Eskom started negotiations with Tegeta Exploration and Resources, owned by President Jacob Zuma's son Duduzane and the Guptas, before it had even been granted a water licence for its mining operations.
That is according to Solly Tshitangano, chief director of supply chain governance at the Treasury. He outlined several contraventions of government's rules on supply chain management in the Eskom-Tegeta contract to the standing committee on public accounts (Scopa) on Wednesday.
Presenting auditing company PricewaterhouseCoopers' (PwC's) report on the contract, Fin24 reported that it questioned the fact that Eskom started engaging Tegeta about a possible contract even before it had received a water licence.
A burning issue emanating from the PwC report was the fact that although Eskom invited competitive bids for coal supply, it approached only Tegeta.
The initial value of the contract was R3.7bn, Tshitangano said, and Eskom later intended on expanding it to a further R2.9bn for the Brakfontein Colliery.
"In August 2016, Eskom wanted support from National Treasury [for the expansion], which was not supported," [Tshitangano] he said.
Eskom asked PwC to carry out an investigation in 2015 and Treasury also launched its own probe, starting in 2015.
"The PwC report stated among other things that supply chain management processes were flouted, and that the contract contained discrepancies. In addition, Tegeta started operating before on-site health and safety valuations could take place. The assessments only took place two-and-a-half months after the contract had been signed", reported Fin24.