Jaco Marais/Netwerk24 An ageing Eskom power station in Mpumalanga is the hub of one sophisticated fuel theft operation siphoning off millions of rands worth. As prices keep rising, cross-border fuel smuggling is increasingly attractive. Implicated in the scam are corrupt officials within Eskom, the trucking companies and the local police. A sophisticated crime syndicate – in cahoots with Eskom officials, police and trucking companies – is stealing millions of rands worth of fuel by exploiting a design flaw at the Kriel Power Station in Mpumalanga. And it all has to do with a weigh bridge on the wrong side of a gate. In March amaBhungane revealed how armed gangs were stealing fuel from buried pipelines owned by Transnet. After the story was published, we received tipoffs that led us to another form of fuel theft, at Kriel Power Station, which have evaded detection for many years. In coal-fired power stations fuel-oil is used at start-up or during unstable furnace conditions to ignite or stabilise the coal flame. At Kriel the fuel-oil is stored in four storage tanks with a combined capacity of 1 350 tons. But as fuel prices have soared, fuel theft and cross-border fuel smuggling is increasingly attractive, placing even more pressure on Eskom when the utility is already struggling with crippling electricity blackouts. Kriel: a hub of fuel theft The Kriel Power Station, located between the towns of Ogies and Kriel some 100km east of Johannesburg, was commissioned in 1979. At the time it was the largest coal-powered station in the southern hemisphere, capable of generating three gigawatts of power. But it has a fatal design flaw. As one truck driver put it: “Unlike other power stations the weigh bridge is outside not inside the Eskom yard. This gives a chance for trucks to drive to other locations to offload and then come back to weigh.” The driver, who did not want to be identified, also said security was very lax at the station “because as long as you have documentation they don’t even check inside the truck … security lets you pass.” Other sources claimed that officials at the power station did not play an oversight role in terms of how much fuel was ordered. Said one: “If there was proper control on the amount of fuel being ordered, then surely someone would have picked up that the numbers don’t add up. There are lots of trucks from various companies delivering fuel even though the coal is dry and there is no need.” According to three drivers amaBhungane spoke to, a full tanker is usually worth between R500 000 and R1 million, depending on the size of a tanker and the type of fuel. On the black market, the minimum price for the load would be R250 000. One of the sources said: “How it works is that let’s say in a six day period, we deliver plus minus 15 loads to Kriel, then about half of that product will go to the black market.” He said how much was skimmed off depended on the level of reserves in the storage tanks, because it would raise suspicions if the tank ran dry. AmaBhungane has also seen bank statements from a driver who claimed that the controller (a middleman between the driver and the Eskom operator) was paid a standard fee of R3 000. The driver and operator would get R9 000 each from a single load. Payments were received and made via cash deposits at automatic teller machines, making them difficult to trace. This driver said there was quite regularly a police officer who escorted the stolen fuel. The policeman would be paid directly in cash by the black market buyer. An Eskom tip-off and an arrest Luck ran out, however, for truck driver Douglas Ndivhatzo Ralulimi, 39, who was arrested for theft on 18 March outside Kriel Power Station, where he was allegedly caught with a tanker full of stolen fuel. He is currently out on R10 000 bail. Mpumalanga police spokesperson Brigadier Selvy Mohlala said another suspect, Blessing Ngubo, who worked at the power station, died in a car accident shortly after Ralulimi was arrested in what one source describes as suspicious circumstances because “he did not hit anything his car just overturned”. Ngubo was an operator responsible for the loading and offloading of fuel from tankers. The theft case has been taken over by the Hawks, who would not comment on a live investigation other than to say that the arrest was made after a tip-off from Eskom’s own internal investigators. Eskom’s media department also did not want to provide details on the case except to state that they were aware of the fuel oil theft, and that it was through Eskom’s own initiatives that the arrest was made. Investigations are currently underway. Responding to claims that there were no tight controls and accountability on how much fuel was ordered, Eskom said that fuel was ordered through “National Control” via a daily planning process. Eskom’s statement said, “The fuel oil trucks are weighed at the coal plant weigh bridge and come to the station for off-loading. The operators take readings before off-loading and after off-loading to account for the amount that has been off-loaded, then the tanker goes back to the weigh bridge for weighing.” Eskom did not explain why the discrepancies between recorded delivery volumes and actual fuel consumption were not picked up. Neither did the utility respond to questions about the security flaw entailed by the weigh bridge being located outside the Kriel perimeter. How it’s done: the modus operandi Amabhungane’s sources say that the thefts are facilitated by managers and controllers working for trucking companies, as well as operators at the power station. Of course there is also a buyer. Controllers at the trucking companies will assign favoured drivers to deliver fuel to Kriel, usually from the Natref refinery in Pretoria. Early in the morning or the previous night, the controller will alert the drivers about a black market order. Said one driver: “We load mostly around 10.00 am but make sure not to load after 4.00 pm as the refinery closes after that. If you load too early then you must make sure you waste time because you can only reach the power station at night,” said the driver. That is because the syndicate’s operator only starts his shift at 8.00pm. The operator tells the driver to go to the weigh bridge, which is outside the power station gates. “Then after weighing, the operator tells you to come in and then you go through access control security checks.” At the security checkpoint, all that is required is to show a shipment slip – a document that has details of what is inside the truck. The next step is to get an access slip and proceed to the offloading zone. There, the driver will offload only enough fuel to pass a quality control check and make it appear that normal offloading has happened. The crooked operator gives the driver a slip to confirm that the fuel has been delivered and the truck is driven out of the gate, allegedly bound for the weigh bridge. Instead, the truck driver calls the illegal buyer and waits at the side of the road for a small private car to appear. The trucks are equipped with cameras to monitor the drivers and prevent theft. But in this case the driver switches off the live camera, allowing a passenger from the small car to jump inside. The passenger is equipped with a signal jammer and it is alleged that officials at the trucking company, who ought to be monitoring the cameras, turn a blind eye to the lost signal. The passenger directs the truck to an illegal offloading spot, usually a closed yard a few kilometres away. At the illegal offloading site, there is a second, empty truck, coupling pipes and generator. After offloading the fuel into the second truck, the truck driver goes back to the weigh bridge outside the Kriel Power Station, which will confirm that the tank is empty and that the job has been completed. Illegal fuel’s cross border destinations According to research by the Global Initiative Against Transnational Organised Crime in a 2020 paper on fuel smuggling, Zimbabwe is a favoured destination for smuggled fuel from Mozambique, South Africa and Botswana. Some smugglers use boats to carry fuel purchased in Mozambique across rivers that flow into Zimbabwe, the study said. For larger-scale smuggling, tankers with false documentation – such as marking fuel as a commodity not subject to duty, like soy oil – were also used. Reports of fuel stolen in transit have also surfaced elsewhere in the region, such as the Maputo Corridor, where Mozambique, Eswatini and South Africa converge. Revenue authorities in Zambia also uncovered large-scale scams involving tankers transporting illicit fuel from Namibia and Mozambique. During one incident in 2018, 60 trucks were seized in Zambia carrying illicit fuel. In South Africa, joint operations by Transnet and Eskom have resulted in several arrests and seizures of private vehicles and tankers. In Mozambique, a tracking programme was launched in May 2018 involving marking fuel with an invisible chemical, which allows authorities to more easily identify fuel which has been adulterated by bulking up with cheaper kerosene. Within six months, revenue collection increased by 32%. A corresponding 60% reduction in kerosene sales indicated its widespread use as an adulterant, and further indicated a potential decline in adulteration. According to the research paper, the sudden rise in fuel thefts, particularly in South Africa, is a new shift in fuel-smuggling dynamics in the region. Smart policy decisions, such as Mozambique’s successful fuel-marking initiative, and greater regional cooperation between revenue and law-enforcement bodies, may prove useful in countering this growing problem, the study suggested.

Diamonds in a laboratory in Antwerp, Belgium. (Photo by DeAgostini/Getty Images)

Diamonds in a laboratory in Antwerp, Belgium. (Photo by DeAgostini/Getty Images)
  • Prices are surging in some corners of the rough-diamond market.
  • Diamond cutters, polishers and traders are struggling to source stones after the US levied sanctions on Russian company Alrosa, which accounts for about a third of global production. 
  • In the past, the industry could turn to behemoth De Beers to crank out extra gems when supply ran tight — but not this time

Prices are surging in some corners of the rough-diamond market, as sanctions on one of the world’s two giant miners ripple through the supply chain. In the past, the industry could turn to behemoth De Beers to crank out extra gems when supply ran tight — but not this time.

The price of a small rough diamond, the type that would end up clustered around the solitaire stone in a ring, has jumped about 20% since the start of March, according to people familiar with the matter. The reason: Diamond cutters, polishers and traders are struggling to source stones after the US levied sanctions on De Beers’s Russian rival, Alrosa PJSC, which accounts for about a third of global production.

For most of the modern history of diamonds, this is the sort of situation where De Beers could have tapped its vast stockpiles or simply fired up latent mining capacity. Little more than 20 years ago, its safes in London held stocks of diamonds worth perhaps as much as $5 billion.

Those days are now long gone. The company only carries working inventory stocks and its mines are running at full tilt. There is little chance of material increases in supply before 2024, when an expansion at its flagship South African mine will be completed.

“It’s very difficult to see us bringing on any new production,” Chief Executive Officer Bruce Cleaver said in an interview in Cape Town. “Thirty percent of supply being removed isn’t sustainable.”

De Beers also produces relatively few of the type of diamonds Alrosa specializes in: the small and cheap gems that surround a larger center-point stone or are used in lower-end jewelry sold in places like Walmart or Costco.

For many in the sector, that means growing shortages unless Alrosa and its trade buyers can find a work around.

Alrosa canceled its last sale in April and is unlikely to sell any large volumes again this month, the people said. It’s uncertain when the company will be able to sell normally again, they said, even as the company, banks and buyers look for solutions.

Alrosa’s press service declined to comment. A US Treasury license that allowed for winding down of deals with the company expired on May 7.

The fallout from Russia’s invasion of Ukraine has divided the global trade. As western governments levy sanctions on Russia and companies pull away from the country, many in India’s diamond industry still want to keep buying, according to people familiar with the matter. And while big-name US jewelers Tiffany & Co. and Signet Jewelers Ltd. have said they will stop buying new diamonds mined in Russia, retailers in places like China, India and the Middle East have not followed suit.

That dynamic is spurring concern that diamonds from Russia will be passed off as other origins.

Very few diamonds remain in one party’s custody through the entire supply chain. Most are cut, polished, manufactured and then set in jewelry by different companies and often traded inbetween each step. Diamonds are routinely mixed into parcels of similar sizes and qualities throughout this process, making origin tracking almost impossible in many cases.

De Beers, which sells to around 60 handpicked customers, is already looking to beef up its standards. It’s considering increasing both the paper and physical audits it already carries out on its customers to make sure supply remains segregated.

“They have to show us that our production is not being mixed,” Cleaver said.

Be the first to comment on "Jaco Marais/Netwerk24 An ageing Eskom power station in Mpumalanga is the hub of one sophisticated fuel theft operation siphoning off millions of rands worth. As prices keep rising, cross-border fuel smuggling is increasingly attractive. Implicated in the scam are corrupt officials within Eskom, the trucking companies and the local police. A sophisticated crime syndicate – in cahoots with Eskom officials, police and trucking companies – is stealing millions of rands worth of fuel by exploiting a design flaw at the Kriel Power Station in Mpumalanga. And it all has to do with a weigh bridge on the wrong side of a gate. In March amaBhungane revealed how armed gangs were stealing fuel from buried pipelines owned by Transnet. After the story was published, we received tipoffs that led us to another form of fuel theft, at Kriel Power Station, which have evaded detection for many years. In coal-fired power stations fuel-oil is used at start-up or during unstable furnace conditions to ignite or stabilise the coal flame. At Kriel the fuel-oil is stored in four storage tanks with a combined capacity of 1 350 tons. But as fuel prices have soared, fuel theft and cross-border fuel smuggling is increasingly attractive, placing even more pressure on Eskom when the utility is already struggling with crippling electricity blackouts. Kriel: a hub of fuel theft The Kriel Power Station, located between the towns of Ogies and Kriel some 100km east of Johannesburg, was commissioned in 1979. At the time it was the largest coal-powered station in the southern hemisphere, capable of generating three gigawatts of power. But it has a fatal design flaw. As one truck driver put it: “Unlike other power stations the weigh bridge is outside not inside the Eskom yard. This gives a chance for trucks to drive to other locations to offload and then come back to weigh.” The driver, who did not want to be identified, also said security was very lax at the station “because as long as you have documentation they don’t even check inside the truck … security lets you pass.” Other sources claimed that officials at the power station did not play an oversight role in terms of how much fuel was ordered. Said one: “If there was proper control on the amount of fuel being ordered, then surely someone would have picked up that the numbers don’t add up. There are lots of trucks from various companies delivering fuel even though the coal is dry and there is no need.” According to three drivers amaBhungane spoke to, a full tanker is usually worth between R500 000 and R1 million, depending on the size of a tanker and the type of fuel. On the black market, the minimum price for the load would be R250 000. One of the sources said: “How it works is that let’s say in a six day period, we deliver plus minus 15 loads to Kriel, then about half of that product will go to the black market.” He said how much was skimmed off depended on the level of reserves in the storage tanks, because it would raise suspicions if the tank ran dry. AmaBhungane has also seen bank statements from a driver who claimed that the controller (a middleman between the driver and the Eskom operator) was paid a standard fee of R3 000. The driver and operator would get R9 000 each from a single load. Payments were received and made via cash deposits at automatic teller machines, making them difficult to trace. This driver said there was quite regularly a police officer who escorted the stolen fuel. The policeman would be paid directly in cash by the black market buyer. An Eskom tip-off and an arrest Luck ran out, however, for truck driver Douglas Ndivhatzo Ralulimi, 39, who was arrested for theft on 18 March outside Kriel Power Station, where he was allegedly caught with a tanker full of stolen fuel. He is currently out on R10 000 bail. Mpumalanga police spokesperson Brigadier Selvy Mohlala said another suspect, Blessing Ngubo, who worked at the power station, died in a car accident shortly after Ralulimi was arrested in what one source describes as suspicious circumstances because “he did not hit anything his car just overturned”. Ngubo was an operator responsible for the loading and offloading of fuel from tankers. The theft case has been taken over by the Hawks, who would not comment on a live investigation other than to say that the arrest was made after a tip-off from Eskom’s own internal investigators. Eskom’s media department also did not want to provide details on the case except to state that they were aware of the fuel oil theft, and that it was through Eskom’s own initiatives that the arrest was made. Investigations are currently underway. Responding to claims that there were no tight controls and accountability on how much fuel was ordered, Eskom said that fuel was ordered through “National Control” via a daily planning process. Eskom’s statement said, “The fuel oil trucks are weighed at the coal plant weigh bridge and come to the station for off-loading. The operators take readings before off-loading and after off-loading to account for the amount that has been off-loaded, then the tanker goes back to the weigh bridge for weighing.” Eskom did not explain why the discrepancies between recorded delivery volumes and actual fuel consumption were not picked up. Neither did the utility respond to questions about the security flaw entailed by the weigh bridge being located outside the Kriel perimeter. How it’s done: the modus operandi Amabhungane’s sources say that the thefts are facilitated by managers and controllers working for trucking companies, as well as operators at the power station. Of course there is also a buyer. Controllers at the trucking companies will assign favoured drivers to deliver fuel to Kriel, usually from the Natref refinery in Pretoria. Early in the morning or the previous night, the controller will alert the drivers about a black market order. Said one driver: “We load mostly around 10.00 am but make sure not to load after 4.00 pm as the refinery closes after that. If you load too early then you must make sure you waste time because you can only reach the power station at night,” said the driver. That is because the syndicate’s operator only starts his shift at 8.00pm. The operator tells the driver to go to the weigh bridge, which is outside the power station gates. “Then after weighing, the operator tells you to come in and then you go through access control security checks.” At the security checkpoint, all that is required is to show a shipment slip – a document that has details of what is inside the truck. The next step is to get an access slip and proceed to the offloading zone. There, the driver will offload only enough fuel to pass a quality control check and make it appear that normal offloading has happened. The crooked operator gives the driver a slip to confirm that the fuel has been delivered and the truck is driven out of the gate, allegedly bound for the weigh bridge. Instead, the truck driver calls the illegal buyer and waits at the side of the road for a small private car to appear. The trucks are equipped with cameras to monitor the drivers and prevent theft. But in this case the driver switches off the live camera, allowing a passenger from the small car to jump inside. The passenger is equipped with a signal jammer and it is alleged that officials at the trucking company, who ought to be monitoring the cameras, turn a blind eye to the lost signal. The passenger directs the truck to an illegal offloading spot, usually a closed yard a few kilometres away. At the illegal offloading site, there is a second, empty truck, coupling pipes and generator. After offloading the fuel into the second truck, the truck driver goes back to the weigh bridge outside the Kriel Power Station, which will confirm that the tank is empty and that the job has been completed. Illegal fuel’s cross border destinations According to research by the Global Initiative Against Transnational Organised Crime in a 2020 paper on fuel smuggling, Zimbabwe is a favoured destination for smuggled fuel from Mozambique, South Africa and Botswana. Some smugglers use boats to carry fuel purchased in Mozambique across rivers that flow into Zimbabwe, the study said. For larger-scale smuggling, tankers with false documentation – such as marking fuel as a commodity not subject to duty, like soy oil – were also used. Reports of fuel stolen in transit have also surfaced elsewhere in the region, such as the Maputo Corridor, where Mozambique, Eswatini and South Africa converge. Revenue authorities in Zambia also uncovered large-scale scams involving tankers transporting illicit fuel from Namibia and Mozambique. During one incident in 2018, 60 trucks were seized in Zambia carrying illicit fuel. In South Africa, joint operations by Transnet and Eskom have resulted in several arrests and seizures of private vehicles and tankers. In Mozambique, a tracking programme was launched in May 2018 involving marking fuel with an invisible chemical, which allows authorities to more easily identify fuel which has been adulterated by bulking up with cheaper kerosene. Within six months, revenue collection increased by 32%. A corresponding 60% reduction in kerosene sales indicated its widespread use as an adulterant, and further indicated a potential decline in adulteration. According to the research paper, the sudden rise in fuel thefts, particularly in South Africa, is a new shift in fuel-smuggling dynamics in the region. Smart policy decisions, such as Mozambique’s successful fuel-marking initiative, and greater regional cooperation between revenue and law-enforcement bodies, may prove useful in countering this growing problem, the study suggested."

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