GOVT COMPANY ENPC PROBED FOR CORRUPTION, FRAUD

MBABANE – The Board of Directors of Eswatini National Petroleum Company (ENPC) has initiated a preliminary enquiry into grave accusations made against the public enterprise.

The construction of the Strategic Oil Reserve Facility at Phuzumoya, located in the Lubombo Region, is currently subject to investigation. There are allegations of corruption and fraudulent activities linked to this project, with transactions estimated to exceed E100 million. The Times SUNDAY has established that the probe has also been set up to determine if there was any corruption and collusion involving management and suppliers. The investigation will focus on key areas, including consulting, policy formulation and project management in connection with the multi-million Emalangeni Strategic Oil Reserve facility.

It is understood that this facility is a critical national asset designed to ensure fuel supply security and play a significant role in advancing the country’s socio-economic development.
The Board’s Audit and Risk Committee has been assigned to prepare a report within four to six weeks, to help determine whether a comprehensive forensic investigation is warranted. The sub-committee will identify areas of concern and gathering evidence to support further action.

Extraordinary

The decision to initiate the preliminary investigation was taken during an extraordinary Board meeting held on November 22, 2024. Investigations by this publication unearthed that the scope of the investigation includes a detailed review of the operational practices such as analysing procurement processes and documentation for irregularities and ensuring compliance with policies and regulations. ENPC is a State-owned enterprise established in October 2012, to enhance local supply and access of quality petroleum products through optimal storage and trading. According to a communique signed by Board Chairperson Velaphi Dlamini, the key areas of focus will include reviewing the selection criteria, justifications for engaging specific consultants and contractors and verifying the authenticity of suppliers, service providers and related invoices.

Legality

The Board sub-committee will also assess the legality, consistency and validity of agreements with external suppliers. Particular attention will be to establish if there were any inflated charges or overpayments. The probe will also seek to identify frequently used suppliers. In the examination of contracts, the investigators are expected to identify any signs of inflated pricing, overcharging or unjustified payments. The investigation will further focus on tracing financial flows between ENPC and suppliers to identify anomalies or unauthorised transactions. This includes analysing bank statements, payroll records and other financial documents for signs of suspicious activities.

Confidentiality

Additionally, the Board sub-committee will interview current and former employees involved in processing payments, while ensuring that confidentiality and employee rights are upheld. A forensic review of electronic records, including emails and other digital evidence will also form part of the enquiry. The committee will assess the roles and responsibilities of implicated management personnel, focusing on potential breaches of fiduciary duties and ethical standards. External legal and audit experts may be consulted for technical guidance on procurement and compliance matters.All levels of ENPC management, as well as external suppliers, are expected to fully cooperate with the investigation.

The investigating team has been granted unrestricted access to relevant records, systems and personnel. Velaphi, the Chairman of the Board, confirmed the internal probe, adding that it was nothing more than just a Board assessment which forms part of its oversight function. He said as the new Board, this assessment will help guide their duties going forward as it seeks to commit itself to transparency, accountability and the ethical management of ENPC’s operations.

Irregularities

Documents seen by this newspaper indicates that the scope of the investigations include analysing procurement processes and documentation for irregularities or compliance with policies and regulations. The Times SUNDAY reported on August 1, 2024, that should His Majesty the King’s desires will to be fulfilled, the contract for the establishment of the strategic oil reserve facility would have been signed in the first week of the eight month of the year. Upon his arrival at the ENPC stand during this year’s international trade fair, the King, first greeted by Minister for Natural Resources and Energy, Prince Lonkhonkhela, met Nhlanhla Dlamini, the Chief Executive Officer (CEO) of the public enterprise. Nhlanhla elaborated on the

Confidence

The CEO further indicated that negotiations were already in progress to secure adequate funding for the project. He expressed confidence that these discussions would reach a conclusion soon, allowing the project to commence. Specifically, he mentioned that they were awaiting finalisation of engagements with the Ministry of Finance and the Republic of China (Taiwan) regarding the project. His Majesty enquired about the exact timeline for the contract’s finalisation. In a light-hearted manner, he elicited laughter from those present by noting the presence of Ambassador Jeremy Liang and requesting that he be summoned to confirm the news regarding the imminent conclusion of the contract negotiations. The ambassador, who was positioned a short distance from His Majesty, approached and stood beside the CEO. “Please share the good news that I have been hearing. The good news that the contract for the construction of the strategic oil reserve will be finalised next week,” the King stated at that time to a round of applause.

Updates

The ambassador responded with a smile, and the King then urged all parties involved in the project to confer and provide him with updates the following week.It is essential to recognise that during the presentation of the Speech from the Throne in February 2024, the King emphasised the necessity of prioritising certain outstanding capital projects, including the strategic oil reserve. The King explicitly expressed his desire for the project to commence within six months. For context, in September of the previous year, Taiwan committed to assisting Eswatini, its sole African ally, in the construction of a new oil tank, as outlined in a memorandum of understanding (MoU) signed by both nations and their respective enterprises.

The Overseas Investment and Development Corporation (OIDC), a Taiwanese firm dedicated to executing government overseas aid initiatives, was appointed to develop the strategic oil facility. It was reported that the Kingdom of Eswatini aimed to establish an oil tank capable of storing a minimum of 30 days’ worth of oil reserves. Former President Tsai Ing-wen, during her four-day visit to Eswatini, praised the agreement as a significant advancement in the bilateral relations between the two nations. She noted that discussions regarding the construction project had been ongoing for some time, emphasising that the proposed facility will play a crucial role in securing the nation’s energy supply.  According to government’s website, Eswatini relies heavily on oil imports from South Africa, making it vulnerable to fluctuations in international crude oil prices.

Responsibility

Consequently, government has tasked its national oil company, ENPC, with the responsibility of constructing and managing the oil reserve facilities to enhance energy security. The memorandum of understanding (MoU) was signed by Jeff Chung, General Manager of OIDC, and Nhlanhla in his capacity as the CEO of ENPC.The signing ceremony was attended by His Majesty King Mswati III and former President Tsai. Established in 1995, OIDC is a collaboration of various State-run and private enterprises in Taiwan, aimed at executing aid and infrastructure initiatives in allied nations of the Republic of China (Taiwan).

It remains unclear whether OIDC has previously engaged in the development of fuel storage facilities. The new oil reserve facility is anticipated to bolster fuel supply security and significantly aid the socio-economic development of Eswatini through infrastructure enhancement and job creation. On its website, the ENPC states that it is the country’s national oil company established by the Petroleum Act No.18 of 2020 and has been mandated by government to build and operate a Strategic Oil Reserve Facility at Phuzumoya.

The company says the facility will enable security of fuel supply and significantly contribute towards the socio-economic development of the country through infrastructural development and job creation. In November 2023, ENPC invited companies for pre-qualification of contractors for the proposed construction of the Strategic Fuel Reserve Facility at Phuzumoya. This was referred to as Tender No.10 of 2023/2024.According to the project background as relayed by the ENPC, the public entity is planning to construct a Strategic Oil Reserve Facility at Phuzumoya which will be central to the country’s goal of having security in energy supply and mitigate fuel supply disruptions.

Storage

Currently, Eswatini sources petroleum products from the international markets through the Republic of South Africa and Mozambique. Most of the products are distributed from the commercial storage facilities in Matsapha. The company said the stock was, however, generally limited to approximately two to three days storage, despite the Petroleum Act of 2020 mandating the Oil Companies to hold 14-days’ commercial stock. As a result, the Government of Eswatini, through ENPC, intends to develop a Strategic Oil Storage Facility.
The facility will hold up to 80 million litres of fuel stock, which is equivalent to 60 days’ consumption for the country. It will also offer blending for all its 95-ULP.

Proof that Eswatini is determined to see the project start was evident when Prime Minister (PM), Russell Mmiso Dlamini visited Taiwan in March this year to pitch for investment in the African kingdom and discuss details of the fuel storage facility.  During his visit, the PM gave feedback to the effect that he had an engagement with former President Tsai Ing-wen and that they then proceeded to tour Taiwan’s leading engineering company, CECI Engineering Consultants. Also, the PM shared that ambassadors from both countries presented a progress report of the project at Phuzumoya and its designs.

The PM emphasised that the establishment of the facility will enhance the nation’s ability to secure its fuel supply, thereby mitigating the economic repercussions of potential fuel supply disruptions in the market. He noted that Eswatini currently lacks fuel stock reserves and that the existing bulk fuel storage infrastructure is severely limited. “This situation renders us economically vulnerable to any disruptions in the supply chain, whether from external or internal sources. Therefore, the creation of this facility is of paramount importance,” the PM said.
 During his visit, he encouraged CECI to establish operations in Eswatini, as it is a reputable company that employs approximately 2 300 individuals in Taiwan and other countries.
“Their expertise lies in the construction sector, and they are well-known for their work on railway lines, bridges and hospitals, among other projects,’ he explained.

Custodian

It remains to be seen how much the facility will now cost. Nine years ago, the cost for the construction of the facility was E900 million. In the financial year 2022/2023 and 2023/2024, the custodian of the facility, ENPC had fixed the costs at E2.1 billion. From January 2024 to the present, the ENPC had not changed the budget for the facility until companies from Taiwan got involved in the project. A proposal was tabled by a certain company fixed the construction of the Strategic Oil Reserve Facility at US$380 million, the equivalent of E7 billion in the current foreign exchange rate.

The Burgan Cape Terminals (Pty) Ltd, South Africa, built the 118 million-litre fuel storage capacity in Cape Town at a cost of E1.2 billion. It was built because of the shortage of oil refinery facilities in Cape Town, long haul distances and congested loading at existing facilities. It was launched on August 30, 2017. The facility was built by VTTI. VTTI, at some point, showed an interest in constructing the Phuzumoya fuel storage facility at a cost of E900 million.  

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