PetroSA in dock over Gazprom-Equator tenders

A new court case threatens to crack open two of PetroSA’s most controversial deals: the gas-to-liquids refinery deal with Russia’s Gazprombank and the gas finance-and-infrastructure deal with businessman Lawrence Mulaudzi. Phezulu Natural Energy Resources, a rival bidder, this month filed a case asking South Africa's Western Cape High Court to set aside Mulaudzi’s deal. However, it is also demanding access to the decision-making records of the Gazprombank tender, which – it alleges – was illegally split for Mulaudzi’s benefit. PetroSA last year issued a flurry of tenders designed to kickstart the offshore gas industry: amaBhungane subsequently reported that PetroSA was planning to award RFP 0001/2023, worth roughly $211.9m, to Gazprombank Africa, a local subsidiary of Russia’s state-owned gas giant. The deal was controversial: Gazprombank had been selected after all 19 other bidders were eliminated for technical reasons. Dealing with a Russian entity, currently under Western sanctions, made it even riskier. In January, amaBhungane published a second exposé, showing how PetroSA subsequently held a private signing ceremony with Mulaudzi, which awarded his company, Equator Holdings, an expansive deal to finance and build all of the infrastructure needed to bring gas onshore.

The deal was potentially worth as much as $1.2bn and would have made Mulaudzi an overnight oligarch. The scope of work awarded to Equator, however, strayed far outside of the original tender (RFP 0004/2023). ‘It appeared that RFP 0004/2023 was potentially awarded irregularly by PetroSA to Equator as it clearly included ‘scope creep’,’ Phezulu director André Cilliers told the court. Phezulu had submitted a bid for the gas-to-liquids refinery in Mossel Bay (RFP 0001/2023), but not for RFP 0004/2023, which was supposed to be limited to sourcing finance, not building infrastructure. Leaked records show that Equator had been one of the 20 bidders for RFP 0001/2023 but that it had scored 0 points out of 100 and was eliminated because the ‘(a) uthenticity of entity could not be established.’ Phezulu had also been eliminated but had at least scored 67.5 points out of 100. Says amaBhungane’s advocacy co-ordinator, Caroline James: ‘The courts have taken a dim view of litigants hiding behind spurious reasons for not providing the full record of a decision to award a tender. PetroSA’s actions go against the Constitution’s requirement of procurement transparency but also the rule of law and a respect for the legal process.’

Full amaBhungane report on the Daily Maverick site