"Eskom is rotten to the core", said your editorial of October 9. All true, but nowhere was there any mention of a huge factor in the problem: the increases in the cost of coal.
One of the first signs that things were going wrong was when Eskom leaned over backwards to accommodate small miners. This gave rise to many problems. Coal quality was one. Coal used to be delivered by conveyor belts. It is quite easy to check quality on a belt. The small miners used trucks. It is very difficult to check truckloads. In addition, the roads weren’t designed for regular heavy loads and they have fallen to pieces. Transport charges of R200 a tonne and more are added to the basic cost.
Small mines were an easy target for the Guptas. One of their mines was awarded a generous contract. The Eskom expert said coal from that mine wouldn’t burn, so he was put on long leave. He was right. The result was the loss of 600MW of generation and a R2bn repair bill.
Re-enter the Guptas — their contacts would do the repair for R4bn. Then, of course, there were the long-term contracts. How could a Gupta make a living off one of these? The answer was provided by the Optimum example. The mine was "fined" R2bn for supplying off-specification coal, for which they had been paid about R2bn. And suddenly yet another Gupta-linked firm stepped in to say it would buy Optimum and assume liability for the "fine".
However, they needed cash and Eskom helped with nearly R500m. The long-term contract was forgotten, a new and different one was drawn up and the "fine" was slashed.
Power stations will always need coal. Who can blame the Guptas for thinking sustainably?
Prof Philip LloydEnergy Institute, Cape Peninsula University of Technology