KwaZulu-Natal premier Sihle Zikalala’s call for the national government to buy Sapref, the 58-year-old Durban-based refinery, may be heeded because of ANC politics.
The same thing happened in 2005 when ANC politicians in KwaZulu-Natal lobbied the national government to force the Airports Company SA (Acsa) to build a new airport north of Durban. This went against the advice of the Acsa board, the Treasury and Aeroporti di Roma (ADR), Acsa’s Italian anchor shareholder at the time.
They argued that the old Durban airport could meet the projected demand from SA hosting the 2010 soccer World Cup and beyond. It therefore made no economic sense to build a new airport, especially in the mad rush ahead of the 2010 World Cup in which construction costs rose sharply. But the ANC bigwigs felt differently. They eventually took their case to then president Thabo Mbeki.
In the end, Acsa had to borrow much money to pay for the King Shaka Airport. This ill-timed investment resulted in ADR selling its 20% in Acsa to the Public Investment Corporation for R1.67bn, more than twice what it had paid for the shares. The sale was announced in September 2005.
Fund manager Futuregrowth, which funded black investors who bought 4.2% of Acsa in July 1998 when ADR bought its 20% shareholding for R819m, said in a recent report that the King Shaka Airport “has never been a commercial success”.
It’s not known what tipped the balance in favour of the KwaZulu-Natal ANC leaders, but the timing of events is suggestive. Their push for the new airport occurred at about the same time as Mbeki’s firing of Jacob Zuma as deputy president, a decision that triggered the events that led to Zuma trouncing Mbeki at the ANC’s 2007 elective conference. Zuma was fired in June 2005 after being implicated in corruption during the trial of Schabir Shaik, his former financial adviser. Shaik was convicted in June 2005.
The building of King Shaka has never been about the spatial restructuring of the provincial economy for the benefit of poor communities
Historical corruption patterns suggest why KwaZulu-Natal ANC leaders pushed this hard for the new airport despite it not making economic sense. It’s fair to assume the push for the new airport had financial backers who stood to reap huge economic rewards.
The building of King Shaka has never been about the spatial restructuring of the provincial economy for the benefit of poor communities. The new airport sparked a huge redevelopment of the northern corridor from Umhlanga to Ballito that benefited landowners along the corridor, including the transformation of sugar cane land into commercial and residential properties.
The communities of KwaMashu, Ntuzuma and Inanda were left out. One would have assumed that a political party that represents the poor would use developments of this nature and magnitude to benefit primarily the poorest communities.
Now the KwaZulu-Natal government is nudging the national government to buy Sapref. The refinery’s owners, BP and Shell, have decided to mothball it pending a decision about its future. They have said they would prefer to sell it, indicating that BP and Shell have decided not to invest further in the refinery. But KwaZulu-Natal premier Sihle Zikalala believes the national government should buy it.
Elective conference
“We are of the firm view that retaining refinery operations in our province is key for economic growth and job creation rather than solely relying on importing refined oil. For that reason, we have called on national government to buy Sapref,” Zikalala said in his state of the province address last month.
He said the provincial government had already met Sapref and the department of minerals & energy “to work towards taking over the full operations of Sapref as a state-owned oil company”. The call comes as the governing party is heading towards its elective conference later this year.
It is not clear what studies have led the provincial government to conclude that the refinery is key to provincial economic growth. For sure, there have been mumblings about security of supply of petroleum products, but there are other ways of securing petroleum supplies.
Interestingly, Zikalala said nothing about the plight of the southern Durban communities that have borne the brunt of Sapref pollution. He didn’t even pretend that the proposed purchase by the government was motivated by environmental issues. On environmental considerations alone Sapref should be shut down, leaving BP and Shell to bear the associated costs.
But the ANC bigwigs would rather give a finger to the Durban South communities by paying BP and Shell to exit Sapref. That says a lot about the ANC’s development agenda.
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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