Dirty fuels: Inside PetroSA’s shambolic diesel trading empire

• In May last year, two oil tankers set sail for South Africa, each carrying $35-million (R650-million) worth of diesel. 
• Their destination: Mossel Bay, where the diesel could potentially be piped into Eskom’s open cycle gas turbines and burned to keep load shedding at bay. 
• When the tankers arrived, however — Jag Pushpa on 11 May 2024 and Centennial Matsuyama on 16 May — they found there was no room at the inn: PetroSA’s storage tanks were full.

With demurrage costs increasing at $35,000 (R650,000) a day, PetroSA “scanned the market” looking for a buyer and settled on a little-known company, Nako Energy, which offered to buy the diesel at a hefty discount.

Nako didn’t qualify for credit and PetroSA would make a R19-million loss, but hey, this was an emergency.

This, at least, is the story that PetroSA employees concocted in an internal memo in a bid to explain why they handed over R933-million worth of diesel without Nako paying for it or providing payment guarantees.

The memo was compiled in August 2024, a month before Nako was due to make full and final payment for the diesel. Almost a year later, however, Nako still owed PetroSA R825-million.

PetroSA declined to comment: “PetroSA has considered the questions provided and will not be providing any commentary in this regard,” spokesperson Nonny Mashika-Dennison told us.

Nako’s CEO, Nqobani Mkhwanazi, was more forthcoming: “PetroSA approached Nako to urgently assist in offloading diesel cargoes under significant time pressure… Nako stepped in at PetroSA’s request,” she told us in a written response.

But even she conceded that the deal was irregular.

“No guarantees were provided for these cargoes by any financial institution,” Mkhwanazi confirmed in a follow-up response.

As for a written contract governing the almost R1-billion sale?

“To our knowledge, no such agreement exists,” she said.

Yet the evidence suggests that the Nako deal — with its hefty discounts and missing paperwork — is just the tip of the iceberg: PetroSA has been gambling recklessly in its diesel trading business and hiding its losses behind claims of commercial secrecy.

A secret business

As the state-owned petroleum company, PetroSA’s role is to ensure that the country has access to petrol and diesel.

Historically, that meant refining, but since 2020, when its Mossel Bay refinery closed, PetroSA’s only real business has been trading fuel. And although it is technically insolvent, PetroSA has been kept afloat largely by one client: Eskom.

Thanks to load shedding, which has created an unslakeable thirst for diesel, PetroSA’s revenue grew from R11-billion in 2019 to R23-billion in 2024. Figures provided by Eskom show that at the height of load shedding, 80% of Eskom’s diesel was supplied by PetroSA.

This covert bailout — funded by Eskom and electricity users — may have injected as much as R500-million into PetroSA in the past financial year. This wouldn’t have happened if the Department of Minerals and Petroleum had granted Eskom a fuel wholesale licence, but it refused, arguing that Eskom did not qualify as a wholesaler. Without a wholesale licence, Eskom cannot apply for a diesel import licence and is forced to buy from importers like PetroSA.

Author: Susan Comrie for amaBhungane