Gas conversion deal with Russia in the making

SA and Russia are again considering an energy partnership – this time non-nuclear – according to Mineral Resources & Energy Minister Gwede Mantashe in a Sunday Times report. It says SA has entered into discussions with Russian gas utility Gazprom to build a multibillion-rand plant to convert natural gas into electricity, in apparent violation of tender laws. Officials from the Department of Mineral Resources & Energy (DME) and the Central Energy Fund (CEF) met a delegation from the Russian company to discuss the proposed development. Two senior executives said the delegation from Gazprombank, a subsidiary of state-owned Russian gas giant Gazprom, was accompanied by arms deal fixer Fana Hlongwane. They said the meeting was facilitated by Mantashe, but he reportedly denied this. Plans to build a liquefied natural gas plant at the Coega Industrial Development Zone in Nelson Mandela Bay have been announced, but the Public Finance Management Act does not allow government departments to give preferential treatment to potential bidders, notes the report. However, though the project is still undergoing feasibility studies and the government has yet to put out a call to potential bidders, a memorandum of co-operation has already been signed between PetroSA and Gazprombank to ‘co-operate with each other and jointly evaluate the development, construction and operation of the … project and … explore other opportunities for mutual co-operation as the relationship progresses’. Mantashe reportedly said the discussion were nothing more than ‘meetings with potential investors who have money’. However, Mantashe also told the Sunday Times that if it was up to him, ‘Gazprom would have been working at Coega by now. There is nothing suspicious with the Russians, they have money and they want business.’ Two state energy company executives reportedly said Gazprombank’s delegation made an unsolicited bid to finance and build the plant, but Mantashe denied this.

Mantashe and CEF chairperson Dr Monde Mnyande have been accused of imposing the appointments of senior executives in the state-owned energy company and one of its subsidiaries. According to a Times Select report, it appears Mantashe appointed Dr Ishmael Poolo as CEF chief executive after ignoring recommendations from its board to appoint one of two candidates who performed better in interviews and psychometric tests. Poolo takes up his position today. A document presented to the CEF board on 28 February recommends the appointment of another candidate, arguing that he was the most experienced and competent. The document recommends that should he be unsuitable, the next suggested candidate be appointed as the CEF’s new CEO. The document shows that out of the four candidates who underwent psychometric tests, Poolo performed the worst. However, in an undated letter Mantashe appoints Poolo. Mantashe said he was legally entitled to appoint the CEF’s CEO. Meanwhile, at the Strategic Fuel Fund (SFF), documents indicate that Mnyande allegedly irregularly orchestrated the conversion of Godfrey Moagi’s contract as acting CEO into a permanent five-year contract. Mantashe denied any wrongdoing in the conversion of Moagi’s contract, saying the decision was taken to the SFF board which unanimously endorsed it.