7 December 2017

South Africa: Competition Commission Probing Eskom Coal Contracts

The Competition Commission has confirmed it is probing a complaint laid by two Members of Parliament around contracts Eskom holds with three companies for long-term coal supply.

A case was registered in October, commission spokesperson Sipho Ngwema told News24 this week, complaining about the length of "evergreen contracts" to supply coal to the entity, one of which ends in 2033.

The three companies include Anglo American, Exxaro and BHP.

"It is difficult to give timelines on an investigation because all depends on the complexity of the issues involved, the amount of information and the cooperation of the parties involved," Ngwema said.

"We hope to finish the investigation as soon as possible though."

The complaint was filed by African National Congress MP Nyami Booi and African People's Convention MP Themba Godi, both of whom sit on the standing committee on public accounts (Scopa).

Godi is chairperson of Scopa, while Booi is ANC whip in the committee.

Godi told News24 the pair decided to file the complaint as individual MPs, because it fell outside Scopa's mandate as Parliament's watchdog over public funds.

"If it was in our mandate we would have tackled it, but because it was outside, we referred it to the Competition Commission, the competent body to pursue it."

A second issue involved the shared directorship of some individuals at the various companies with Eskom.

They had no evidence themselves of possible collusion yet, hence the request, but the directorship matter raised issues of conflicts of interest.

Booi's complaint was that the length of the contracts is a barrier to entry for smaller BEE companies, and hampers the processes of transformation.

"You won't be able to change the pattern with these types of contract, it would take too long," he said.

Eskom last month said it is aware of the probe and is cooperating over the long-term contracts.

Spokesperson Khulu Phasiwe said Eskom pays the suppliers for the working cost of the mines together with a return on the mine owner's original investment, to ensure supply.

Any additional capital requirements are carried by Eskom.

Ngwema meanwhile said they cannot comment on the merits of the case while the probe is ongoing, and will update the public at "the appropriate time".

Source: News24

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