All of SA’s fossil fuels to be overseen by this one company

• All of South Africa’s fossil fuel and petroleum matters now fall into a single company, the South African National Petroleum Company.
• The company was created today by the President and sees iGas, PetroSA and the Strategic Fuel Fund merge into one.
• PetroSA is struggling financially, which may delay when the new company begins operating in earnest.

President Cyril Ramaphosa today has established the South African National Petroleum Company (SANPC), which state media claims will become a leading player in the country’s energy sector and is comprised of other Central Energy Fund (CEF) bodies like iGas, PetroSA and the Strategic Fuel Fund.

The creation of the SANPC will also apparently see changes in the energy and fuel sector in South Africa, such as the driving of new technologies, the creation of essential infrastructure and the striking of strategic partnerships within the sector.

This new petroleum company is also expected to be the sole overseer of South Africa’s petroleum resources and fossil fuels. The formation of the new company was approved by Cabinet in 2020, with three subsidies of the CEF merging into one.

It will reportedly be led by Godfrey Moagi, per Engineering News, and has been pushed for several years by Mineral Resources Minister Gwede Mantashe, who continues to support South Africa’s wholesale exploitation of fossil fuels, despite climate change pressures, both internationally and locally.

It is likely that all matters related to the fuel price affecting South African motorists will now fall to the new national petroleum company.

“The rationalization of these subsidiaries into one single SA National Petroleum Company is on the basis that each company be efficiently structured so as not to transfer operational inefficiencies and going concern issues into the new entity,” reads a statement issued by the new company on Wednesday.

However, before the SANPC can begin its operations in earnest, there is still the matter of “legacy assets” from the companies it is now formed up of. For example, it says in a statement that the only “viable” and not-covered-in-debt parts of PetroSA were its Trading arm and its Ghana assets.

SANPC will now use a leasing model to select which of the assets of PetroSA it wants folded into itself until the rest of the problems facing PetroSA can be sorted out. Essentially, only the healthy parts of PetroSA will join SANPC while the unhealthy parts are “resolved.”

“This approach will improve the financial risk profile for SANPC to secure funding as well as provide a legally sound solution to deal with the constraints associated with the non-profit status of [the] SFF. At the same time, work has begun to attend to the legacy assets which include the re-instatement of the Gas-To-Liquids (GTL) Refinery and the decommissioning liability methodology and provisioning,” it explains.

“Once all the matters relating to these legacy assets are resolved, they will be ready for transfer to the SANPC.”

[Image – CC BY-ND 2.0 GovernmentZA on Flickr]

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