Cape Town — The recent gas supply disruption in the Western Cape that left consumers and traders scrambling for alternatives was allegedly not a mere contractual dispute, as reported. Impeccable sources have claimed that it was, in fact, a calculated act of corporate sabotage by Vita Gas, a subsidiary of energy trading giant Vitol.
The purported motive is as staggering as the disruption itself: to corner Sunrise Energy, the sole LPG terminal operator in Saldanha Bay, into a vulnerable position for a corporate takeover by Vita Gas, a gas importer to the terminal. Insiders suggest that Vitol orchestrated the crisis by cancelling its contract with Sunrise Energy on the eve of a public holiday, depleting storage, and then deliberately stalling the offloading of vessels loaded with LPG gas.
Vita Gas had entered into an exclusive agreement with Sunrise Energy, the only LPG terminal facility in the Western Cape. Vita Gas used the Competition Commission case with Sunrise as cover for the staged sudden halt of the contract right in winter.
Business Report revealed that sources said the Vita contract did not give Sunrise enough cash flow to pay its debt, hence it was considered for business rescue in December.
Responding to questions from the Daily News, Vitol said it was incorrect that it cancelled a contract with the supplier on the eve of a public holiday after the product was depleted from storage.
“On June 15, 2023, Vita Gas informed Sunrise that it would no longer contest Sunrise Energy’s actions to terminate the contract,” Vitol said.
“Sunrise Energy had sought to terminate the contract for over three years. The lengthy and ongoing legal actions against Vita Gas had made the situation untenable.”
Vitol explained that in the submission to the Competition Tribunal, both Sunrise Energy and the Competition Commission had requested that the contract between Vita Gas and Sunrise be terminated immediately.
“Vita Gas acquiesced to the Competition Commission and Sunrise Energy’s request to the Competition Tribunal.”
Vitol also explained that the sole reason for the product shortage was the adverse weather which prevented vessels from discharging at the terminal.
“As per the statement of June 15, Vita Gas would have continued to supply the terminal until alternative supply arrangements were in place. It had arranged supply from Vitol, which had a vessel offshore carrying product and which could have supplied the terminal as soon as weather conditions permitted. However, to do so it required permission from Sunrise Energy. Sunrise Energy did not give permission.”
Vitol added that Vivo Energy, a company owned by Vitol, has agreed to acquire Engen in South Africa.
"Vitol engaged in a web of strategic decisions designed to force Sunrise into a corner," said one source, speaking on condition of anonymity.
"They used their market dominance, exploited the exclusive supply agreement and some loopholes, and orchestrated a situation where they can emerge as saviours by potentially acquiring a distressed Sunrise Energy."
The allegations, if proven true, would mark a serious breach of corporate ethics at a time when South Africa can ill afford it.
Key stakeholders and industry bodies have raised alarm bells over the June supply shortage, noting the direct impact it has had on multiple sectors. Residential consumers are the ones who have suffered the most — especially the poorest of the poor, who rely on LPG for essential heating during the cold winter months.
"Business strategies should never cross the line into causing suffering," said Rosemary Anderson, the national chairperson of Fedhasa. "These actions have had real-world consequences, from the hospital floors to the humblest of homes."
Meanwhile, the Competition Commission is reviewing the potential acquisition of Engen Limited by Vitol group.
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