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Daily Maverick
08-07-2025
- Business
- Daily Maverick
The consultants who supported CEF's Sapref oil refinery gambit
Consultants downplayed previous warnings given to the Central Energy Fund about the purchase of Sapref's oil refinery in South Durban, which has serious implications for the state and the public. When the Central Energy Fund (CEF) purchased the South African Petroleum Refinery (Sapref) refinery from fossil fuel giants Shell and BP in May 2024, major red flags were raised about the viability of the purchase. CEF bought the refinery anyway, and on a problematic 'clean break' principle. This let Shell and BP off the hook for the significant environmental and other liabilities that come with the refinery. Now, CEF and the broader public are on the hook instead. In the first article in this series, we showed that CEF's decision to go ahead with the purchase seemed to ignore important parts of the due diligence that CEF initially received in 2021 and the risks that had substantially increased since the devastating floods in KwaZulu-Natal in 2022. Now, we turn to the consultants that gave CEF advice and appear to have pushed the transaction over the line: CLG (formerly the Centurion Law Group) and Mazars. Their later advice downplayed previous warnings given to CEF about the purchase, which has serious implications for the state and the public. Given these implications and risks, the question at hand is why the board of CEF did not heed the earlier warnings. CLG and Mazars' advice in 2023 The documents provided to Open Secrets by the Organisation Undoing Tax Abuse (Outa) reveal that CEF initially received advice from Mazars, the lead transaction adviser, as well as Ceris Engineering and law firm Fasken. Together, the advice highlighted the significant liabilities that any purchaser of Sapref would take on and warned against allowing Shell and BP to walk away without paying towards these. These were discussed in detail in the first article. However, the transaction advice provided by Mazars and CLG after the KZN floods told a different story. For instance, the 2021 due diligence undertaken by Certis Engineering estimated decommissioning costs of the refinery were around $374-million (R6-billion). Its advice was that 'the Buyer [CEF] should ensure that at least $374m is provided for before giving the Seller a clean break ' (emphasis added). The 2021 advice from Mazars also used this figure as the estimated decommissioning liabilities. In 2024, Shell and BP paid just R335-million to cover some employee and operational costs as part of the final deal and walked away with a 'clean break', exempting them from any decommissioning costs. We asked Shell and BP what they had estimated as the decommissioning costs of the refinery, as well as the amount that they ended up paying to CEF, but they declined to comment, citing confidentiality. Without any explanation, the 2023 transaction advice from Mazars and CLG suddenly estimated that the total liabilities associated with the refinery were only R1.6-billion – including both soil and groundwater remediation, and decommissioning costs. There is nothing in the documents explaining how the full liabilities were now only around 25% of the initial 2021 estimates of only the decommissioning costs. We asked Mazars to explain the change in the estimates, but they did not respond to Open Secrets' questions. This is particularly confusing given the extensive damage done in the 2022 floods. However, using this figure allowed Mazars to state that the purchase would result in a net asset value (NAV) of R1.1-billion. The other notable difference in the 2023 advice from Mazars is that there is much less detail provided about the economic risks facing the future of the refinery sector, including the threats posed to its viability by the electrification of the transportation sector. This is a notable omission because, in the intervening period, the South African state had made new energy vehicles (NEV) a 'priority area' in terms of South Africa's Just Energy Transition Investment Plan (JET IP). The initial due diligence said any significant shift to NEV vehicles risked making Sapref a stranded asset very quickly. The advice received in 2023 aligned more closely with CEF's existing narrative – focusing on the strategic value of reducing fuel imports to South Africa, noting that 'opportunity has arisen [for CEF] to become an influential player in liquid fuels'. It repeatedly stresses the growth in fuel imports and the strategic importance of securing supply locally. The document makes no mention of a 2022 warning from the South African National Energy Association (Sanea) that the arguments around security of supply were no longer applicable given the global refining market, also arguing that the refinery could become a stranded asset in as little as 10 years. There were also apparent errors in the 2023 advice. For example, it stated that the refinery's operations 'currently contribute R45-billion to GDP' and 'sustains 780 direct jobs' and up to 85,000 people through contractors, indirect, and induced jobs. It is not clear how these figures were calculated given the refinery had been shut down and underwater for several years. In fact, Sapref had undertaken mass retrenchments and no maintenance. Yet despite downplaying the economic risks and talking up the future positive impacts of the Sapref refinery, even the 2023 Mazars/CLG advice did not totally ignore the risks of taking on the refinery's liabilities on the 'clean break' principle. It labelled the risk of this as 'high' and noted that CEF should either obtain third-party insurance against possible future claims and liabilities or establish a dedicated separate fund for these future risks. In line with the earlier legal review from Fasken, Mazars noted that one of these risks was class action claims in the future by communities near the refinery. It warned the CEF that the claims could be 'exorbitant and far-reaching', citing the R5-billion silicosis class action case that was settled in 2016 and noting that BP and Shell had refused to include these types of claims in the sale and purchase agreement (SPA). Despite these warnings and the host of other concerns raised in the earlier due diligence, it was announced that CEF had purchased Sapref a mere month after Mazars and CLG presented this advice to CEF's board in April 2024. A problematic partnership seals the deal There is one other notable way that the Mazars transaction advice documents from 2023 differ from those in 2021. At the end of the slides provided in 2023, there is a contact person listed from another organisation; CLG, formerly the Centurion Law Group. The later transaction advice given to CEF by Mazars lists two contact people: Taona Kokera, a director at Mazars, and Oneyka Ojogbo, a director and lawyer from consulting firm CLG. Mazars acted as the lead transaction adviser from 2021 through to its completion, and there is only one other mention of CLG in the documents that Open Secrets has access to: in a number of comments made in track changes on the draft Sale and Purchase Agreement (SPA) between BP, Shell and CEF dated 2 May 2024, a couple of weeks before the purchase was announced. Founded by prominent oil and gas lobbyist NJ Ayuk, who has since stepped down as CEO, CLG is often referred to in the media as a 'South African legal firm'. However, it is not registered with the Legal Practice Council and is more accurately understood as a typical professional services firm that provides a broad range of consulting, legal and other services under one roof. CLG has 25 offices and more than 300 attorneys and 'business advisers', with major offices in nine African countries, including its Sandton office in South Africa. CLG describes itself as an 'undeniable leader' in oil and gas development. Its office at Suite 43, Katherine and West, in Sandton, is the same address linked to the African Energy Chamber (AEC), where Ayuk is chairperson. The AEC is overtly an oil and gas lobby organisation aiming to attract investment and build capacity in the oil and gas sector across Africa and hosts the annual 'African Energy Week' in Cape Town, focused on developing the oil and gas sector across the continent. There is also a notable South African political connection in the AEC. Nosizwe Nokwe-Macamo is on the advisory board, and sits on the 'Local Content Committee', 'Investment Committee', and 'Natural Gas Committee' of the advisory board. Nokwe-Macamo was the CEO of PetroSA for three years between 2012 and 2015, but was suspended and ultimately left after the state-owned entity posted a nearly R15-billion loss in 2015. In 2024, she made a return to state-owned oil and gas when she was appointed by Gwede Mantashe to the board of the brand-new South African National Petroleum Corporation (SANPC). It is unclear when exactly CLG was contracted to work on the project, but the advice that it contributed to was certainly more supportive of the decision to purchase the refinery and more bullish on the future of the oil refinery business. Their advice on this transaction also overlapped with the period Mazars and CLG were giving dubious advice to CEF's then subsidiary – PetroSA – on a separate oil and gas deal. In February 2025, amaBhungane revealed that Kokera had led the Mazars team that gave the green light to three dubious deals between PetroSA and Gazprom, and PetroSA and Lawrence Mulaudzi. Mazars was brought on to advise on the deal in September 2023 and provided a final due diligence report in October 2023. The due diligence labelled Mulaudzi as a 'low-risk' partner, despite publicly available information that he had been involved in alleged corruption in his own business dealings. The PetroSA deal fell apart in June 2024 after Mulaudzi and EquaTheza failed to provide the R227-million that was promised. Mazars has come under fire for its involvement in this deal for several reasons. The final due diligence report it provided was insufficient and left out crucial details it had identified in earlier due diligence about the risks associated with Mulaudzi, his company Equator Holdings, and the financial and technical capabilities that EquaTheza had to take on a project of this nature. Mazars has denied any wrongdoing. Additionally, Mazars was also accused of overcharging PetroSA for the work it did. Mazars had sub-contracted CLG in its work for PetroSA, and Ojogbo had billed as if she had worked on the project from 8am to 7pm every day of the week for two months, charging R4,160 per hour. PetroSA's internal audit team alleged that Ojogbo and Mazars had engaged in 'double dipping'. PetroSA has since written to Mazars, demanding a refund of just over R1-million, but it is unclear whether this has happened. Additionally, the audit team raised questions around Mazars' potential blacklisting by National Treasury for future business with the state if Mazars had, in fact, overcharged and underdelivered. PetroSA's internal audit team also pointed out that CLG had an obvious conflict of interest. In advising PetroSA, they would draft contracts and undertake due diligence on Mulaudzi and his companies. Yet Equator's bid to PetroSA listed CLG as its partner. Mazars and CLG – led by Kokera and Ojogbo – were thus advising CEF on its decision to purchase the Sapref refinery at the same time as providing advice to PetroSA which has since been called into serious question. Both Mazars and CLG failed to respond to detailed questions from Open Secrets regarding the due diligence, the discrepancies in the transaction advice provided to CEF in 2021 and 2023, and their views on the serious concerns raised by other firms in the due diligence process. CEF board signs off and then stalls Regardless of the motivations of those providing the advice to CEF, its board – chaired by Ayanda Noah – still had the responsibility to carefully apply its mind to all of the advice before making the decision to purchase the refinery and on what terms. The scramble to create the South African National Petroleum Company (SANPC), a merger of CEF's subsidiaries – PetroSA, Strategic Fuel Fund and iGas – to spur investment in the country's oil and gas sector has also been a large factor behind the acquisition of Sapref. While it is speculative, it may be that the desire to rapidly consolidate the SANPC and expand its operations led the CEF board to gloss over the very real consequences of purchasing a defunct refinery, taking on its enormous liabilities and the myriad risks identified in the due diligence phase. Despite the more positive tone of the later advice from Mazars and CLG, it still called for further due diligence and a 'comprehensive review of financial records, legal documents and environmental assessments'. Crucially, the CEF board motivated to proceed with the sale just one month after receiving this advice, insufficient time for a further comprehensive due diligence process. Open Secrets sent detailed questions about the transaction to both the Central Energy Fund and Department of Petroleum and Mineral Resources but received no response from either. Since the purchase, CEF and the SANPC (now officially in operation and staffed) have argued that the rehabilitation of the refinery is the answer to national energy security and job creation. They have repeatedly indicated their aim to increase the refinery's capacity from 180,000 barrels per day to 600,000 barrels (bbl) per day, to create a 'mega-refinery'. Yet there is no sign of any progress in this regard. In fact, in February 2025 reports arose suggesting that the state was realising it could not afford to rebuild the Sapref refinery nor expand its capacity to 600,000bbl on its own. Deputy director-general in the Mineral and Petroleum Resources department, Tseliso Maqubela, and Minister Gwede Mantashe told Parliament in February 2025 that they were looking to regional partners – including Angola's Sonangol or Botswana Oil – to help rebuild the refinery. The state thus now sits with a defunct and out-of-date refinery with enormous social and environmental liabilities. It may not have the capital to get it going again, and even if it does, many experts suggest it will be a stranded asset in the near future. Its former owners, Shell and BP, have disappeared into the sunset. All the while, the communities of South Durban continue to bear the disastrous health costs and environmental devastation caused by the refinery. DM Open Secrets is a nonprofit organisation which exposes and builds accountability for private-sector economic crimes through investigative research, advocacy and the law. To support our work including the investigations that go into the Unaccountable series visit Support Open Secrets
Daily Maverick
09-05-2025
- Automotive
- Daily Maverick
Hallelujah and praise be, give thanks for the humble N2 and our national highways
Gather round, people and join me in celebration. I wish to sing a paean of praise for… the N2. The nation's coastal artery runs from Cape Town to Hluhluwe through divergent and often glorious landscape before twisting north past Eswatini and (who knew?) ending its 2,214km life deep inland on the eastern highveld at Ermelo. I have no knowledge of anything on the N2 north of King Shaka Airport, but much of the rest in KZN, the Eastern Cape and the Western Cape I have travelled on in recent times and can report very positively. Sanral – the government organisation responsible for our national roads – gets a bad rap, largely because of its poorly thought-through and costly idea to toll the commuter motorways around Johannesburg. But, to my eyes, they are a functional bunch who do a pretty good job. Our major road infrastructure is generally solid and a source of wonder to visitors from the US, Italy, the UK and even Australia, where their equivalent routes are either crumbling or permanently under laborious repair. Sanral's R100-billion budget seems to represent good value by parastatal standards. And before you scream 'what about the potholes?', those tend to be on municipal roads, which are not within Sanral's remit. On the 870km from Cape Town to Makhanda last week, I did not encounter a single piece of unsafe surface. There is work to be done on the patchwork quilt of bitumen east of Swellendam, and some of the markings are perilously scant, but that's not a bad report card, especially given the pressure that the collapse of the rail freight system has put on the roads. There were three sets of road works under way – which is a good thing. Stop/Goes may irritate, but they demonstrate that maintenance is being done. And on that subject, I spotted five verge clearing crews mowing and trimming diligently. And, while I am in a positive mood, allow me to reflect on a few other N2 things. In 20 hours of easy driving, I did not encounter a single piece of the insane overtaking-on-a-blind-rise kind of driving that used to be routine. Are we becoming safer drivers? The polite yellow line passing dance with flashing lights in thanks is done by pretty much everyone. The route was well policed with a regular presence of flashing blue lights, which generate a Pavlovian response of good behaviour, and a couple of roadblocks. And I saw not a single rust bucket, held-together-by-wire-and-duct-tape taxi. They also used to be commonplace. I appreciate that the Taxi Recapitalisation Programme, begun in 2006, was deeply flawed and has many critics. But the government claims 84,000 old taxis have been scrapped at a cost of R6-billion, and I suspect that the overall outcome is positive, given that almost every taxi I see now is in decent condition. The vibrant health of our agriculture was in abundant and constant evidence all along the N2. The extraordinary orchards of Elgin; shiny new seeding machinery in action near Bot Rivier; the immaculate vineyards of Gabrielskloof; vast oceans of pristine netting covering fruit trees in the Overberg; healthy herds of ostriches, cattle and sheep everywhere; barns, fences and warehouses in good condition. And, where traditional farming has proved burdensome, the owners have reinvented themselves into thriving game farm destinations like Amakhala in the Eastern Cape. Or they farm the wind. The massive sets of metal sails at Caledon and Humansdorp represent huge investments. Thinking of investments, there's new housing in abundance beside the N2 in Mossel Bay and Plett, and even whizzing past much-maligned Gqeberha, some serious evidence of fresh economic activity can be spotted. And who remembers a time, not so long ago, when a journey on the N2 was a culinary desert in which a Wimpy coffee was your best option? Not any more. The route is littered with magnificent offerings: the astonishing Peregrine Farm Stall, Houw Hoek, the Ou Meul at Riviersonderend (which was running full throttle at 7am last Friday), Tredici at Swellendam, Ikigai at Riversdale, the venerable Blue Crane at Heidelberg, 'Thyme and Again' at Keurbooms – just some of the superb roadside outlets, along with countless other splendid padstals, all of which seem to have excellent, friendly staff. Please don't take this for granted. My international guests marvel at these places, saying they have nothing remotely like them on their primary routes for the quality of what they offer. Yes, questions abound and the true picture of the journey is complicated. How much are the farmworkers paid? Will Trump, the ANC and Portnet between them shaft our successful farmers? What is life like in the ever-sprawling townships outside Grabouw and Mossel Bay, and in the backstreets of those country towns? What on earth is going on with the forestry land at Knoflokskraal? That 60kmh speed limit on the downhill to Kaaimans before Wilderness is a straight revenue gouger. The sulking, hulking, mothballed Mossgas refinery near Mossel Bay is a monument to the incompetence and corruption of PetroSA. Makhanda is still a mighty municipal mess. And every river you cross raises an alarm on water quality. All valid and true. Our land is both beautiful and ugly. But can we, just for once, don the rose-tinted glasses and celebrate something that works remarkably well? Please give me a hallelujah for the N2. Thank you, brothers and sisters. Amen. DM
Eyewitness News
30-04-2025
- Business
- Eyewitness News
US shuts down massive Lesotho development project
A 6-billion Maloti (R6-billion) American-funded development project in Lesotho is on the verge of collapse as the United States moves to shut down the Millennium Challenge Corporation (MCC), the agency behind the programme. Launched last year, the Lesotho Health and Horticulture Compact was to benefit approximately 2.5 million people over the next 20 years and generate over 90,000 direct and indirect jobs over five years. The Lesotho Health and Horticulture Compact included three projects: A $75.4-million health project to improve primary health care and modernise data systems, improve maternal and child health, and support HIV/AIDS treatment; A $118.6-million food production project aimed at increasing rural incomes and food security through investments in irrigation; and A $62-million project aimed at small businesses, especially owned by women and young people. According to the 2022 agreement between the MCC and the Government of Lesotho, seen by GroundUp, the US committed $300-million, while Lesotho pledged to contribute no less than $22.3-million over the lifespan of the compact. The Millennium Challenge Account (MCA) was set up to implement the project in Lesotho. Both the MCA in Lesotho and the Lesotho government have remained silent on the future of the initiative, following the closure of other US-funded programmes. But GroundUp has seen correspondence suggesting that the project is being shut down. In response to questions from GroundUp, acting chief executive for Lesotho of the Millennium Challenge Account, Limpho Maema, said only that MCC and the Lesotho government were discussing the issue. She said once a final decision had been made, the government would issue a statement. Foreign Affairs Minister Lejone Mpotjoane referred all inquiries to Finance Minister Retselisitsoe Matlanyane, but she said she was out of the country and too busy to comment. However, staff on the food production project have been told: 'As per an email from Limpho [Maema]… Regrettably, the determination is that the Lesotho Health and Horticulture Compact will be closing'. GroundUp has also seen correspondence from Maema to contractors saying the same thing. In her email, Maema said services would remain in place 'until we have confirmation of a definitive date of closure' Contractors to the project include consultants on engineering, horticulture, gender, and business development, as well as auditors and providers of phone services, IT, and vehicles. Employees of Cowater International—a Canadian consulting firm awarded a $21-million contract in the small business programme —have already been instructed to return company equipment in preparation for shutdown. In an internal email last week, Cowater Project Manager Antoinette Albisetti told staff to bring laptops and equipment back to the office. 'We are now moving all office equipment into storage and looking to tie up loose ends before the end of the month,' she said. According to the agreement with the US and the Lesotho government, the government must return any unspent funds to MCC. In Phamong, Mohale's Hoek — one of the areas earmarked for implementation of the horticulture project — uncertainty now looms large. 'Maamohelang Tomo, a local villager who served on the land verification committee, told GroundUp that communication about the project has abruptly halted. 'Since we were told to suspend services in January, there's been no word on the way forward,' she said. Tomo and her team had been verifying land ownership for fields earmarked for the project. The initial plan included constructing access roads and irrigation dams before moving into crop production. 'We had already concluded discussions with landowners, and many had willingly agreed to release their fields,' she explained. Now, with MCA operations in question, that progress is at risk. 'The closure would be a heavy blow. We had made plans based on the payments that we were expecting,' said Tomo. 'The community trusted us because we were the ones meeting with them, persuading them to release their land. Now they come to us, asking for answers, but we have nowhere to turn for information and nothing to tell them.' A request for comment to the US Embassy in Maseru had not been answered by the time of publication. On previous occasions, the Embassy has referred queries to the US foreign affairs administration in Washington.
