JOHANNESBURG—South Africa’s African National Congress (ANC) government has endorsed a sanctioned multinational energy corporation owned by the Russian state to rebuild a gas refinery.
The deal will be financed to the tune of almost 4 billion rands ($219 million) by Gazprombank, the financial arm of Gazprom, Moscow’s gas company.
The gas deal will put South Africa, the second-largest economy on the continent, into massive debt to Moscow, giving the Putin administration a stronger hold over a country that’s expected shortly to be a permanent member of the U.N. Security Council.
“Politics aside, our government has no money, and we can see that in the shrinking budgets it’s imposing on essential services such as health, for example,” Kevin Lings, chief economist at South Africa’s STANLIB financial group, told The Epoch Times.
“We’re in this terrible position because of the government’s financial mismanagement. We’re already in huge debt to China and the World Bank and we cannot afford these energy megaprojects.
“We’ve taken billions of dollars in loans from the United States and Europe to fund our transition to renewable energy and now we contract Russia to invest in gas? It doesn’t make sense.”
Upcoming Election in May
It claims the ANC is being “bankrolled” by Russia ahead of a crucial national election in May 2024.The ANC hasn’t denied that it receives funding from Russian sources, saying it gets money from a “variety of supporters, like any other political party.”
“The ANC has been a great friend to Russia since its invasion of Ukraine, a friendship that’s swayed other African countries away from condemning the Kremlin’s brutality,“ DA leader John Steenhuisen told The Epoch Times. ”The ANC has promised ‘close military cooperation’ with Moscow into the future.
“Just months ago, the ANC couldn’t afford to pay staff. Now, suddenly, it’s flush with cash as we go into the most important election since 1994. It doesn’t take a genius to put it all together.
“The Gazprom gas deal is just another piece of the puzzle, as the ANC sells its soul, and South Africa’s soul, to Putin’s murderous regime.
“Moscow needs the ANC to win next year’s election because then it keeps hold of a major developing world ally and one that is currently a non-permanent member of the Security Council, where it happily does what Russia says.”
South Africa’s energy minister, Gwede Mantashe, is a committed communist. He’s infamous in his home country for regular, unexplained visits to the Kremlin, his vehement assertions that Russia’s attack on Ukraine is “justifiable defense” against “NATO aggression,” and his “proud ties” to Russian President Vladimir Putin’s United Russia party and its subsidiary, the All-Russia People’s Front.
Officials inside South Africa’s energy department said 20 companies submitted bids to refurbish the gas refinery, with one telling The Epoch Times that the bidding process was “heavily weighted” in favor of Gazprombank’s local subsidiary, GPB. Africa & Middle East Pty Ltd.
Independent energy analyst Ted Blom said the government “desperately” needs the refinery to convert natural gas into diesel fuel.
“Diesel powers turbines at the country’s power plants. The government has been importing megaliters of the stuff as it tries to save face by easing power outages before next year’s elections,” he told The Epoch Times.
Worsening Blackouts
The nation has been enduring electricity blackouts since 2008, but they’ve become much worse since 2020. It now suffers daily outages lasting anywhere from 4 to 12 hours, with infrastructure failures causing outages in some areas that last for days and sometimes weeks.Diesel-burning turbines allow Eskom to have fewer and shorter blackouts.
In terms of the government’s agreement with Gazprombank, the Russian entity will “share” future profits made by the refinery.
“There’s a hell of a lot of money involved here; hundreds of millions of dollars,” Mr. Blom said. “Our state petroleum company, PetroSA, has benefited immensely from the electricity crisis by selling diesel to Eskom to drive its turbines, and to millions of South Africans for their private generators.
“PetroSA’s turnover this year grew to an unprecedented $1.2 billion. Russia is smiling.”
In May, when rumors began surfacing of the ANC’s engagement with Russia in a gas project, both the South African Treasury and the South African Reserve Bank (SARB) warned that accepting large amounts of money from Moscow and sharing profits with Kremlin-linked companies would have “consequences” for South Africa.
“This is an entity that is under sanctions from one of our primary trade partners, the United States,” SARB Governor Lesetja Kganyago said.
“The possible imposition of secondary sanctions on South Africa ... could lead to financial instability in South Africa. Should this risk materialize, the South African financial system will not be able to function if it is not able to make international payments in USD [U.S. dollars] and it could lead to a sudden stop to capital inflows and increased outflows.”
Undeterred, the Ramaphosa administration this week announced plans to build several new nuclear power stations.
The Koeberg plant near Cape Town, Africa’s only nuclear power plant, has been dysfunctional for several years.
“It’s presently working at about half capacity, and that’s also because our government has consistently failed to do the necessary upgrades and maintenance at Koeberg,” Mr. Blom said.
South Africa’s electricity minister, Kgosientsho Ramokgopa, told The Epoch Times that the “extra” nuclear power “will go a long way to ending our energy crisis and will make South Africa much more energy-secure.”
‘Dubious Energy Deals’
Mr. Blom commented: “The ANC got us into this energy crisis and now it wants praise for signing dubious energy deals that will supposedly get us out of that very same mess. What a cheek.”Mr. Ramokgopa said his government has spoken with a “variety of different vendors about whether they’re interested” in building the plants.
“We’ve asked them for proposals,” he said.
Asked by The Epoch Times if one of those vendors is Rosatom, the Russian state atomic energy corporation, Mr. Ramokgopa responded, “It’s much too early to mention the names of potential partners.”
In 2014, then-South African President Jacob Zuma, a Soviet-trained former ANC intelligence chief with extensive Russian contacts, signed a secret deal with Rosatom to build nuclear reactors in South Africa.
If it had gone through, the $76 billion agreement would have been the biggest procurement contract ever signed in the country.
Economists said it would have locked South Africa into debt with Russia and made it energy-dependent on it for decades.
Treasury and finance ministry officials, the media, civil society groups, and court rulings from a judiciary that’s largely free of political interference stopped the deal from reaching fruition.
But top ANC members, including Mr. Mantashe and South African President Cyril Ramaphosa, have remained dedicated to future nuclear projects in South Africa.
Mr. Mantashe told The Epoch Times that Rosatom “certainly has all the expertise necessary to build anything nuclear anywhere in the world.”
‘Playing Russian Roulette’
“America almost kicked us out of AGOA (the U.S. government’s African Growth and Opportunity Act) a few months back because of this,” Mr. Mileham told The Epoch Times.“Can you imagine what the powerbrokers in Washington are going to say when they hear we’re inviting Russia into our nuclear space? We’re playing Russian roulette and ultimately it’s the citizens of this country that will suffer when America stops trading with us.
“It’ll crash our economy. The ANC, of course, doesn’t care about this, because it has financial backing from the Putin regime.”
ANC spokesperson Mahlengi Bhengu-Motsiri denied that her party relies on Russian finance.
“The ANC doesn’t need to do this because we have many sources of income that allow us to survive and thrive,” she told The Epoch Times.
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