Enviroshore denies stalling in oil deal

A South African company that borrowed $15.4m worth of oil sludge from the government to help fund the recovery of crude stored in a mine during apartheid has yet to implement the project more than three years after the contract was signed, according to a person familiar with the situation.

The project sprung from a request for proposals issued in 2013 by the Strategic Fuel Fund (SFF) to recover and reprocess sludge. One of the respondents was Enviroshore Trade and Logistics, which said it believed that there could be as many as 5-million barrels of crude in the Ogies coal mine in eastern Mpumalanga.

The company offered to retrieve it on condition it was loaned 300,000 barrels of oil from the nation’s strategic reserves. It was agreed it would keep 70% of recovered fuel.

International sanctions hindered SA from buying oil during apartheid and the SFF was tasked with ensuring the country had sufficient fuel supplies. The entity continued to manage strategic fuel stocks and storage facilities after apartheid ended.

While a company borrowed crude from the SFF’s Saldanha storage facility on the West Coast, the rotation of the oil stocks was “irregular” because proper procedures were not followed, the Central Energy Fund said in its 2016 annual report.

CONTRACTED BY CFF

The oil was valued at R198.9m on the agreed replenishment date and the contractual deadline to replace it was missed.

The person who said the project had not started, asked not to be named because the information is not public.

Enviroshore confirmed it had been contracted to do work by the SFF, but denied there was anything amiss.

“Enviroshore’s contract for the recovery of sludge and the pumping of water from the Ogies storage facility, as well as a subsequent related contract for the recovery of 300,000 barrels of sludge from the Saldanha storage facility, were entered into pursuant to the issuing and awarding of a fully compliant public tender,” Vuyo Mkhize, a public affairs consultant to the company, said.

“Performance on these contracts is continuing to the satisfaction of both parties.”