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Profin Consulting, SA – a company that belongs to the Chipande family – CIP report (unabridged)
2:21 CAT | 15 Mar 2016
By: Borges Nhamire
The South African gas and oil company SacOil, announced1 the establishment of a consortium which is to propose, to the Mozambican Government, the construction of a natural gas pipeline from Palma (Cabo Delgado) to Gauteng (South Africa), with branches to deliver gas to “cities and urban settlements” in Mozambique. In addition to SacOil, the announced consortium also includes the public company ENH (Empresa Nacional de Hidrocarbonetos) and Profin Consulting, SA, a Mozambican private equity company, in which Alberto Joaquim Chipande and his wife, Hortência Cornélio João Madanda Chipande are the shareholders.
The interest shown by SacOil-ENH-Profin’s in building the gas pipeline is not the first to be announced. Other gas pipeline construction projects whose purpose is to transport natural gas from Palma to Maputo and South Africa have been announced, including the Gasnosu project (north-south gas), in which the applicants are the South African Gigajoule and the Mozambican ENH.
All projects depend on the Government’s appraisal and approval for their implementation, and to this end, a call for tender must be issued for purposes of governmental transparency. All that exists at this moment are private projects belonging to companies interested in building the gas pipeline, which is part of the national natural gas development plan.
The next steps to be taken following the announcement of the establishment of the SacOil, ENH and Profin consortium involve conducting the project’s economic and social feasibility studies, as well as preparing the gas pipeline construction project. This process will probably not take less than six months; thereafter it must be submitted to the Government for analysis, and it is expected that this will be done through a public tender.
Participation of the national business sector in the extractive industry projects
Although there is no specific legislation on local content2 for projects in the extractive industry, the sector’s legislation defends the participation of the national business sector in the extractive industry’s projects3 .
The SacOil-ENH-Profin consortium states it has given priority to the participation of the national business sector, since it has Profin, a Mozambican private equity company in its shareholder structure. Thus, the guarantee given to the national business sector’s participation in other infrastructures is achieved through companies such as Profin, which belong to the political elite linked to the party in power.
The gas pipeline proposed by the consortium will be implemented by China Petroleum Pipeline Bureau, a company presented as having more than 40 years’ experience in research, engineering, construction and gas pipeline construction technology. It is presented as having over 80 thousand kilometres of gas pipeline projects onshore and over 10 thousand kilometres of gas pipeline offshore.
In the two paragraphs in the announcement that describe the gas pipeline, SacOil mentions that the gas pipeline will have branches to distribute gas to “the main cities and urban settlements” in all provinces of Mozambique (those it passes through, obviously). It does not provide anything more substantial regarding the project.
Box 1: Gasnosu Gas Pipeline Project
Another project involving the construction of a gas pipeline from Palma to Maputo and South Africa is the one baptised with the name Gasnosu (northsouth gas). This project also includes a South African company, Gigajoule – which already has a gas pipeline in Mozambique – and ENH.
The agreement for the creation of this project was signed on 23 April 2013. It establishes the “bases for the joint study and feasibility of building the 2100 km gas pipeline from Cabo Delgado to Maputo and regional markets”14 . These two companies, Gigajoule and ENH, are already partners in another gas pipeline, dating back to 2003, in the Matola Gas Company, which transports gas from Ressano Garcia to South Africa and Matola, where it has a distribution network.
Although neither project is known in detail, the Gigajoule-ENH project is different from the SacOilENH-Profin project, since the former proposes a 2100 km gas pipeline, from Cabo Delgado to Maputo, and the subsequent transport of gas from Maputo to South Africa using the existing network. The estimated cost for the performance of these works is between 3 to 5 billion Dollars.
SacOil-ENH-Profin, in turn, proposes to build a 2600 kilometre gas pipeline, linking Cabo Delgado and Gauteng, in South Africa. The 500-kilometre difference between the two projects refers to the distance between Maputo and Gauteng. The estimated cost of this proposal is six billion Dollars.
In 2014, the Gigajoule-ENH consortium announced it had contracted a South African engineering firm, VGI, to provide engineering services to design the possible routes and sizing of the pipeline. Econex, an economics consultancy firm, was responsible for preparing the project’s social and economic study, to determine the social and economic impact of the pipeline in Mozambique and South Africa.
It is not known whether Gigajoule-ENH has submitted its project to the Government for the construction of the pipeline.
http://www.gasnosu.co.mz/gasnosu-notcias/Gasodutode-gaacutes-natural-iraacute-ligar-as-grandes-descobertasde-gaacutes-natural-no-norte-de-Moccedilambique/index.html
Agreement between Profin and ENH
Also mentioned in SacOil’s announcement is the existing agreement between Empresa Nacional de Hidrocarbonetos and Profin, signed in October 2015, regarding the “participation as a joint venture partner, in integrated natural gas projects, subject to their technical and commercial feasibility”.
The Palma to Gauteng gas pipeline project is the first large infrastructure project for natural gas from the Rovuma Basin in which Profin participates, under the aforementioned agreement signed between the private company and ENH.
Participation of Chipande family offers no guarantee that the SacOilENH-Profin project will be approved by the Government
Over the last decade, the promiscuity or indiscriminateness of business between the State and private entities was the hallmark of Armando Guebuza’s governance. Almost all the large infrastructures serving the economy, with the potential to generate profit, were projected, built, awarded under concession and managed by private companies with the participation of figures from the political elite of the Frelimo party. However, with Filipe Nyusi, this trend seems to be changing.
With Armando Guebuza as Head of State and of the Government, this same Government awarded concessions for State services to companies in which the Guebuza family was involved, as is the case of the migration from analogue to digital broadcasting, awarded under concession to StarTimes, a company in which Focus21, a company belonging to Armando Guebuza and his children, holds shares.
Filipe Nyusi shows signs of change. When he took office as President of the Republic on 15 January 2014, he made promises of profound changes to the form of governance of his predecessor Armando Guebuza, focusing on transparency in the State’s decisions:
“… We need to build consensus, we need to share, without fear, the information on major decisions to be taken by my Government” – Filipe Nyusi in his Inaugural Speech; Maputo
Box 2: Nyusi shows signs of change: the case of the rejection of Petroinveste Mozambique, SA’s proposal
President Filipe Nyusi appears to be willing to turn his words into actions. During the fifth round of tenders for the concession of the hydrocarbon exploration and exploitation projects, Petroinveste, a company with strong participation of figures from the Frelimo party’s political elite, saw its proposal to apply as a nonoperator in two concessions in the Angoche Basin being disqualified by the National Petroleum Institute.
At the time, CIP had alerted to the fact that the company in question, Petroinveste, represented a potential conflict of interest, since a significant part of its shareholders were figures with decision-making authority within Frelimo, the party in power and, consequently, within the State.15 Furthermore, Petroinveste demonstrated neither the capacity nor technical experience to be awarded a hydrocarbon exploration concession.
After CIP’s warning, Petroinveste saw its proposal rejected, based on the lack of proven expertise in the field.
Big names such as Raimundo Domingos Pachinuapa, Oldivanda Bacar, Alberto Joaquim Chipande, Abdul Magid Osman, Carimo Abdul Mahomed Issa, José Mateus Muária Katupha have interests represented in Petroinveste.
15 CIP (2015). Will Petroinveste – Company Linked to the Frelimo Party – be Included in the Winning Bid? – MAIN MULTINATIONAL OIL COMPANIES DISPUTE THE ANGOCHE BLOCKS IN THE 5th LICENCING ROUND; Maputo. Available at http://www.cip.org.mz/cipdoc/394_5%20Ronda%20de%20licenciamento%20final. pdf [Accessed on 8 March 2016]
Profin’s shareholder structure
The persistent question asked after learning of the agreement to establish a consortium, which was to propose to the Mozambican Government the construction of the Palma to Gauteng gas pipeline, is “who are the shareholders of these companies”? If, on the South African side, the concession company is SacOil, on the Mozambican side there is Profin, in addition to the 100% State-owned enterprise, ENH.
Despite it being a limited liability company, where the identities of the shareholders have not been disclosed, CIP investigated and discovered who Profin’s shareholders are, and has the genuine underlying documents.
Profin was incorporated and registered at the 1st Notary Public Office in Maputo, on the 23rd of July 2015, by two companies and natural person. Profin’s shareholders are: Chetu, Limitada, holding 46.7% of the shares; Phambile – Investimentos, Imobiliária, Logística e Procurment, Sociedade Unipessoal Limitada, holding 18.7% of the shares and Joice Rebeca Quilambo, holding the remaining shares.
Chetu, Lda, in turn, belongs to Alberto Joaquim Chipande, former Minister of Defence, member of Frelimo’s Policy Committee, and his wife Hortência Cornélio João Mandanda Chipande. Each holds an equal shareholding of 50% in Chetu.
On the 23rd of June 2015, the Chipande couple, or rather, the shareholders of Chetu Lda, deliberated at an Extraordinary General Meeting, held at the company’s head offices (which coincides with the couple’s residential address) on the participation of Chetu, Limitada in the company Profin Consulting, SA.
The Chipande couple was represented by their daughter, Doroteia Alberto Chipande, in the act of constituting Profin.
The other shareholders
Another shareholder in Profin is, as was previously mentioned, Phambile – Investimentos, Imobiliária, Logística e Procurment, Sociedade Unipessoal Limitada, with 18.7% of the shares. This company (sole proprietorship) is owned by Milva Luís Ribeiro dos Santos. On the 19th of June 2015, the sole shareholder of the company decided, in an extraordinary general meeting, to participate in Profin. Milva dos Santos is presented in public profiles as the sales and marketing manager of Serena Polana Hotel.
Profin’s third natural person shareholder is Joice Rebeca Quilambo, Lawyer, specialising in Intellectual Property, Litigation, Commercial and Real Estate Law. In addition to Profin, she has another company registered in her name – J. Quilambo – Industrial Property, Limitada. Her partner in this company is Stayleir Jackson Elias Marroquim, lawyer and candidate to the position of President of the Mozambican Bar Association.
1-http://www.sacoilholdings.com/investor-centre/ company-announcements/cooperation-agreementconcluded-with-new-partners-and-the-chinapetroleum-pipeline-bureau-for-the-constructionof-the-african-renaissance-gas-pipeline-inmozambique/?id=14&entryId=458
2 Under design, in a process headed by the National Petroleum Institute 3 See article 34 of Law 20/2014, of 18 August 2014
3 See article 34 of Law 20/2014, of 18 August 2014
Source: CIP CENTRE FOR PUBLIC INTEGRITY MOZAMBIQUE / Newsletter Edition Nº 49/2016 - March
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