Troubled Gupta Coal Mines Threaten S. Africa With Power Cuts

(Bloomberg) -- 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 SOC Ltd. is diverting coal to the under-resourced stations from facilities that have sufficient supply, spokesman Khulu Phasiwe said on Johannesburg-based broadcaster SAfm. The supply problems stem from mines run by Tegeta Exploration and Resources Ltd., 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 Ltd. 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 Plc. Last year the company sought higher prices from Eskom for its coal.

Oakbay said in August that it agreed to sell Tegeta for 2.97 billion rand ($247 million) to Swiss company Charles King SA. The disposal was expected to be concluded in 12 months, Oakbay said at the time.

To contact the reporters on this story: Ana Monteiro in Johannesburg at amonteiro4@bloomberg.net, Thembisile Dzonzi in Johannesburg at tdzonzi@bloomberg.net.

To contact the editor responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net.

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