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Energy minister orders review of fuel fund contracts

Jul 28 2016 09:55
Matthew le Cordeur

Cape Town – Department of Energy (DoE) Minister Tina Joemat-Pettersson has ordered the Central Energy Fund (CEF) to conduct a review of Strategic Fuel Fund (SFF) contracts since 2014.

This follows the alleged unlawful sale of R5bn worth of fuel stocks this year, as well as the SFF irregularly expressing interest in buying Chevron SA assets in June.

READ: AG to probe R5bn 'secret’ oil deal

The Democratic Alliance (DA) said allegations had been made that Joemat-Pettersson and CEF chief executive Sibusiso Gumede had colluded without permission from Treasury to sell R5bn worth of fuel stock/reserves contravened section 54(2d) of the PFMA.

“Rotation of strategic stock has therefore both technical and economic benefit for the country,” the CEF said in a statement in July. The rotation will be investigated by the auditor-general.

READ: Energy Fund downplays 'secret' oil sale

With regards to the Chevron deal, the CEF said in June that the actions of SFF did not comply with governance requirements.  The SFF chairman and the acting CEO resigned and the CEF said it would urgently address the gaps in governance compliance.  “The group further regrets the perceived misalignment with the minister of Energy and the Department of Energy,” the CEF said in a statement in July.

“An offer to purchase by an entity of the Department of Energy requires express consent from the Minister of Energy as the ultimate Shareholder representative,” DoE director-general Thabane Zulu said in a statement in June. “This was neither sought nor obtained.”

“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 CEF and SFF.”

READ: Energy Dept to probe fuel fund’s interest in buying Chevron

Joemat-Pettersson said in a statement on Wednesday that she met with the CEF board on July 14, where she shared her concerns around the recent lapses in governance in the group, and the need to strengthen both the governance and oversight responsibility of the CEF over its subsidiaries.

“(The) CEF was directed to undertake a thorough review of its governance processes as well its turnaround strategies for the subsidiaries in the group,” she said.

“This review will include all contracts and transactions entered into in terms of the Ministerial Directive issued to the SFF, inclusive of the Strategic Stock Rotation and Storage and Leasing Agreements concluded.

“This process will establish whether the transactions were implemented in accordance with the conditions as set out in Ministerial Directive, and whether these followed due process and were above board. Any lapse in governance processes or irregular actions will be further investigated.”

She said the DoE’s deputy director general responsible for petroleum regulation, Tseliso Maqubela, would become the interim chairperson of the SFF board until a new chairperson is appointed.

READ: Strategic Fuel Fund CEO resigns after Chevron bid


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