- PetroSA owes SARS R4,5 billion, with liabilities far exceeding assets.
- Mismanagement and failed deals have blocked the Mossgas plant from generating revenue.
- The DA calls for PetroSA to be shut down and its assets sold to the private sector.
Government-run PetroSA is in deep trouble. A senior manager has told the Portfolio committee on Mineral and Petroleum Resources that the entity owes SARS R4,5 billion which PetroSA is unable to pay. SARS has apparently travelled to Mossel Bay where PetroSA’s major asset, the gas to liquids Mossgas plant is located, with a view to attaching assets.
The committee heard that PetroSA has assets of about R13 billion but liabilities of around R20 billion and continues to get deeper into the red every year as it loses money. It trades oil on an unsustainable basis as it has a poor credit record and cannot compete efficiently with other traders.
If PetroSA was a private company it would be considered to be trading recklessly and its diretors would be liable to prosecution. But its position as a subsidiary of the Central energy Fund and as a favoured child of the ANC ensures that it is allowed to continue to rack up debts and impede South African fuel supplies.
PetroSA’s problems are stark. The only way it can start earning significant revenue is to restart the gas to liquids plant at Mossel Bay. To do so it would need a private sector partner. One is unlikely to be found with PetroSA being an unviable partner. Attempts to find a lifeline have been sabotaged by foolish politically-driven actions or appalling decision making by the board.
The ANC’s cunning plan has been to take out all of the profitable parts of the fuel trading, supply and storage system and place them with the yet-to-be formally established South African National Petroleum company. The failed assets will be liquidated and debts written off.
The list of scandals is long. Jut in the last two years there have been three of them:
- From 2023 PetroSA selected Gazprombank Africa (a unit of Russia’s state-owned bank) as the preferred partner to restart the Mossel Bay GTL refinery. The deal was valued at approx. R3.7 billion. Gazprombank defaulted on even its initial promise to fund feasibility studies and after months of non-performance was let go.
- Even more ridiculously, a contract to restore offshore gas assets was awarded to a company called Equator which was disqualified during the tender process because the “authenticity of the entity could not be established.” Equator was then liquidated during a comparatively minor court dispute.
- A deal with Total Energies to exploit the Brulpadda and Luiperd gas fields off Mossel Bay was mishandled to the point where total walked away.
It is time to staunch the bleeding and get government out of a business where it does not belong and where it has a track record of nothing but failure. PetroSA should be shut down and infrastructure sold to the private sector which could refurbish it and begin using it to the country’s advantage.
The ANC needs to give up its dreams of controlling the economy and using the oil business to fund favoured comrades.
Soundbite by James Lorimer MP.