‘Fuel oil cartel’ company blasts De Ruyter over corruption claims

One of Eskom’s fuel oil suppliers implicated as part of the criminal cartel fleecing the parastatal has blasted former CEO André de Ruyter over claims made in his memoir.

Fuel oil can be likened to Blitz for a power station; it is used to get coal in the boilers burning.

Throughout the book, De Ruyter points to coal theft syndicates swapping out top-grade quality coal meant for power station boilers for lower-grade coal scrappings that requires excessive fuel oil to burn.

Coal-fired power station boilers tend to be finicky about the quality of coals used, and using stones and substandard product causes damage to the boilers, which ultimately ends in load shedding.

In his book, De Ruyter details how he clashed with one of Eskom’s board heavyweights, Sifiso Dabengwa, a former CEO of MTN barely three days into the job.

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Cash-strapped Eskom raises its fuel oil budget

De Ruyter was probing why the power utility was preparing to increase the five-year budget for fuel oil by nearly 30% – from R14 billion to R18 billion.

“With Eskom already in dire financial straits, blowing R4 billion over your initial budget seemed like a big deal,” wrote De Ruyter.

Eskom had, at the time, entered into an agreement with Econ Oil to supply fuel oil to the value of R9 billion over the five-year period – half of the proposed total fuel oil budget of R18 billion.

De Ruyter explained: “It soon dawned on me what was happening here: the company was merely a middleman, adding no apparent value to the product they were selling. Aside from their own profit margin, of course”.

The former CEO believed Eskom should have been buying directly from refineries, such as Total, Engen and Sasol, to save on costs.

In the wake of the damning allegations made against Econ Oil, the company’s sole shareholder and director, Nothemba Mlonzi, klapped back at De Ruyter, essentially accusing him of being on a witchhunt since his tenure began.

“We believe we’re being unjustly targeted by a system opposed to the success of a black-woman-owned energy company in a predominantly white industry,” says Mlonzi.

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Mlonzi’s history

According to investigations by Bowman’s, which is described as a ‘leading African law firm’, the company investigated Econ Oil and found links between the supplier and a key Eskom employee. But the report was never finalised or presented to the board because Eskom decided to halt the investigation in 2019.

But that report ended up in De Ruyter’s possession, who says the findings would have killed Econ Oils’ chances of being awarded the fuel tender.

“The claim that only oil majors or refineries can provide superior pricing or value is misleading. HFO (heavy fuel oil) is not the core business of oil majors (Sasol, BP, Engen, etc). Econ Oil added substantial value by sourcing raw materials from oil majors and tailoring them to each Eskom plant’s specifications,” said Mlonzi.

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She further alleges that a push for Eskom to source products solely from refineries was a tactic to exclude Econ Oil from participating in the bidding process.

A quick company search into Econ Oil reveals that Molonzi is the sole shareholder and director. Still, she appears to have no previous experience in the petroleum industry before being added to the company as a director in 2001.

Mlonzi says she is suing Eskom and De Ruyter for defamation while also pursuing criminal charges.

She’s thrown the gauntlet to the former CEO: “We invite De Ruyter and Eskom to bring their evidence to court where we are confident we can disprove their claims”.

“We refuse to be used as a scapegoat to distract from the failures of an incompetent individual who presided over the decline of a state-owned enterprise,” Mlonzi concluded.

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