News / South Africa / State Capture

Makhosandile Zulu
3 minute read
13 Mar 2019
4:49 pm

Eskom wasn’t interested in helping Optimum – Marsden

Makhosandile Zulu

The practitioner says the mine needed assistance from Eskom but the power utility was steadfast on the mine delivering on its contract.

Picture: AFP

The commission of inquiry into state capture today heard testimony from former business rescue practitioner of Optimum coal mine (OCM) and Optimum Coal Holdings (OCH), Piers Marsden, a qualified chartered accountant.

Following the July 31, 2015, decision by the board of directors of OCM to place the company under voluntary business rescue, Marsden was appointed business rescue practitioner alongside Petrus van den Steen, an appointment effective immediately after August 4, 2015.

Marsden told the commission that soon after his appointment he found that OCM’s sole customer had been Eskom and that a long-term agreement was in place between the two entities.

Furthermore, Marsden said he found that the mining company was losing cash on a monthly basis and at the time relied on its shareholder to survive.

Marsden told the commission that the R2.17 billion penalty levied by Eskom on OCM for failing to meet coal quality specifications set out in the coal supply agreement had a significant impact on the mine’ finances.

The penalty would have forced the mine to sell coal which was already being supplied at R150 per ton to be sold at R1 per ton, Marsden said.

It became apparent to Marsden that a solution to OCM’s situation would require the cooperation and assistance of Eskom, so he attempted to engage the entity, he said.

Marsden told the commission he tabled a number of solutions to the power utility but Eskom was “steadfast and unmoving” regarding the long term contract, which ended in 2018 and expected the mine to deliver on the contract from 2015 until it came to an end.

A meeting was convened between the business rescue practitioners and Eskom’s management, however, the meeting failed to yield positive results as relations between the mine and the power utility were strained at the time, Marsden said.

On August 20, 2015, the mine switched off its conveyor belts supplying coal to Eskom, while the power utility continued to insist that OCM should comply with the agreement in place.

Evidence leader at the commission, Advocate Vincent Maleka estimated that the period that OCM ceased supplying coal to Eskom may have been 13 days.

Former Eskom CEO Brian Molefe called Marsden to set up a meeting with the business practitioners, the chief executive of OCM’s holding company, Glencore, Clinton Ephron and the power utility’s executives, Marsden said.

The meeting was held at Eskom’s Megawatt Park, however, Marsden remained outside of the meeting venue and only learned about what had been discussed from Ephron after the meeting had been concluded.

Ephron told the business practitioners that an interim agreement had been reached which included that the mine resupply Eskom with coal, he said.

Marsden said while negotiations with Eskom continued, OCM received an unsolicited bid on September 10, 2015, to purchase the mine which was made by Gupta-owned Oakbay.

However, the business practitioners and OCM were focused “very much on the Eskom renegotiation”.

Marsden said three options were presented to the power utility, which included selling the mine to Eskom or a third party, but the entity was not willing to negotiate.

For more news your way, download The Citizen’s app for iOS and Android.