FORMER Eskom acting CEO Matshela Koko has told the commission of inquiry into State Capture that the utility’s board acted unlawfully when it failed to collect R2.1 billion in penalties from Optimum Coal Mine (OCM).
At the time, OCM was owned by Global mining giant Glencore.
Eskom and OCM had signed a 25-year contract for OCM to supply coal at R150 per ton. OCM supplied Eskom with poor quality coal incurring penalties amounting to R2.1 billion.
Koko said Eskom was under a legal obligation to collect the penalties.
“So, if Eskom decides to not deduct penalties, it is an unlawful activity that is in contravention with the Public Finance Management Act. Eskom has the obligation chair to impose penalties, the only remedy in the coal supply agreement for Eskom for non-compliant coal are two, its rejection of the coal or penalties.
“Eskom has not waived its right to not deduct penalties. Eskom had not sat down and said in the interest of itself it must not deduct penalties in the best interest of both parties, so therefore Eskom was obliged to impose penalties,” explained Koko.
Instead of paying the penalties, Glencore, on behalf of OCM, decided to renegotiate for a price increase for coal as the mine was under financial difficulties.
Koko said Optimum was committing to delivering better coal, however, he said the new proposal was going to cost Eskom money it did not have.
Earlier, Koko told the State Capture Commission that Eskom was allegedly threatened with Cyril Ramaphosa’s name when they tried to enforce penalties.
He said at the end of June 2015, Optimum and Glencore, lied about the amount of penalties they were supposed to pay to the power utility. He said the penalties were close to R2 billion in 2015, while they claimed the amount was R16 million.
“The Eskom assessment of the Optimum proposed cost indicate that if agreed to will cost Eskom R5.5 billion at 5.5 billion ton for the remainder of the coal supply agreement. So the team was saying this was going to cost Eskom R5.5 billion extra.
“The best we could go for a tariff increase which we did, and it was declined, you can’t get money from the regulator, you can’t borrow any more money and you can’t get a liquid injection, where are you going to get R5.5 billion? The team was aware, and they just thought the associations of President Cyril Ramaphosa are entitled to bully Eskom, to extract R5.5 billion out of Eskom and nobody says anything about it and Thuli Madonsela missed this?” said Koko.
He asked why former public protector Thuli Madonsela missed this information and maintained that she owes the country and apology.
“Why would she not have my input when she passes a judgment against me? The rules of fairness expect her to say, you are implicated I am going to make findings that are adverse against you, what is your comment,” said Koko
He said he had opened a criminal case against the people at Eskom who were involved in the deal.
Koko also accused the state capture commission of coaching travel agency witnesses who said Salim Essa paid for his flights.
He said Madonsela was wrong when she concluded that Brian Molefe abandoned cooperation with the mine but the commission continued with that narrative, the same way he claimed it did with the travel agents.
- (Additional information by local agencies)
