South African State Energy Board 'Suspended'

There has been confusion over reports that the board of South Africa’s Central Energy Fund (CEF), which oversees state gas company PetroSA, has been suspended. CEF a month ago announced the appointment of an interim board for PetroSA which included none of its former members.

Reports on August 1 in the local business media suggested that the latest decision had been taken by Energy Minister Mmamoloko Kubayi due to concerns over CEF’s oversight of the sale of 10.3mn barrels of strategic oil reserves, a transaction which was not related to its relationship with PetroSA.

The current CEF Board was not serving at the time of the sale, so the minister’s motives are unclear. 

Her department issued a statement denying the reports: “The minister of energy Ms Mmamoloko Kubayi has not suspended the board of directors of the Central Energy Fund (CEF), as purported by the media. The minister has however given the board members letters on the morning of the 26th of July 2017 requesting an explanation on concerns. It is also important to stress the fact that Minister Kubayi is the shareholder to CEF and all matters relating to governance [at the state owned company] will be dealt between herself and the board, as such matters are dealt within the confidentiality it deserves.”

South Africa's energy minister Mmamoloko Kubayi (Photo credit: SA Parliament)

Shadow energy minister Gordon Mackay, who represents the opposition party Democratic Alliance, branded the reported decision as “highly confusing and (it) may be nothing more than a smoke screen.

“It is confusing in the sense that the current CEF board became aware of the sale only in May 2016 and the CEF Chairperson and the two other board members, Mosimaneotsile Besnaar and Neville Mompati, were only appointed in December 2016, well after the issues of the sale which occurred in December 2015. Removing a new chairperson who is actively trying to clean up the fund and PetroSA is also highly suspicious.”

Mackay said that, were CEF directors removed, it would ostensibly relieve pressure on PetroSA “as the CEF CEO has been hugely critical of PetroSA.”

A cloud is also hanging over PetroSA, which won the unenviable record of making unprecedented annual losses by a South African state-owned entity of rand 14.5bn ($1.1bn) in the 2014/15 financial year.

Much of this loss was attributed to poor management of Project Ikhwezi, an offshore gas drilling programme that was to be used to top up dwindling feedstock for PetroSA’s Mossel Bay gas-to-liquids refinery; the refinery is now being switched over from gas to processing other feedstock.

Update as of 3pm GMT: The DA's Gordon Mackay later added that the minister could resolve the confusion over the CEF board by agreeing to a summons to appear before an energy select committee in parliament to answer questions under oath. He said his party will write to the committee's chairman Fikile Majola to ask that he summon the minister accordingly.

John Fraser, Pretoria