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Brian Molefe testifies at the Commission of Inquiry on January 15, 2021. Photo: Gallo Images / Papi Morake
- Former Eskom CEO Brian Molefe says he blocked Glencore’s deal with Eskom because it would financially ruin the energy company.
- When he was seconded from Transnet in 2015, one of the first things Molefe did was block the renegotiation of Glencore’s Optimum Coal coal mine contract with Eskom.
- Glencore has said that, at the price Optimum was supplying coal to Eskom, it was bleeding the company to death and accused Molefe and Mosebenzi Zwane of putting the coal mines out of business.
Former Eskom CEO Brian Molefe, who appeared before Zondo’s commission of inquiry into the state capture allegations on Friday, said the company’s deal with Glencore would “financially ruin” the power company, so he intervened. to stop her.
Optimum Coal Mine, which was later acquired by Glencore in 2012, had a contract to supply Eskom with coal. But the contract stipulated that the price of the coal supplied would be the same for 10 years or more.
Molefe told the commission that this happened because Optimum was “at my expense,” meaning it had been built with Eskom’s capital. Molefe said Optimum received a 40-year contract in which Eskom would finance extraction costs, and in return Optimum would receive a fixed margin.
But when Glencore bought Optimum, it wanted Eskom to renegotiate the price the power company had agreed to with Optimum, from R 150 per tonne to R530 per tonne. He said Glencore also wanted Optimum’s accumulated fines in terms of that contract, which amounted to R2 billion, to be canceled.
The disgraced former CEO said that this increase would have meant Eskom would transfer R6 billion to Glencore between 2015 and 2018.
“Add to this the canceled R2 billion of the fines. The amount Glencore wanted Eskom to pay for its original mistake of not doing due diligence was R8 billion. R8 billion, Chairman!” Molefe said.
He said that all of this happened at a time when cargo shedding was becoming the norm in South Africa. Allowing this negotiated price would have meant a reduction in the financial resources Eskom needed to carry out the planned maintenance necessary to reduce outages.
Molefe also said he could not “in good conscience” allow the country to subsidize the transactions of a wealthy international company while urging Soweto residents to pay their debt to Eskom.
“I could not, President, tell South Africans that load shedding will continue because we do not have enough money to carry out the maintenance of planned buildup in our electricity generating fleet, and yet we allow R8 billion to be transferred unfairly. Glencore, “he said.
Former Glencore CEO Clinton Ephron previously testified in commission and said the terms of that deal between Eskom and Optimum needed to be renegotiated as the mine was bleeding Glencore to death. But as soon as Molefe moved from Transnet to lead Eskom, the renegotiations fell apart.
Ephron accused Eskom and then-Minister of Mineral Resources Mosebenzi Zwane of taking Optimum out of business. Glencore bankrupted Optimum in 2015, paving the way for the Guptas to buy it.
Molefe said the renegotiations of the Optimum deal had been endorsed at various levels of Eskom’s management prior to his arrival, but that he could not accept it.
“I am not ashamed of this change in attitude that occurred when I arrived. I was thinking of Eskom’s interests and those of the country. What was happening was wrong on many fronts and it was literally going to ruin Eskom financially,” he said.
