DNG Energy, the company that promised SA energy security, struggles to keep its own lights on

Former and current employees and suppliers have lost homes and medical aid cover and are struggling to make ends meet, thanks to energy company DNG Energy failing to pay salaries and invoices.

After months of trying to secure payment, they have broken their silence and described how DNG management continually promised that payment was imminent, but it did not materialise.

Founded by group CEO Aldworth Mbalati in 2013, the DNG group – that once bid unsuccessfully to supply emergency power to South Africa – describes itself as the “leader in the delivery of Liquified Natural Gas in the South African market, providing both a cleaner and cheaper fuel alternative”. The company boasts UK politician Lord Peter Hain on its board and according to Bloomberg has investment company Helios Investment Partners as its publicly known investor.

DNG group states that it consists of DNG Smart Gas, Power, Industrial, Marine and Renewables, and ambitiously states that it will invest billions of rands in infrastructure to ensure affordable energy alternatives in the country over five years.

On paper, the company looks very attractive, but for a DNG executive who has not been to work since mid 2022, the company has brought nothing but hardship and disappointment.

When DNG executive Felix Ncube joined the company it was with assurances that it had a R1.2-billion investment, so he had no doubts when he took up the position halfway through 2021. Ncube said of R1.2-billion investment, R400-million would be allocated to DNG’s strategy roll-out, so “we started working on the plans”, but the money did not materialise.

Instead, by September 2021, Ncube would be paid only half his salary that month, with the shortfall being made up in the following months. Delayed salaries would become the norm from October, and in December he was paid only a quarter of his salary, along with other employees. DNG, Ncube says, now owes him well over R800,000 and he has been told that the lack of payment is due to a delay in overseas transactions.

Ncube has since lost his home, is battling to pay his children’s school fees and has had his medical aid terminated due to non-payment. The former DNG executive says he has been made an offer of just over R200,000 along with a retrenchment offer. He has turned down both offers, hoping for a full repayment once his Labour Court and CCMA proceedings have been concluded. 

Daily Maverick made several attempts to contact DNG and Mbalati about these and other allegations, but to no avail.

https://www.dailymaverick.co.za/article/2022-10-10-dng-energy-threatens-daily-maverick-with-legal-action-but-fails-to-answer-our-questions/

In 2020, DNG had thrown its hat into the energy supplier ring, bidding for a share of a 2,000MW tender that would see the winning bidder provide emergency supply under the Risk Mitigation Independent Power Producer Procurement Programme, relieving the country of ongoing rolling blackouts.

The company would not be awarded a part in the tender, losing out to Turkish company Karpowership. DNG challenged the outcome in court, claiming a corrupt tender process that unfairly favoured the Turks. In 2021 the challenge failed with the court ruling that DNG was disqualified from the independent power procurement programme because it did not meet the financial, legal and technical requirements for the bid.

Mbalati, on SABC, described the ruling as “unbecoming” and filled with “a lot of contradictions”. He also told Reuters he would appeal against the decision, but has yet to do so.

https://www.scribd.com/document/597002812/DNG-Ruling-161

 

(Separately, Karpowership has also not benefited from the tender after Environment minister Barbara Creecy withdrew Environment Impact Assessment approval, saying the company’s consultants, economic allies and legal representatives had tried to brush aside significant environmental concerns. – Ed)

Read more in Daily Maverick: “Creecy firm in rejecting Karpowership plan – but gives Turks a third bite at the cherry”.

While DNG was fighting in court for the opportunity to supply the country with electricity, power to its own workshop where liquefied natural gas (LNG) infrastructure was manufactured, had been cut off and the generators repossessed. Daily Maverick understands that Mbalati would run up a bill for hired equipment then fail to pay accounts, resulting in the equipment being repossessed. This included machines and furniture in the workshop. At times staff had to run the generator with fuel bought from their own pockets, this before they were locked out of the premises due to rent not being paid for months.

Visit Daily Maverick’s home page for more news, analysis and investigations

But despite appearing to be in financial dire straits, DNG is making representations to the business rescue practitioners dealing with the liquidation of PSV Holdings to recapitalise the company, of which Mbalati has about 25% shareholding. 

According to a statement by PSV, “DNG has now signed various facility agreements with its bankers and proof thereof has been provided to the BRPs [Business Rescue Practitioners] on 25 August 2022, with drawdown of funds imminent… DNG is intent on completing the rescue and/or opposing the liquidation and recapitalising PSV, including the reintroduction and rebuilding of the original businesses.”

https://www.scribd.com/document/597002591/Statement

 

But while DNG looks for capital to rescue PSV, those to whom it owes money say they have heard similar promises in relation to a service supplied for a project into which DNG was venturing.

The work provided by the supplier was in relation to a DNG launch event in December 2021, that would see DNG’s LNG being tankered into logistics trucks through a pilot project. 

But by early 2022, the project had fallen through and companies withdrew from the signed Memorandum of Understanding that they had with DNG. With the shipped-in LNG not used, it was stored in the DNG workshop the company had been locked out of, turning to vapour and releasing mounds of methane into the atmosphere, Ncube said.

A supplier at a company, who asked that they and their company not be named, said they were owed well over R300,000 for brand-related work done for DNG.

“We delivered the work and sent numerous requests for payment, and they just went quiet. At some point, they were pushing back saying [the money] is coming through… and then there was radio silence. The contact that used to work there resigned,” the supplier said.

“I can’t speak to why she resigned (the former DNG employee) but the indication that I had was that there were challenges with employees getting paid,” the supplier correctly assumed.

The supplier emailed Mbalati about the outstanding balance and was told the CEO would look into it, but again, the supplier never heard back from Mbalati. Instead, she spotted the branding the company developed being used to promote DNG across social media networks and on their website.

“The audacity!” said the supplier.

Suppliers to the branding company were paid within seven days with the expectation that DNG would settle its account in a similar manner. “Now we’re sitting with a write-off of close to R300,000… I mean, really? I think the issue is bigger… the lack of ethics and integrity,” she said. The branding company has decided not to send a legal note for infringement, but rather approach the company in its own capacity.

At the time of publication, the supplier and former and current workers had still not been paid. Some have moved on and lost hope for payment. Some are still holding their breath. DNG, in the meantime, has advertised job openings at the company. DM/OBP

Daily Maverick’s contact with DNG: 

• Daily Maverick contacted DNG Energy and its CEO Aldworth Mbalati on 28 June 2022.


• This publication was unable to meet the company on the set date and politely postponed the meeting to the following week.


• DNG has since been delaying meeting this publication after countless attempts for a response.


• On approaching the publication date, Daily Maverick made a final attempt to contact DNG and was met with a legal note threatening this journalist and the publication with legal action should the article be published without speaking to the CEO.


• Daily Maverick once again gave DNG the opportunity to respond to queries, but was met with silence after dates proposed by its lawyers.


• On 8 September 2022, an article was written on IOL (The Star) by Siyabonga Sithole, incorrectly setting out the events of how this publication sought a response.


• To date, Daily Maverick has not received a response from DNG to detailed queries. DM/OBP