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AG to probe R5bn 'secret’ oil deal

Jun 21 2016 21:30

Cape Town - The Auditor General (AG) will be investigating the allegedly unlawful sale of fuel stocks involving Minister of Energy Joemat-Pettersson, the DA announced on Tuesday.

DA MP Pieter van Dalen said in a statement that the party received confirmation from AG Kimi Makwetu stating that the allegedly unlawful sale of fuel stocks will be investigated as part of his statutory audit for the 2015/2016 financial year.

This followed allegations that Joemat-Pettersson and Central Energy Fund (CEF) chief executive,  Sibusiso Gumede, colluded to sell R5bn worth of fuel stock/reserves without permission from Treasury and thereby breaching  the Central Energy Fund Act and contravening section 54(2d) of the Finance Management Act (PFMA).

The Business Day's Carol Paton broke the news in December in a story titled “Strategic fuel stock sold off secretly”, adding that sale is connected with the ANC linked investment arm Thebe Investment Corporation.

The CEF, the holding company of the Strategic Fuel Fund (SFF), manages South Africa's reserves. The primary shareholder in CEF is the Department of Energy.

Strategic stockpiles are a country’s reinsurance policy in the event of a sudden supply crisis, but the SFF reportedly sold off close to the entire stockpile of the country's crude oil reserve, despite the fund having to hold stock for 20 days cover.

According to Reuters the 10 million barrels were sold at $28 a barrel in a closed tender to a unit of Glencore, Vitol and Taleveras. When the sale took place in December the Brent oil price ranged between $37.22 and $44.44.

Joemat-Pettersson defended the deal in her budget speech describing it as "a rotation" of unsuitable and uneconomical stock, rather than a sale.

“Although the DA would have preferred a more focused and separate investigation outside the realm of the statutory audit; we, in any event, welcome that the egregious allegations of selling fuel stocks without the consultation of Treasury will be investigated,” said Van Dalen.

He added that the party is still expecting a response from the Finance Minister Pravin Gordhan as to whether National Treasury received any of the money from the sale of fuel stocks. It further wants to know if Gordhan will be take disciplinary action against Joemat-Pettersson for contravening the PFMA.

According to the PFMA, section 54(2d): “Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction: (d) acquisition or disposal of a significant asset.”

Van Dalen urged the AG to table its report in Parliament upon its completion as prescribed by the Constitution, for all Chapter 9 institutions.

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