Plea to give Gqeberha a chance to grow

A group claiming to represent small business owners in Nelson Mandela Bay, the Local Business Committee (LBC), has embarked on a campaign to draw attention to the economic plight of the area and called on government to do its job.

Central to the calls is that government must allow the exploration for oil and gas off the coast of Nelson Mandela Bay.

Masixole Mashelele, secretary general of LBC, says that exploring for and developing an offshore gas field is crucial to enable SA to meet its net-zero emission targets by 2050.

“It is our understanding that SA has 27 billion barrels of oil and 60 trillion cubic feet of natural gas reserves off the coast of SA, according to the Petroleum Agency South Africa [Pasa]. What is key to this is that these oil and gas deposits need to be proven through precise seismic exploration.

“On a conservative estimation of the oil and gas reserves, it could bring about $10 billion to $20 billion of investment to the area,” says Mashelele.

“Without stability in entities such as Samsa [South African Maritime Safety Authority] and the Ports Regulator, whose main objective [is] being custodians of the mandate that the SA ocean economy belongs to SA, we will never realise this.”

Maritime economy

LBC says it represents small businesses from all 60 wards in Nelson Mandela Bay.

“The ocean is central to SA’s economy, with around 40% of the population living within 60km of the coast,” it says.

“As around 90% of all trade has a maritime element, SA has been described as a maritime economy. That is why the LBC has decided to raise its voice on matters that it believes, once addressed, will have a positive impact in the economy of Nelson Mandela Bay and South Africa at large.”

Mashelele says that LBC has noted the deterioration of Nelson Mandela Bay, while the coastal city is well positioned with offshore opportunities in oil and gas and as a strategic shipping route.

“We have been silent while the unemployment rate in the Nelson Mandela Bay is at 36.4% and small businesses are closing down every week. Yet the city is well positioned to attract foreign investment,” he adds.

“The LBC officially declares our support for oil and gas exploration in Algoa Bay.”

Mashelele says that in August 2021, Impact Oil & Gas Limited, a privately-owned Africa-focused exploration company, announced the completion of a farm-out transaction between its wholly-owned subsidiary Impact Africa Limited and BG International Limited. The latter is a wholly owned subsidiary of Royal Dutch Shell, with a 50% working interest and operatorship in the Transkei & Algoa exploration right (offshore SA exploration right reference 12/3/252).

“Since then, the only news about exploration we’ve ever heard is about the Wild Coast, between Morgan’s Bay and Port St John’s, but nothing pertaining to Algoa Bay.

“We want to lobby the NMBM [Nelson Mandela Bay Municipality] to start engagements with relevant parties for the Algoa Bay process to start, while the Wild Coast is still undergoing the justice process,” says Mashelele.

He says the LBC met on 3 February 2023 and decided to take the step of calling the business community to come together and start engaging on how to get the process started.

“This opportunity could be an economic boost [that is] much needed for tax, corporations and government – for at least the next century,” says Mashelele.

Shipping

The business owners point to the importance of the shipping lanes and the huge harbour in Port Elizabeth (Gqeberha), saying that many ships moor in Algoa Bay.

“These ships require services and supplies. The South African Maritime Safety Authority [Samsa] has a regulatory role in offshore ship-to-ship bunkering services, by vetting all vessels bunkering in Algoa Bay rigorously and ensuring that the highest safety standards are met as per local and international requirements,” says Mashelele.

“However, from 2019, Samsa has been deteriorating in its role including opening up the space for opportunities for SMMEs [small, medium and micro-sized enterprises].” Mashelele says an initiative that would have seen a fund created to assist SMMEs and environmental non-governmental organisations was left to flounder, despite Samsa itself having brokered the initiative.

Forensic investigation

LBC alleges that groups are misusing black empowerment requirements for enrichment. It supplied Moneyweb with a confidential report of an investigation into allegations of irregularities at Samsa.

Dated April 2022, the report summarises the outcome of investigating 20 allegations against senior management members of Samsa.

While a lot of the allegations were proved to be without substance, the investigation uncovered several other instances of misconduct involving senior management.

In the most damning, the investigators, chartered accountants Morar Incorporated, found that two senior acting executives at the time requested access to money in the Maritime Fund without the authorisation of the board, and without its knowledge.

The investigation recommended further action against the two – former acting CEO Sobantu Tilayi as well as the then company secretary Lolo Raphadu.

Tilayi was also called out for not disclosing that he was facing a disciplinary hearing at his previous employer (the Transnet National Ports Authority) with regard to a tender for tug boat services.

Read: TNPA head office’s move to Port of Ngqura questioned

The investigators’ report said: “Failure to adhere to ethical, good governance and legal practices, by transmitting a request letter to the Minister of Transport, to access funds from the Maritime Fund, which such circulation may have occurred without the requisite authority by the previous board. The current board had also not given their authority and it’s the board’s view that this warrants further forensic investigation.”

The report also says that allegations against Raphadu had substance. “Mr Tilayi and Mr Raphadu proceeded with the request to transfer funds from the Maritime fund without full disclosure to the lawful Samsa board in office at the time of the request.

“Mr Raphadu further utilised the signature of the former chairperson without securing the required consent/permission (forgery and fraud). Such signature was affixed to the letter to the Department of Transport,” according to the investigators.

Ports

LBC says that it is calling on the relevant cabinet ministers and Nelson Mandela Bay Municipality leadership to act on its requests to fix the port and Samsa, and allow exploration for gas and oil “with urgency”, because of the importance of the port and its effect on the economy as a whole.

The most recent World Bank Container Port Performance Index (CPPI) – admittedly covering the difficult 2021 year and measuring only container ports – says that SA ports are “beset with operational inefficiencies”.

While the top 10 ports in the world scored between 70 000 and 93 000 points on the ranking of 370 ports worldwide, SA ports were so bad they got negative rankings.

Port Elizabeth scored -46 and ranked 312 on the list of 370, Durban got -155 (ranked 363), Cape Town -159 (ranked at 364) and Ngqura, also known as Coega, was ranked 365 with -170 points.

The World Bank says in its report that maritime transport carries over 80% of global merchandise trade by volume, and any impediment or friction at ports will have tangible repercussions for their respective hinterlands and populations.

“In the short term, this is likely to take the form of shortages of essential goods and higher prices, as we saw early in the pandemic,” it says.

“But over the medium- to longer term, an inefficient port will result in slower economic growth, less employment, and higher costs for importers and exporters.”

 

Listen: PetroSA acting CEO Sandisiwe Ncemane says it’s investigating reinstating the Mossel Bay gas-to-liquids plant and explains why gas has a role to play in solving SA’s energy crisis (read the transcript)

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