MUNGO SOGGOT, DAVID LE PAGE and EVIDENCE WA KA NGOBENI | Friday
THE Minister of Mineral and Energy Affairs, Phumzile Mlambo-Ngcuka, is probing a R1,5bn secret deal at the state oil company which has effectively privatised the state’s oil trading operations without the knowledge of the government.
The agreement strips the country of its strategic oil reserves for a year during a time of considerable instability in world oil markets. It exposes the state to heavy financial risk and gives the private companies involved considerable latitude for error without compromising their multimillion-rand fee. Sources close to the investigation say the deal could flout exchange control regulations.
Mlambo-Ngcuka is considering demanding the resignation of senior officials involved in the deal, which was struck between the Strategic Fuel Fund (SFF) and two oil trading companies.
The SFF is the oil trading subsidiary of the holding company for the state’s oil operations, the Central Energy Fund (CEF). Its deal is with High Beam Trading International, registered in the Bahamas, and Trafigura, an international commodities trading company. The South Africans who stand to benefit from the deal include the directors of High Beam’s local affiliate, Moses Moloele and Dominic Sewela. An internal auditor at the state oil company estimates the two companies will earn a minimum of R75m.
Essentially, the deal pays the companies to effectively take over SFF’s oil trading operations for three years. It gives them a share in the profits while imposing few corresponding liabilities.
The contract between the SFF and the companies was sealed in April this year without a public tender or Mlambo-Ngcuka’s knowledge. It was signed off just three days before the arrival of new CEF CEO, Renosi Mokate.
According to the government’s preliminary investigation, the deal was masterminded by SFF chair Seth Phalatse and CEF chair Keith Kunene. Government officials say it is unclear how much information the board was given before signing it off – or whether indeed all board members were aware of the deal at all.