Eskom Says It's Buying Coal for Plant From Optimum, Six Others

  • Family friends of South African President are buying Optimum
  • New supplies to Arnot power plant cheaper than lapsed contract

Eskom Holdings SOC Ltd. said it’s sourcing coal for its Arnot power station from seven suppliers under an interim contract, including a mine that’s being bought by a company controlled by the Gupta family, while the South African power utility negotiates a long-term supply deal for the plant.

Eskom, which supplies more than 95 percent of South Africa’s power, didn’t renew Exxaro Resources Ltd.’s contract to supply Arnot from a nearby mine at the end of December. At the time, it said prices, at 900 rand ($56.64) a metric ton, were too high and it could not afford them.

The Guptas, who are friends of South African President Jacob Zuma, are buying Optimum Coal from Glencore Plc through Tegeta, which is owned by their Oakbay Investments.

One of the seven suppliers is the Optimum mine, which “has provided less than 15% of the coal delivered to Arnot in January,” Eskom said in a statement linked to a post on its Twitter account. All the interim suppliers are providing below the cost of Exxaro’s previous deliveries, Eskom said.

“Eskom is in no way involved with transactions relating to the ownership of coal mines,” the utility said. It “is solely focused on procuring coal of the required quality to Eskom’s power stations, at the right time and at optimal cost.”

The utility will conclude a new long-term supply contract for Arnot by March, “through an open and competitive bidding process.”

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