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Eskom has cut the power at Gupta-owned Optimum coal and wants it liquidated, blaming the mine’s business rescue practitioners for failing to bring it back to profitability.
The mine has been struggling financially and it failed to pay Eskom for its power supply.
Eskom, which is one of the mine’s major creditors, said in an email sent to the business rescue practitioners and other interested parties, who are expected to vote on the future of the mine, that it leaned towards liquidation.
In an email sent on February 21, Eskom lawyer Gareth Cremen, wrote: “Notwithstanding the status of the arbitration, it is quite clear that the business rescue practitioners have further worsened the position of Optimum Coal Mines (OCM), in that, inter alia, the post-commencement claims exceed the pre-commencement claims and there has been an inordinate delay in rescuing OCM and bringing this matter to finality.”
Cremen said: “The mine is deteriorating as the days go by; and [there is a] lack of funding for its care and maintenance … In light of the aforesaid, our client is leaning more in favour of a liquidation for reasons set out above, which are not exhaustive.”
Eskom, which is allegedly claiming R4.5 billion from Optimum, also said it had “offered to abandon 50% of a pre- and post-penalty only, alternatively we are amenable to a reasonable proposal by the parties”. Eskom’s claim includes fees charged for substandard coal, short delivery volumes and interest.
“The commercial rationale is this – if Eskom is able to prove its full claim (which we believe it can), there are simply insufficient funds to satisfy the claim based on the current bids,” Cremen said.
The comments by Eskom have been met with resistance from Richard Mguzulu, the National Union of Mineworkers’ (NUM) representative.
The union represents at least 3 000 employees whose livelihood has been affected by the ongoing problems at Optimum.
On Tuesday Mguzulu wrote a harshly worded email in which he expressed the union’s disappointment and labelled Eskom’s statements as “very reckless”.
“As far as we know, the people who are appointed to rescue Optimum are the business rescue practitioners, not Eskom.
“We are very disappointed about the Eskom statement that the damage done at Optimum is irreparable. How was that determined as we have never seen an Eskom crew conducting any due diligence at Optimum to assess the situation?
“According to us, that statement is just speculation and it lacks substance.”
NUM also blamed Eskom for delaying the sale of the company.
“In December 2018, the section 151 meeting was postponed because Eskom required some time to go through the plan. In December last year another section 151 meeting was postponed because Eskom and Centaur Ventures had an agreement prior to the section 151 meeting.
“Eskom changed what was agreed to at the eleventh hour which caused the meeting to be postponed. It is very disgusting to claim that other people have delayed the disposal of the company whereas Eskom is the reason for all these delays,” Mguzulu’s email read.
The future of Optimum has been hanging in the balance for 18 months since the rescue practitioners took charge of its operations.
Several bids, including one from state mining company African Exploration Mining and Finance Corporation, in partnership with Lurco Coal, were received but claims by Eskom and Centaur – another of Optimum’s large creditors – had led to the delay.
The creditors have now opted for arbitration to determine the validity of their claims against the struggling coal mine.
Centaur is allegedly 50% owned by Akash Garg Jahajgarhia, a nephew-in-law of the Guptas, a claim the company has denied. Centaur is demanding almost R1 billion, including interest, from Optimum for a prepayment it had made to the mine. The mine had failed to deliver.
In December last year, Centaur and other creditors’ committees challenged Eskom’s voting rights, prompting the matter to be decided on in private arbitration. The arbitration process was due to be finalised next month but an email from Eskom’s legal team indicated that it might not be ready to submit all the required evidence.
Optimum made headlines when it emerged that Eskom made a R586 million prepayment to its holding company Tegeta Exploration and Resources.
At the time, the company – owned by the Gupta family and President Jacob Zuma’s son, Duduzane –was struggling to raise R2.15 billion that Glencore, which then owned Optimum, wanted for the transaction to go through.
At the time of the transaction, Optimum was placed under business rescue after receiving a R2 billion fine from Eskom.
Optimum business rescue practitioners declined to comment on the allegations from Eskom’s legal team.
Eskom spokesperson Sikonathi Mantshantsha said the power utility, like other creditors, would vote on the way forward at the creditors’ meeting.
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Abram MashegoSenior journalist | City Press | ||||||||||||||||||||||||||
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