PetroSA bidder ‘didn’t have the money or skills’
Previously disqualified Equator Holdings appointed partner in offshore deal
● Soon after Equator Holdings was appointed to partner PetroSA in a R21bn deal four months ago, its politically connected owner Lawrence Mulaudzi started scrambling to find entities with the requisite technical and financial capacity to execute the huge project.
Equator Holdings was appointed in December as PetroSA’s partner to finance and rebuild the stateowned entity’s offshore gas infrastructure — to bolster the country’s electricity supply.
This was after being disqualified for a R3.7bn contract to restart a gas-to-liquid refinery in Mossel Bay because the authenticity of Equator could not be established and the tender was awarded to Gazprombank.
A rival bidder, Phezulu Natural Energy Resources, claims Mulaudzi’s firm did not have the financial or technical capacity to deliver the project. This was because days after being appointed on December 11, Mulaudzi contacted Phezulu to inquire about its technical expertise to carry out the project and “potentially also access to funding”. The next day the companies signed a nondisclosure agreement.
Phezulu’s lawyer, Fred van der Westhuyzen, wrote to PetroSA, accusing the SOE of irregularly appointing Equator and of “scope creep”. PetroSA has kept mum over the claims and did not respond to questions from the Sunday Times despite promising to do so.
Van der Westhuyzen said: “Mr Mulaudzi stated that purportedly at the behest and direction from PetroSA, Equator is to engage with our client to comply with and satisfy the technical requirements in the delivery of the projects, including the potential provision of funding. This was ostensibly based on the technical expertise and financial capability demonstrated by our client in its conceptual proposal under RFP [request for proposal] 0001/2023.”
Equator was appointed PetroSA’s partner in the R21bn deal (tender RFP 0004) to fund the development of new — and reinstatement of existing — gas processing facilities, pipelines and infrastructure. Mulaudzi is adamant his company won the contract fairly and had secured €1.2bn (R24bn) which he had presented to PetroSA.
PetroSA went to the market advertising three RFPs in January 2023 as part of its planned gas-to-power initiative to supply about 180MW to the national grid. Revitalising its Mossel Bay refinery would create jobs after about 2,000 were lost in 2020 when the refinery shut.
Van der Westhuyzen’s letter alleged that PetroSA did not publish any amendments to RFP 0004, indicating the scope had been extended from only funding the project to include delivery of the “actual feasibility studies and projects as per the gas infrastructure agreement”.
Phezulu said it was prejudiced by PetroSA not publishing an extension of the scope of RFP 0004. It did not bid because the scope was limited to funding. Phezulu later discovered it had been extended to include technical expertise.
“It is evident that our client has been undermined and severely prejudiced by the awards made by PetroSA in respect of both RFP 0001/2023 and RFP 0004/2023, including the execution of the gas infraBy structure agreement, and that our client’s rights have been infringed ... A plausible assumption can be made, and conclusion reached, that the RFP 0004/2023 was potentially awarded irregularly by PetroSA to Equator and clearly included ‘scope creep’,” wrote Van Der Westhuyzen.
Mulaudzi said his company had met all the requirements and submitted a detailed proposal.
“We can confidently state that Equator Holdings complied with PetroSA requirements; and has engaged or formed strategic partnerships with various stakeholders and/or institutions that even go beyond the South African border,” he said.
He had approached Phezulu, a standard practice in the industry, as big projects needed partnerships to be well executed.
Phezulu was adamant in its letter that Mulaudzi had no financial or technical capacity to deliver. “During the call it became clear to our client that Equator did in fact not hold the requisite technical expertise, capacity or ability to deliver the projects, nor had Equator secured the relevant finance,” wrote Van der Westhuyzen.
The companies fell out this year after Mulaudzi allegedly tried to circumvent Phezulu by contacting its consortium and technical partners to secure direct contracts with them.
“The technical partner refused to enter into any agreement with Equator to the exclusion of our client and immediately reported the same to our client. The aforementioned action was a clear and blatant action by Mr Mulaudzi and Equator to circumvent our client in a desperate attempt to be perceived to the outside world as a company with the requisite technical expertise and ability to deliver the feasibility studies and projects, which it is not,” wrote Van Der Westhuyzen. According to Phezulu, Mulaudzi said he did not want his company to look like a middleman so he needed to sign direct contracts with the technical partners. “This was in the words of Mr Mulaudzi, to ensure that, ‘Equator does not look like a middleman subcontracting the services’,” said the letter. Phezulu then stopped further engagement with Mulaudzi.
Mulaudzi denied the allegations, saying he pulled out of discussions because Phezulu was not handing over documents, including proof of funding.
“They wanted me to sign an MOA (memorandum of agreement) with them but were not giving me the documents I was asking for. It is not true that I was trying to contract with their technical partners directly to avoid that my company would appear like a middleman. I used that word (middleman) because they were not giving me the documents ... and I couldn’t just sign an agreement and let someone just go do the work,” said Mulaudzi.
He said there were no grounds to disqualify Equator and some competitors believed they “qualify more than any other, including us”.
Mulaudzi was also involved in a partnership with Theza Oil and Gas Exploration in RFP 0003 to restart PetroSA’s wells and drill new ones, in what investigative journalism organisation amaBhungane reported to be an “arranged marriage”. AmaBhungane reported that the two had formed EquaTheza, with Equator as the funder for the project.
But Mulaudzi said he had resigned from the consortium because of claims that his company was imposed on Theza.
Theza’s Barend Hendricks said they were surprised when Mulaudzi pulled out but were continuing without Equator.