Petroleum industry upstart Nako Energy has blown the lid off what it describe as “war-like tactics” and “monopolistic practices” by major oil and gas companies and implicated state-owned PetroSA in the alleged sabotage of black-owned businesses and the manipulation of critical industry contracts.
In a complaint to the Department of Mineral Resources and Energy, which recently surfaced due to lack of intervention since the letter landed on the desk of director-general Jacob Mbele in August last year, Nako Energy’s co-founder, Nkosinathi Ngwenya, paints a harrowing portrait of a sector under siege – not by foreign interests but by a small cabal of multinational giants and their local enablers within state organs.
The allegations strike at the heart of transformation in South Africa’s energy sector.
The letter details a pattern of exclusion, obfuscation, and outright sabotage.
Far from being given a fair chance to compete, Nako Energy alleges it has been subjected to scrutiny and contract manipulation designed to keep newcomers, and especially black entrepreneurs, out of the lucrative petroleum value chain.
“Every vessel we have imported has been met with what can only be described as war-like tactics, severely impacting our ability to function, turn a profit, and establish ourselves as a significant player in the industry,” Ngwenya wrote.
In defiant terms, Ngwenya rejected any insinuations of political favouritism. “Nako Energy has never received any preferential treatment in the oil and gas industry. The barriers to entry have not only hindered us but have also prevented many others from entering this highly competitive sector.
“We formally lodge a protest and complaint against the ongoing attacks, sustained investigations, and insinuations that we may be receiving preferential treatment or undue attention.”
The company’s founders, who pride themselves on their black ownership and industry experience, describe how their attempts to form partnerships and invest in infrastructure met resistance at every turn, especially when dealing with PetroSA, the state oil company. This, Ngwenya said, is a betrayal of the very “codes of good practices” that were supposed to open the sector to black entrepreneurs.
The most explosive allegations relate to the involvement of PetroSA insiders who Ngwenya claims leaked his entity’s confidential business information and contracts to competitors and law enforcement agencies, leading to “unfounded accusations” and reputational damage.
As a result, the company’s business case – allegedly worth over R1-billion to PetroSA – was “dissected and undermined, with critical elements being stripped away”.
But it is the company’s assertion of internal sabotage that will be most damning for those tasked with safeguarding South Africa’s transformation agenda.
“What is even more troubling is the infiltration of state organs by the majors, particularly within PetroSA, where their interests are now protected by gatekeepers. For example, Nako has had its samples handed over to the industry without proper consultation or adherence to established policies and procedures.
“This allowed the majors to conduct analyses on our product and request information that seriously infringes on our intellectual property,” the complaint claims.
Despite the government’s much-publicised transformation goals, Ngwenya charges PetroSA’s legal leadership dismissed them as “untrusted”, not for any operational failing, but for their “youth, inexperience and lack of trustworthiness”.
This, he contends, flies in the face of both their credentials and successful deliveries. “It is unclear on what basis these judgements were made, particularly when Nako has been the only BEE and indigenous company to deliver successfully, time after time,” the complaint concludes.
Ngwenya said the company faced a financial onslaught comparable to the decimation wrought by state capture’s most powerful architects. He says it is buckling under the weight of “credit exposure of R600-million to our funders, $15-million to our component suppliers, and $10 million to our shareholders”.
“The finance charges alone are enough to sink any corporate entity, but thanks to the strategic intent and vision cultivated through our economic activism… we have managed to stay afloat.”
Nako Energy claims it is being starved of liquidity and opportunity by a system that appears to serve only the entrenched multinationals. “Our outstanding invoices now exceed R950-million, and our demurrage invoices have accumulated to over $12-million. This financial burden has severely impacted our ability to commission our refinery, build necessary storage facilities, and enter the retail market, which remains dominated by multinationals.
“It is rather disheartening that when other multinationals and international traders supply PetroSA, there are never any disputes over demurrage, and their invoices are settled promptly. In stark contrast, Nako has had our demurrage invoices outstanding for over 11 months.
“This disparity highlights the unequal treatment we have received within the industry.”
The company made an urgent plea to the government, demanding a fair hearing. “We need to officially present our case and seek support that will enable us to continue our mission of establishing a locally driven oil and gas enterprise.”
PetroSA declined to comment, and Mbele’s office failed to respond to questions.
