New Age2.png Eskom slams double standards in supply saga TNA Reporter, The New Age, Johannesburg, 1 February 2016 Eskom says it is buying coal for its Arnot power station in Mpumalanga from no less than seven suppliers under an interim contract. This flies in the face of reports that a mine owned by Tegeta Exploration and Resources, Optimum Coal, has received preferential treatment from Eskom. Tegeta is a black-owned company in which the Gupta family has shareholding. The family also owns The New Age among many other investments. Arnot power station.jpg One of the seven suppliers is the Optimum mine, which, Eskom said last week, has provided less than 15% of the coal delivered to Arnot in January. According to media reports, Exarro Resources had been supplying coal to Arnot at more than R900 a ton, based on a cost-plus model. Indications are that the current supplies are being purchased by Eskom for about a 50% saving. "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". Rescuing jobs The new owners of the formerly Glencore-owned Optimum Coal Holdings, who paid R2.15bn for the asset, say they are saving 500 permanent jobs but questions have been raised about the viability of the mine. Optimum is under business rescue after being unable to fulfil its contract with Eskom. Optimum Coal supplied Eskom with coal at below cost for several years and went into business rescue in August after Eskom imposed a R2.2bn fine for low quality coal. Business rescue practitioners Piers Marsden and Peter van den Steen said that Tegeta had undertaken to honour the existing coal supply agreement with Eskom. When announcing the transaction, the business rescue practitioners said they had considered all available options to rescue the companies that may be acceptable to Eskom and other key stakeholders, which included shareholders, creditors, organised labour, employees and regulators. "We believe this transaction provides the most optimal outcome for stakeholders and, importantly, preserves the livelihoods of thousands of the mines' employees and dependants, as well as the uninterrupted coal supply to two of Eskom's thirteen power stations." Eskom statement Eskom said in a statement on Friday it was focused on procuring coal of the required quality, quantity and price for its power stations. "Eskom and Exxaro Resources had a 40-year contract for the supply of coal to Arnot mine that ended on December 31. "Eskom was unable to renew the cost-plus contract due to the exorbitant coal price, as well as the mine supplying below the contractual requirement. From 2012, Eskom proactively engaged with Exxaro on improving its performance. However, these efforts were unsuccessful. "As such, the contract was allowed to expire as it was financially imprudent for Eskom to continue to purchase coal at their cost levels. "Eskom, following its standard tendering process, approached the open market in an effort to identify cost-efficient suppliers to provide coal to Arnot Power Station. "The company has previously stated that this process would be completed in March 2016 and has all intentions of completing by this date. As such, the process has not yet been finalised and therefore no contract has been awarded. "Any speculation contrary to this is therefore incorrect and mischievous." Matshela Koko Eskom's Group Executive for Generation, Matshela Koko, said: "In order to ensure business continuity of Arnot, Eskom has responsibly sourced coal from seven interim suppliers. "These interim suppliers will ensure security of coal supply pending the conclusion of the long-term contract. One of these suppliers is Optimum, which has provided less than 15% of the coal delivered to Arnot in January. "All interim suppliers deliver coal significantly below the previous Exxaro price - further demonstrating the correctness of Eskom's decision to seek a new supplier," Koko said. "Eskom categorically states that it is moving away from 'owning the bakery' to just 'buying the bread'. "Eskom will therefore create market tension through an open and competitive enquiry process to source coal from any suitable supplier," he said. Koko said Eskom was dismayed by accusations about any purchase of coal from Optimum due to an ownership change to Tegeta. Eskom also noted that there had been no outcry when the parastatal previously bought coal from Optimum, which was then owned by Glencore, nor were there any complaints about the ownership of any other coal supplier. "These double-standards are unfair and Eskom is unapologetic about engaging with any supplier irrespective of ownership," Koko said. - 7015198 From: http://tnaepaper.co.za/DRIVE/main%20edition/01022016/epaperpdf/4.pdf -- -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [email protected] . --- You received this message because you are subscribed to the Google Groups "YCLSA Discussion Forum" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. 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