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Troubled Gupta coal mines threaten South Africa with power cuts

17th April 2018

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JOHANNESBURG – South Africa’s State-owned power utility is working with the National Treasury to source more coal for seven of its plants that don’t have adequate supply, raising the specter of a return to rolling power cuts that have periodically slowed the economy since 2008.

Eskom Holdings is diverting coal to the under-resourced stations from facilities that have sufficient supply, spokesperson Khulu Phasiwe said on Johannesburg-based broadcaster SAfm. The supply problems stem from mines run by Tegeta Exploration and Resources, a struggling company controlled by the politically connected Gupta family, he said.

“There are some difficulties – that’s the situation they’re managing now,” Phasiwe said of Tegeta. “From our side, we’re looking for a replacement supplier as soon as possible to make sure we don’t go back to the days of load shedding, especially as we’re going into winter,” he said, using a local term for rolling blackouts, which the country was forced to last implement in 2015 after seven years of power shortages hindered economic growth.

Tegeta is a company controlled by the Guptas through Oakbay Investments and a son of former President Jacob Zuma. In December 2015, it bought Optimum, which includes a mine of the same name, the Koornfontein operation and a stake in Africa’s biggest coal-export terminal, from Glencore. Last year the company sought higher prices from Eskom for its coal.

Oakbay said in August that it agreed to sell Tegeta for R2.97-billion ($247-million) to Swiss company Charles King. The disposal was expected to be concluded in 12 months, Oakbay said at the time.

Edited by Bloomberg

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