Department of Energy (DoE) director-general Thabane Zulu has slammed the announcement by the Strategic Fuel Fund (SFF) of its intention to bid for Chevron’s South African assets, saying the government is “disturbed at the complete disregard for governance processes by the entity in question”.

On Wednesday, SFF released a statement indicating that it had formally expressed interest to Chevron South Africa to be considered as an interested party to its South African downstream assets.

This followed the January 21, announcement by Chevron that it would be selling its downstream assets in South Africa and certain other Southern African Development Community assets. The South African assets include interests in the Cape Town refinery and its marketing assets.

“Further to this expression of interest, on 24 June 2016, SFF has forwarded a commercial offer to Chevron and its financial advisers, in relation to the purchase of the 75% interest on offer."

However, Zulu said any offer to purchase by an entity of the DoE requires express consent from the Minister of Energy as the ultimate shareholder representative.

"This was neither sought nor obtained," he said in a statement.

“In view of this failure to observe the correct processes, the Minister of Energy and the Director General will initiate a thorough investigation into the matter in consultation with both the Boards of Central Energy Fund and the SFF.”

The admonishment will raise questions about the larger proposed restructuring of the CEF Group of companies, including PetroSA, which is facing serious financial and operational challenges.

Earlier this year, Energy Minister Tina Joemat-Pettersson indicated that the review of the composition of the CEF Group to create a stand-alone national oil company, using PetroSA as the nucleus, should be finalised by October.

Subsequently, questions were raised about the SFF’s rotation of strategic stocks, while acting PetroSA CEO Mapula Modipa resigned and was replaced by CEF acting CEO Siphamandla Mthethwa.

Of critical concern for PetroSA is the need to secure new gas sources for its Mossel Bay gas-to-liquids (GTL) plant, after the five-well Project Ikhwezi drilling programme yeilded only 10% of the 242-billion cubic feet initially anticipated.

As a result, commercial life of the GTL refinery was shortened to 2017.

Last year, PetroSA impaired its assets by a whopping R14.5-billion and also abandoned an earlier plan to purchase Engen’s assets as part of a strategy to move downstream.

In its announcement confirming that Mthethwa would be taking up the post of acting PetroSA CEO from July 1, the company stressed that it was “stabilising and continues to be a going concern”.