Our latest investigative piece detailed the scarcely believable story of how PetroSA effectively gave a little-known company a R933-million cargo of diesel with no contract and no guarantee it would be paid.
This is just the latest in a series of stories we have published on PetroSA’s financial machinations and its fundamental role in the country’s ability to keep the lights on.
- Read our whole series on PetroSA here.
With loadshedding and the cold weather returning, Eskom’s use of diesel is once again in the spotlight, but the finances and workings of PetroSA – its main supplier of that diesel – are most certainly not.
The lack of transparency within PetroSA remains staggering.
A reminder: PetroSA is a major public entity and a wholly-owned subsidiary of the Central Energy Fund, a state-owned company. Its stated mandate is to “ensure the security of energy supply for South Africa”.
Given the central role PetroSA plays in South Africa’s energy architecture, its operations are clearly in the public interest and deserving of true transparency. PetroSA, however, don’t think so: they haven’t published an annual report since 2021, don’t award diesel contracts via tender and refuse to report irregular contracts to National Treasury’s Office of the Chief Procurement Officer as required.
In short, it appears that PetroSA has unilaterally decided that the laws governing public procurement and its monitoring do not apply to it. Strangely, no one seems very perturbed by this, at least not Minister Gwede Mantashe or the Parliamentary committee tasked with its oversight.
But we are.
We have repeatedly sent requests for documents under the Promotion of Access to Information Act (PAIA) and sent questions to PetroSA throughout our investigations. Every time we are met with either stony silence or curt refusals.
We sent the first of two applications for access to information to PetroSA in December 2023.
The requests were for a list of companies that supply diesel to PetroSA, the volume of diesel each supplied and documents relating to multi-billion rand tenders, including the deal awarded to Russia’s Gazprombank for the refurbishment of the offshore gas-to-liquids refinery in Mossel Bay.
When neither request was responded to, we approached the Information Regulator.
- Read more in our joint piece with Open Secrets, here.
The Information Regulator is a brand-new body, established in the Protection of Personal Information Act (POPIA), and is responsible for overseeing public (and private) bodies’ compliance with PAIA.
Late last year the Regulator asked PetroSA why they had not responded to our PAIA requests and why they had refused to disclose the requested information.
In their response to the Information Regulator, PetroSA has maintained that the names of its diesel suppliers and the volumes it procures are “commercially sensitive” and confidential. In response to our request for tender documents, they believe that sharing the information would “erode the bidders’ ability to compete.”
This response is the first time we’ve been able to see PetroSA’s justifications for refusing to make information public. That the Information Regulator was able to get an answer is a positive step and demonstrates the potential value of the role of the Regulator in the PAIA process. Previously, the only option if a government department or public entity refused (or ignored) our PAIA request was a costly legal battle in the courts.
In our PetroSA complaint, the Information Regulator gave us the opportunity to provide our response to PetroSA’s arguments and we explained why their refusal simply isn’t in line with South African law on disclosure of this type of information.
PetroSA believes that it does not have to be transparent about any of the dealings on which we wanted more information. These deals involve diesel contracts worth R45-billion and offshore gas and infrastructure deals worth R30-billion, and no transparency means no scrutiny.
PetroSA may like it this way, but it is inconsistent with our constitutional framework.
The South African Constitution is clear that “public administration must be accountable” and “transparency must be fostered by providing the public with timely, accessible and accurate information.” It also requires that all public procurement must be “fair, equitable, transparent, competitive, and cost-effective”.
PetroSA, as a state-owned company, is bound by these principles and required to conduct transparent procurement.
The courts have frequently ruled on the importance of accessing documents related to the procurement of public goods and services. Most recent and pertinent is the decision from the North Gauteng High Court, which ordered Eskom to disclose information related to their coal and diesel supply contracts and rejected Eskom’s arguments that disclosure could cause commercial harm to its suppliers. The Court said that the allegations of irregularities in the contracts meant that transparency had to prevail over concerns of commercial confidentiality and so ordered that the contracts be disclosed.
The Information Regulator has the power to investigate whether PetroSA’s refusals of our PAIA requests and their justifications are valid – including by requesting to see the documents we want and then issuing a finding. From our (limited) experience, that finding could then be sent for evaluation by the Regulator’s enforcement committee – a panel of external experts tasked with assisting in the resolution of complaints made to the Regulator.
But we also believe there are more effective ways PetroSA could adhere to their obligations to conduct their business in a transparent manner.
PAIA obliges public bodies to disclose information when requested to do so (if there are no legitimate grounds for refusal). However, for over three years we have been advocating for proactive disclosure of tender documents through our work on the Public Procurement Act. This would mean that all public bodies would have to publish tender adverts, bids received and contracts awarded automatically in detail – and not only when investigative journalists come knocking.
Giving the public access to documents throughout the tender process allows for real-time monitoring and helps identify irregularities and corruption before they go too far to be stopped.
If this were happening, then the risk of the type of deal we see in the Nako fiasco would be significantly less.
Many countries around the world have this proactive disclosure of tender documents – a clear illustration that PetroSA’s argument that disclosure harms “bidders’ ability to compete” is bogus.
Minister Mantashe has told us that exposing the business of PetroSA would “kill it”, but if the deals PetroSA make can only survive in secrecy, are they really deals that should ever be made?
