Oilgate: Glencore and Co will lose R4.5bn if SA Govt gets deal reversed

In December 2015, while most observant South Africans had their eyes fixed on consequences of Nenegate (collapsing investment markets and a spiralling currency), shadowy actors were engineering a bargain-priced sale of the country's strategic oil reserves. In what subsequently became dubbed as Oilgate, the whole ten million barrels of SA's oil reserves were sold below the market price to international resources group Glencore and others. At current oil prices, that ill-conceived transaction has cost SA taxpayers over R4bn. The wheels of justice are slowly grinding away as the new brooms in the SA government fight to have the deal reversed – while simultaneously exposing those who profited at the national expense. There was a major development last week – covered here by Stephanie Fick, chief legal officer at OUTA, who was a guest on Rational Radio. – Alec Hogg

In this interview, Stephanie Fick unpacked the stinky Oilgate deal. It is now common cause that the controversial sale of SA's strategic oil reserves by someone who far exceeded their authority did not follow proper procedure. The deal was stuck at $31 a barrel, the absolute trough of the current cycle. Oil currently trades at double that level.

The correct process would have been to request bids for the 10m barrels of oil via a public tender rather than dealing direct with companies like Glencore. Then there would need to be a logical reason for doing so – if the oil was to be rotated then a plan would have been required. Furthermore, before any transaction could be concluded, approval would have been needed from National Treasury – after which the finance minister would have been required to sign off on the transaction. None of these steps were taken.

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