The management and board of the Central Energy Fund (CEF) have been grilled by Parliament’s Portfolio Committee on Energy, particularly on its controversial sale of 10-million barrels of crude oil reserves. The CEF has, however, been unable to come up with many answers.

The main point of contention is that National Treasury was not informed about the rotation of 10-million barrels of crude oil by the Strategic Fuel Fund (SFF). 

“The intervention is that all stock rotation contracts are under legal review,” said CEF interim CEO Mojalefa Moagi.

Moagi told the portfolio committee that the CEF group had assets of R35.5-billion, including a R16.2-billion cash balance.

However, the method of getting to this figure was questioned by Democratic Alliance (DA) MP Pieter van Dalen, who noted that the fuel stock sale could be a case of “creative bookkeeping”.

“Am I right in saying that if it wasn’t for the sale of the fuel stock, you wouldn’t have made a profit. Is this not asset-stripping? You sell an asset to make a profit by the end of the year. What are you going to end up doing next year?”

Apart from the SSF, PetroSA reported heavy losses.

Energy Minister Tina Joemat-Pettersson has claimed she was ill-advised and that PetroSA had made strategically bad decisions.

Meanwhile, committee members said the CEF should also take the rap.

“Where is the CEF in all of this? How did the entities get so far in this process without being reined in by the mother ship?” questioned the DA.

ANC MP Thandi Mahambehlala said: “Strategic stocks were stolen right under your noses.”

Moagi said that the CEF was committed to helping PetroSA through various support and oversight mechanisms, and that PetroSA was also working closely with the National Energy Regulator of South Africa to ensure it discharged its responsibilities. 

He conceded that PetroSA was facing extremely challenging times.

“We are starting to see a decline in the cash balance for PetroSA, as it’s not generating cash at the same pace at which it is burning cash.”

DA Energy spokesperson Gordon MacKay noted that neither the CEF or PetroSA should be “playing in the oil and gas sector”.

“We have done very badly with it. We are always going to be picking up the dregs in the sector. It’s too risky. The South African government should not be playing in this sector.”

CEF board interim chairperson Lindiwe Mthunzi said the CEF had recently submitted a turnaround plan for PetroSA to Joemat-Pettersson for approval. As part of the plan, it had set a target of three months to ensure that all current vacancies were filled.

Mthunzi said a firm of attorneys had been appointed and would look into all contracts.

“We can assure the committee that, depending on the recommendations, we will take appropriate action and corrective measures,” she said.

UK-based company, Allen and Overy, experienced in the oil and gas industry, has been appointed to look into disputes within the CEF group, particularly about the rotation of strategic stocks and the manner in which this was done.

“We were looking for a company that hasn’t done any work with any of our subsidiaries in the recent past, because we didn’t want any bias to go into the review,” said the CEF.  

The company will be reviewing the contracts of about 30 people.

The CEF is the holding company for a number of subsidiaries and employs around 2 100 people.  

“I believe we have a solid plan, but we have challenges. The group is solvent. It doesn’t have debt. We have about R16-billion in cash and have adopted a turnaround strategy for PetroSA. We’ll also look to balance renewables in our investment going forward,” said Moagi.