PetroSA’s impending deal with Russia’s Gazprombank is foolish and must be cancelled

22 November 2023

After a tumultuous year in which the ANC government almost recklessly compromised South Africa’s bilateral and trade relations with America due to its unprincipled stance on Russia’s invasion of Ukraine, PetroSA is adding fuel to the fire by choosing to partner with Russia’s sanctioned Gazprombank. This is a foolish move that will send South Africa/America relations over the tipping point and crash our comatose economy.

With President Cyril Ramaphosa’s Cabinet expected to make the final decision on the deal, the DA is demanding an immediate course correction before PetroSA’s costly error sends the country over the tipping point. If Cabinet still cares about South Africa’s economic wellbeing – which they have mismanaged to crisis levels, they should immediately rescind this ill-thought deal before its too late.

According to reports, PetroSA wants to partner with Russia’s Gazprombank – through its local subsidiary GPB Africa & Middle East, to restart the gas-to-liquids refinery in Mossel Bay, at a combined investment of R3.7-billion. Such a partnership poses significant risk, not only to PetroSA itself but to the entire economy. Gazprombank and its subsidiaries are under US sanctions as part of punitive measures against Russia’s war in Ukraine.

South Africa barely managed to remain in the AGOA trade deal and this latest stunt by PetroSA will give US lawmakers the excuse they need to expel us from this preferential trade access agreement and impose punitive sanctions on the country’s financial system. These catastrophic consequences were obviously lost on PetroSA and it raises the question of whether any risk assessment was done before a decision was taken to partner with Gazprombank.

The actions of PetroSA executives are a clear indication that corporate governance has been severely compromised at the entity and decisions are being taken without adequate due diligence. Despite several warnings from the Reserve Bank and National Treasury that South Africa faced significant risk of “secondary sanctions amid heightened geopolitical polarisation” due to the ANC government’s ‘neutral’ stance on the war in Ukraine, PetroSA still went ahead to choose Gazprombank as its partner. Not only this, they went out of their way to seek legal opinion to support their decision from the law firm of NJ Ayuk, a man who in 2007 pled guilty to fraud charges in the US and was deported from that country. He has also been accused of money laundering in Ghana, and was found guilty of defamation in South Africa.

PetroSA has lurched from one crisis to the other over the past decade and the DA will not allow the entity to drag the economy down through a reckless partnership with a sanctioned Russian economy. South Africa’s economic interests come first before harebrained attempts to appease the Kremlin warmonger, Vladimir Putin.

Issued by Kevin Mileham, DA Shadow Minister of Mineral Resources and Energy, 22 November 2023