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Petro SA mum on business rescue reports

May 04 2017 17:10
Carin Smith

Cape Town - The Central Energy Fund (CEF) is currently still handling certain issues regarding its subsidiary Petro SA internally and will make its decisions known in time.

This was the response of the CEF's spokesperson Jacky Mashapu on Thursday when asked by Fin24 about reports that the board of the state-owned oil company has asked the CEF to place it under business rescue.

Mashapu said he cannot comment on these reports and does not know the source of the reports.

Business Day on Thursday quoted a senior government official as the source of the business rescue claims and that it is due to PetroSA's very bad financial situation. According to the source, the CEF has refused the request.

Fin24 reported last month that the CEF declined to comment on a report that Luvo Makasi, who was appointed chairperson, allegedly asked board members of PetroSA to resign with immediate effect following the state-owned entity’s dismal state of financial affairs.

Mashapu then also refused to comment on "an internal matter".

READ: No one held to account as PetroSA bleeds

PetroSA has suffered significant financial losses over the past three years. Fin24 earlier reported that the state-owned entity suffered losses of more than R14bn in the 2014-15 financial year. These losses were ascribed to poor management of Project Ikhwezi, which entails the finding of new gas deposits under the sea off Mossel Bay to feed PetroSA’s Mossel Bay gas-to-liquids refinery.

On Wednesday Energy Minister Mmamoloko Kubayi berated PetroSA executives for paying themselves millions of rands in bonuses despite the state-owned entity bleeding billions. She was speaking at the portfolio committee on energy.

PetroSA last year decided to pay R17.3m in bonuses to its executives in 2016, it told Parliament earlier this year.

PetroSA’s management told Parliament last year that Project Ikhwezi wasn’t subjected to the required due diligence and corporate management processes because of the urgency to deliver gas to the Mossel Bay refinery. The situation was made worse by the drop in oil prices since 2014, as well as higher capital costs.

In the mid-2000s PetroSA still had a cash balance in excess of R10bn. Now it faces a projected loss of R2.2bn for the year to March 2017, reported Business Day. This is double the estimated further impairment of R1.1bn Fin24 reported in March as being the amount mentioned by PetroSA in a briefing to Parliament's energy committee. 

Read Fin24's top stories trending on Twitter:

central energy fund  |  petrosa  |  industrial  |  petrol  |  energy
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