Shell’s divestment stance contradicts role during apartheid
WHEN the news initially surfaced last week, the focus was on Shell’s reported intention to divest from Shell Downstream South Africa and “exit” the country after 120 years since 1902. This gave rise to many vexing questions.
Shell operated in South Africa during the era of the Cape, Natal, Transvaal and Orange River racist, oppressive colonial regimes. The British oil and gas multinational corporation persisted and even expanded its operations following the consolidation of the four into the racially oppressive British colonial dominion, the Union of South Africa, in 1910.
British imperialist-controlled capital and the white capitalists, as the Communist International found out in 1928, were equally interested in the merciless capitalist exploitation of the oppressed black majority. The oppressors continued the colonial expropriation of the black majority and deprived them of human rights, access to essential services and independence.
Shell continued to invest and expand its presence in South Africa even after the transformation and intensification of the racist oppressive colonial regime into the apartheid system in 1948. The British oil and gas multinational corporation continued, maintaining its presence in South Africa even amid the sanctions imposed by the UN against the apartheid regime after a call by the oppressed for the sanctions.
Similar to the Chamber of Mines, which played a significant role in shaping the successive colonial and apartheid regimes by advocating legislative proposals to maximise profits through forced and then continuously reproduced proletarianisation and exploitation of the oppressed, other sectors of capital also engaged in similar strategies. The capitalist stakeholders contributed to erecting the racialised and gendered structure of what became the underpinnings of South Africa’s principal economic, social and other development problems, the legacy of which continues to endure to this day.
Most, if not all, of the capitalist forces which were complicit in and benefited from colonialism and apartheid have not accounted for their role. For example, they have not appeared before the Truth and Reconciliation Commission and have not offered any reparations from the wealth they appropriated and accumulated through profits during the colonial-apartheid era.
Ironically, most, if not all, of the capitalist forces, calling themselves the private sector, have recently come out to blame the post-apartheid, democratically elected government for the principal problems, inclusive of the legacy of the problems South Africa faces today. They advocate for the solution to be that they run the country.
A vexing question regarding Shell’s intention to divest from downstream investment in South Africa is how the British oil and gas multinational corporation found it profitable to operate in South Africa for 92 years during the era of racist and sexist capitalist oppression and merciless exploitation of the majority from 1902 to 1994, compared to the mere 30 years of the country’s democratic dispensation characterised by the development of equal rights for all.
When the news regarding its intention to divest emerged, the dominant narrative in the media reports that carried the story was that Shell’s intention to exit South Africa followed a dispute with its BEE partner. The BEE partner was not named. The root cause and nature of the dispute were not unpacked. The reader was left with the impression that Shell’s intended exit was a form of strike action against the BEE policy, which was expanded in 2003 to develop towards broad-based BEE.
Thebe Investment Company, probably the BEE partner referred to in the initial stories, as follow-up news confirmed, has come out. This week it has denied the narrative that Shell’s intended exit from South Africa originated from the dispute it has with the British multinational oil and gas corporation.
In coming out, Thebe Investment Company said Shell communicated its intention to it and that the intention has nothing to do with their relationship or dispute. Their dispute concerns the valuation of Thebe Investment Company’s shares acquired in Shell Downstream South Africa in 2002. The dispute arose after Thebe Investment Company decided to withdraw from the Shell Downstream South Africa and sell back the shares to Shell.
On the one hand, Thebe Investment Company asserts that its valuation of the shares was determined through a pre-agreed formula and an independent valuation expert adhering to international standards.
On the other hand, some news stories suggest Shell is contending that Thebe Investment Company’s shares are worthless. In coming out this week, Thebe Investment Company brought the public’s attention to an arbitration process to resolve the dispute.
Whatever the outcomes, it appears the dispute is underpinned by downstream oil refining capacity that has been rendered redundant and, as opposed to during the colonialapartheid era, Shell pursuing divestment.
Shell boasts about 600 forecourts across South Africa. In collaboration with BP’S southern African regional unit, Shell possesses the largest refinery in South Africa – Sapref in Durban. However, this 180 000 barrel-a-day refinery ceased productive operations before a sale in 2022. Instead of being cared for and maintained, the refinery was subsequently damaged by floods. Furthermore, as the transition to a low-carbon future progresses, new regulations necessitate refineries to adhere to low-sulphur fuel specifications. This requires productive capacity recapitalisation and upgrading, as opposed to import-driven divestment.
In its manifesto for the elections scheduled for May 29, the ANC, after extensive consultation with its alliance partners, including the SACP and Cosatu, has pledged to prioritise the rebuilding of the country’s oil refining capacity and further expanding it by constructing new facilities. This is critical as part of the wider energy mix policy and ensuring energy security of supply.
The SACP has engaged with authorities in Venezuela, who have extended an offer to provide crude oil to South Africa at a discounted price. If the government, as advocated by the SACP, pursues the affordably priced oil for efficient domestic refining into finished oil by-products, such as petrol and diesel, which are crucial inputs in production and transportation, the action will help in price reduction and assist our country in tackling the rising cost of living.
” If the government, as advocated by the SACP, pursues the affordably priced oil for efficient domestic refining into finished oil by-products … the action will help in price reduction and assist our country in tackling the rising cost of living.