The South African National Petroleum Company (SANPC) said on Wednesday that it has been approved to start operating as a new State-Owned Petroleum Company in South Africa.
This new entity will not include PetroSA.
This approval was the result of a policy statement made by President Cyril Ramaphosa in 2020 in an effort by government to repurpose and rationalise state-owned enterprises (SOEs) to support growth and development in SA.
Minister of Mineral Resources and Energy, Gwede Mantashe has subsequently merged three subsidiaries of the Central Energy Fund (CEF); namely the South African Gas Development Company SOC Limited (iGas), PetroSA and Strategic Fuel Fund (SFF).
The main reason for this merger is to create a single National Petroleum Company that will be efficiently structured.
According to a statement, out of the three merging entities, only iGas and SFF are financially viable to be merged into the new entity, subject to key legal requirements.
After a rigorous assessment of the PetroSA business, the only financially viable division to be merged into the new company was Trading and the Ghana asset.
PetroSA has been marred by financial issues for years and may require more help before it can be added to the new SEO.
“The remainder of the business that does not form part of the SANPC will form part of legacy assets requiring further work to be done before they could be transferred into the SANPC,” Jacky Mashapu, the spokesperson for SANPC said.
SANPC will be incorporated as a subsidiary of CEF Group of Companies until the National Petroleum Bill is promulgated into law.
“For the SANPC to kick start its operations, it would use the lease and assign model wherein certain assets of the merging entities will be leased to the new company, the SANPC,” Mashapu explained.
“The proposed lease and assignment model provides the opportunity to strategically select what is leased and assigned to the SANPC by ring-fencing or isolating PetroSA’s legacy assets, such as decommissioning liability and current operating challenges of the Gas to Liquid Refinery,” Mashapu added.
It is envisioned that 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 SFF.
Work has also 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.
“With the combined strengths of the three subsidiaries, a solid financial position, and robust stakeholder support, the SANPC is well-positioned to leverage these benefits and seize the R95 billion market opportunity,” Mashapu said.
The SANPC is now expected to become a leading player in South Africa's energy sector, Mashapu added.
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