Mungo Soggot
CLAIMS that the Mossgas sale was an expensive botch were bolstered this week after it emerged that yet another consultancy was hired by the government at the last minute to help massage the process.
Officials have confirmed that British consultancy Chem Systems was recruited to evaluate bids for the troubled project in the final stages of the “market testing” exercise — despite the fact that the government had appointed a team of merchant banks and other advisers in January.
Rand Merchant Bank, Deutsche Morgan Grenfell and consultants Arthur D Little were hired shortly after Cabinet decided to “test the market” for the synthetic fuel operation, which has cost the taxpayer about R12-billion so far. The government and the Central Energy Fund, which pays the bills, have so far declined to say how much the team cost.
It is understood that Chem Systems was brought in by Paul Jourdan, special adviser to the trade and industry department. Jourdan, who is on leave, is known to have been wary of selling off Mossgas. He was a key member in the government team running the sale. Chem Systems is also doing other work for Jourdan on the petrochemicals sector. It is believed that, as with the other merchant banks and advisers, their appointment did not follow a tender.
Chem Systems is one of the host of consultancies that has analysed the Mossgas dilemma in the past three years. The king of the consultants has been the Mossgas monitoring panel, which earned about R6,5-million. The panel included representatives from Arthur D Little and KPMG.
The monitoring panel’s main job was to determine whether or not it was a good idea to expand Mossgas by tapping new gas fields.
It swiftly became embroiled in the notorious politicking surrounding the project and wound down its role in the run-up to the government’s decision to try to sell Mossgas.
Those in the government who are now happy to see Mossgas remain in state hands are banking on the hope that there are more gas fields in the Mossel Bay region that can be tapped — in addition to the R910-million “satellite” fields that will shortly be linked up to the onshore plant.
Ironically, it was a similar belief that gave Mossgas its status as one of apartheid’s greatest white elephants. Former president PW Botha’s design team built the plant on the assumption that there were considerably larger gas reserves than the United States experts had calculated.
The government spent the past three years procrastinating over whether to sell Mossgas, scrap it, or expand it. Towards the end of last year former minerals and energy affairs minister Pik Botha persuaded Cabinet to authorise him to “test the market”. Some in the government interpreted Cabinet’s decision as a green light to sell. Others maintained it was merely a “market testing” exercise to help the government shape its thoughts on what to do.
But the merchant banks and consultants were hired and several bids were made. Two weeks ago, the government task team overseeing the sale agreed none of the bids passed muster amid strong rumblings that bidders had been put off by conflicting signals from the government over whether or not a sale was on the cards.