Unearthing the truth of fossil fuel contracts

Hi everyone, 

This week I want to spotlight the relentless work of amaBhungane, a gritty investigative newsroom in South Africa. In particular, I’ve been talking to the tenacious journalist Susan Comrie, who has been digging deep to uncover the truth behind some lucrative government contracts.

South Africa has faced a severe energy crisis for the past 17 years, with scheduled power cuts – known locally as load-shedding – becoming part of daily life. People have endured long, cold winters with only intermittent electricity, meaning no lights or heating. The lack of power has derailed local economies.

In January last year, to help address this, the state-owned oil and gas company PetroSA advertised a tender seeking a partner willing to invest at least $200 million into their gas-to-liquids refinery. The hope was that this investment might finally secure a more reliable power supply for the country.

Landing this $200 million contract could be immensely profitable for the chosen partner, as Comrie explained to me. However, South Africa’s public procurement process “is a complete mess – there’s very little transparency and consistency.” With no one else tracking developments, she took it upon herself to start sleuthing.

It turned out that 19 of the 20 initial bids were eliminated, leaving just one contender: a local subsidiary of Gazprombank, a bank partly owned by the Russian government and under US sanctions. A partner under sanctions might seem like a strange choice for such a crucial national project.

Comrie uncovered leaked documents showing that, despite Gazprombank being the last bidder standing, both the evaluation committee and board had flagged concerns about working with it. There were understandable fears that secondary sanctions on South Africa could lead to wider economic instability.

In another contract that PetroSA put out to tender at the same time, a deal was awarded to Equator Holdings, a company headed by Lawrence Mulaudzi. Mulaudzi’s name had come up 176 times in a commission report into separate allegations of corruption. Yet again, an unusual choice for a government partner. (Mulaudzi’s company, it should be noted, cast this in a different light: according to them, he was a “transparent, truthful and forthright” witness who “fully cooperated with the commission”.)

It's unclear where Equator will find the funds to meet its obligations. According to amaBhungane, Mulaudzi's financial footing is shaky; Absa Bank previously repossessed his Bentley, and last year it issued two debt judgments against him totaling R2.8 million ($155,000).

When Comrie got in touch, Mulaudzi dismissed the concerns: “We are … pleased as a company to enter into this partnership with PetroSA which will provide security of gas supply and unlock infrastructure bottlenecks in the energy space for South African economy,” he said in a two-page letter, sent on behalf of the company.

“Although we cannot disclose the details of the transactions as we are bound by legal confidentiality provisions, we can confidently state that Equator Holdings complied with PetroSA requirements… We have every intention to deliver, and we will!”

The letter also said the company would “not comment any further on matters that … are unrelated to the work that Equator Holdings is engaged in with PetroSA.”

For a responsible journalist, reporting demands hard evidence. Notably, despite the red flags Comrie uncovered, she hasn’t yet found proof of corruption, although she described what she found as, in her view, “looking like manipulation of the process”.

There’s still plenty of murk and mystery around the decision-making that led to awarding contracts to a sanctioned Russian bank and Mulaudzi’s company.

It might not last, though. In September, a rival bidder filed a court challenge against PetroSA’s decisions, demanding transparency and the release of internal documents detailing why Gazprombank and Equator Holdings were chosen for these critical gas deals. The Daily Maverick has all the details – and I’ll be keeping an eye on how this develops too.

“Our coalition has long advocated against the government’s oil and gas exploitation plans, which threaten both our natural resources and local communities.

We first connected with Jo when she visited the DRC and engaged us on these issues. Her reporting on the backroom deals surrounding oil contracts has been critical, especially in exposing the flawed process behind awarding these lucrative deals.

~ In her investigation, Jo revealed that one of the companies that won the rights to a gas block in Lake Kivu, Alfajiri Energy, had been set up only weeks after the auction was announced. Its corporate headquarters was a suburban home in Calgary, Canada. ~

Recently, the DRC government announced the cancellation of a major oil auction – a huge win for us. This decision reflects years of our advocacy, where we’ve highlighted concerns about corruption, procedural violations, and the lack of transparency and public consultation. 

Yet, the government indicated they might relaunch the auction, so our work is far from over.

The Congo Basin is invaluable; it’s a crucial carbon sink and supports countless communities. Oil exploration would damage the forest and affect water sources, like the Congo River, with far-reaching impacts. We believe the country’s future lies in renewable energy, which could position the DRC as a global leader in the energy transition.

Journalists like Josephine are essential allies. They amplify our concerns, reaching audiences and stakeholders who have the power to make a difference.”

I feel like I’m constantly talking about stories by Jo! Last time it was her investigations into how banks keep funding fossil fuels. Now, her work in DRC. And I know she’s got more great stories on the way. 

There’s a good reason for that. Coverage of oil and gas may not be the most glamorous of journalism beats, but is so important! Governments control their nations’ natural resources and the value of these are often worth millions if not billions. 

With money this big up for grabs, the process is ripe for abuse. We desperately need people like Susan Comrie and Jo Moulds who look into these matters. At the end of the day, corruption is paid for by the poor. 

Please do get in touch with feedback, suggestions, comments, or just generally to say hello. I love hearing from you. 

Have a great week,