South Africa’s just energy transition is at risk of being torpedoed by murky deals and a flawed energy plan being driven by mineral and petroleum resources minister Gwede Mantashe.
This is one of the findings of a new 73-page report released by non-profit group Open Secrets, which lays bare how oil giants manipulate policymakers and the public to ensure they score plum exploration rights.
“Their track records should ring alarm bells for all in South Africa,” the report says, highlighting that the largest five firms – Shell, TotalEnergies, BP, ExxonMobil and Chevron – spent R13.4bn per year globally on climate lobbying and greenwashing strategies between 2019 and 2022.
Luvano Ntuli, the lead author of the report, tells Currency that these companies “are particularly beloved by Mantashe, but they have amassed immense profits at the expense of the environment and communities”.
There’s no better example than state-owned oil company PetroSA, where questions still linger over a series of deals, including a shady R21.6bn contract awarded to a company called Equator, run by well-connected middleman Lawrence Mulaudzi.
These revelations reveal “the sordid underbelly of the Big Oil beast in South Africa”, according to Open Secrets.
“The only way PetroSA continues to exist is that it sells diesel to Eskom to run its turbines during load-shedding, and the [allegation is] it sells the diesel at inflated prices,” Michael Marchant, head of investigations at Open Secrets, said at the report’s launch.
This trading happens in secrecy, he said, with PetroSA allegedly ignoring public procurement laws. While journalists and Open Secrets have lodged requests for access to these contracts, PetroSA has refused to release them.
“In fact, Mantashe has publicly said PetroSA will never release any of this data because this would be harmful to its commercial interests,” Marchant added.
The Equator contract, first exposed by amaBhungane, is one of the most hair-raising.
Last December, PetroSA signed a $1.2bn (R21.6bn) contract with Mulaudzi’s company to overhaul the South Africa’s offshore gas infrastructure. This raised red flags since Equator was only registered in 2018 and had no discernible track record.
But Mulaudzi brushed aside criticism, telling amaBhungane that the deal “will provide security of gas supply and unlock infrastructure bottlenecks in the energy space”.
The deal soon unravelled. In April, the Sunday Times reported that Muluadzi had approached rival bidder Phezulu Natural Energy Resources for expertise and funding. Phezulu has since taken PetroSA to court.
Finally, in July, Equator was liquidated – raising questions both over the quality of PetroSA’s judgment in picking it in the first place, and its governance processes. This underscored years of dubious deals and boardroom chaos at PetroSA. On Thursday, there was yet another twist as PetroSA announced that it had suspended CEO Xolile Sizani, after only eight months in the role, without giving reasons.
New state-owned oil and gas champion
While critics might write this off as just another badly run state entity, the stakes are much higher following President Cyril Ramaphosa’s launch of the new state-owned South African National Petroleum Company (SANPC).
SANPC will combine all state oil and gas resources by merging iGas, the Strategic Fuel Fund and PetroSA.
Right off the bat, it began badly: the SANPC said it would take the “only financially viable divisions” of PetroSA – its trading division and the Ghana division – though the idea, it seems, is to eventually absorb the rest of the company.
According to its marketing, SANPC plans to relaunch the gas-to-liquids refinery in Mossel Bay and “seize the R95bn market opportunity” to become the “leading play in South Africa’s energy sector”.
But given PetroSA’s dubious track record, critics are sceptical.
“PetroSA’s history is a stark warning of the corruption risks inherent to the murky world of oil and gas. It should raise serious concerns about the plan to build a new sprawling national petroleum corporation with Mantashe as its political head,” Open Secrets says.
Mantashe is seen as a staunch defender of oil and gas interests and has been vocal in his opposition to a rapid transition to renewable energy, which is the basis for an $8.5bn grant from international donors.
“This belief that you can leave coal and move to renewables: there’s a technical mistake, very wrong, it will never work,” he told Bloomberg this year. Similarly, he said opposition to Shell’s plan to conduct seismic blasting on the Wild Coast was “apartheid and colonialism of a special type, masqueraded as a great interest for environmental protection”.
Mantashe’s disdain for the legitimate concerns raised by NGOs was clear when he argued that those in opposition to fossil fuel exploration were, in effect, adversarial towards Africa’s developmental goals, Open Secrets says.
Flawed transition programme
Open Secrets also criticises South Africa’s new draft Integrated Resource Plan, released in January by Mantashe’s department, which outlines the country’s energy blueprint until 2030.
It is a muddled plan, packed with hollow phrases, according to Open Secrets.
“South Africa is a long way from a just energy transition,” it says. “This [document] uses inaccurate cost estimates to reject aggressive investment in renewable energy technology, instead favouring the extension of existing coal plants, investment in ‘clean coal’ and new gas-to-power technologies.”
Open Secrets decries “clean coal” as a misleading, inherently contradictory phrase used to justify delaying the shift to renewables.
Lead author Ntuli believes stricter regulations and penalties for non-compliance with climate laws are needed to curb corruption and greenwashing in the sector.
She also called for laws to regulate oil companies’ influence on policymaking to prevent them from manipulating policies for their benefit.
“Corporate lobbying has long been a tactic used by oil and gas majors to pressure governments to limit this type of legislation,” she says, “which has allowed oil and gas majors to operate with minimal oversight.”
Top image energy. Collage by Currency.