duduzane Zuma)

8%

29%

13%

 November 20 2015
Duduzane Zuma (left),
President Jacob Zumas
son, and Gupta associate
Salim Essa both receive
generously discounted
stakes in Tegeta

 September 8 2015
Exxaro is blindsided when Eskom writes to them to inform them
that their contract to supply Eskoms Arnot power station will
not be renewed at the end of 2015. Eskom cited the spiralling
cost of coal at Exxaros cost-plus mine for the decision not to
renew the contract

Hendrina

Ermelo

Who owns Tegeta?

R174/ton

 July 31 2015
Glencore puts Optimum
Coal mine into business
rescue after Eskom refuses to
renegotiate a crippling coal
supply contract that forces
the mine to deliver 5.5 million
of coal a year at R150/ton

R580/ton*
at Arnot
power station

28.5%

 December 1 2015
Exxaros more than 1 000 employees march to the mine, appealing
to Eskom to save their jobs by extending the Exxaro contract at
Arnot. Shortly before the march, NUM branch secretary Mxolisi
Hoboyi told City Press they feared political interference, saying:
We believe that the Guptas have been tipped to get this contract.

Hendrina power station

 January 29 2016
Eskom says they have every
intention of awarding the new coal
supply contract for Arnot before
March 31 2016. In the interim,
seven suppliers will supply Arnot,
including Tegeta. Eskom makes it
clear that Tegeta is not in the
running to supply Arnot long term

2016

Elgasolve
(Salim Essa)

21.5%

 April 18 2016
Eskom says that they will award
the new coal supply contract for
Arnot in June despite quietly
extending Tegetas contract until
September the new contract is
for 1.2 million tons at R470/ton
and is valued at R564 million

Tegeta hires trucks to

transport coal from Optimum
Coal mine 50km up the road
to Arnot power station

 April 14 2016

The sign belonging to previous owners
Glencore has been covered up to reect
Despite the Guptas bank
Optimum coal mines new owners, Tegeta
accounts being shut, Tegeta
surprises everyone by
coming up with R2.15 billion
to pay the nal purchase
price for Optimum Coal.
Tegeta refuses to disclose
the source of the funding

 Last week
Eskom initially insists that Arnots seven suppliers are still
delivering to Arnot, but later concedes that only four
suppliers are delivering and that Tegetas slice of the pie
has been substantially increased to 250 000 tons a month

On Wednesday, there was a queue of

28 trucks waiting to drop off coal at Arnot

Hendrina
*Eskom refused to comment on this gure ofcially they pay R470/ton plus an undisclosed amount for transport

 December 11 2015
Tegeta announces they
will buy Optimum Coal
from Glencore for
R2.15 billion. Tegeta
agrees to take over the
mine from January 1

Compiled by SUSAN COMRIE

 August 2016
The business rescue practitioners
predict that Optimum Coal mine
will be nancially stable enough
by August to be taken out of
business rescue. They wont
discuss details, but conrm that
the Arnot contract has a lot to do
with it

 March 31 2016
The business rescue plan
paints a grim picture of the
nances of Optimum Coal mine
using undated projections, the
business rescue practitioners
estimated the mine would lose
R292 million in the rst
quarter of 2016

 September 2016
Eskom says their short-term
contract with Tegeta to supply
250 000 tons of coal a month
at R470/ton will expire in
September. Tegeta did not bid
during the August 2015 request
for proposal and so cannot be
selected as the winner

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