Eskom Says Plants Run Low on Coal as Gupta Mines Undersupply

(Bloomberg) -- South Africa's state-owned power utility said it's running low on coal at six stations as mines owned by the Gupta family failed to meet their contractual supply obligations.

The Optimum and Koornfontein mines, which supply Eskom Holdings SOC Ltd. plants, are owned by companies linked to the Guptas that were placed under administration last month after banks suspended services. While the utility said there's sufficient stockpiles at most of its power stations, the operational issue comes as it faces substantial financial difficulties of its own.

“Currently, stockpiles at 6 stations, Arnot, Camden, Hendrina, Majuba, Tutuka and Komati, are low,” Eskom said in an emailed reply to questions. Additional coal contracts for the all stations “are being concluded and will add to the current supply,” it said.

Some workers at the Optimum mine have not been paid on time, according to the National Union of Mineworkers. The labor group has urged business rescuers to sell the mines to avoid exposing employees to further uncertainty.

“Optimum and Koornfontein are not supplying as per their contractual obligations and Eskom will follow the remedies as per the coal supply agreements to address undersupply,” Eskom said. “The utility is awaiting the finalization of the business rescue plan.”

Eskom on Thursday had its credit rating downgraded by Moody's Investors Service, which cited a lack of clarity regarding the South African power utility's plans to stabilize its finances.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net.

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Nicholas Larkin

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