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Calls for full transparency on new SOE, the National Petroleum Company

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Dear MyPE

The Democratic Alliance (DA) has taken note of Cabinet’s decision to merge PetroSA, the Strategic Fuel Fund (SFF) and iGas into one National Petroleum Company.

While there may be certain benefits in such a merger, this decision could create a potentially unfair competitive advantage for the new entity, despite the highly competitive nature of the petroleum sector.

The Department of Mineral Resources and Energy also needs to answer the following questions regarding this merger:

  1. Why has the SFF been included into this consolidation, when it’s primary mandate is to oversee the country’s strategic fuel reserves and ensure security of supply?
  2. Why has the Petroleum Agency of SA (PASA) not been broken up, in order to incorporate its commercial aspects into this new entity, and its regulatory aspects moved to NERSA?

The DA will request that the Department brief Parliament’s portfolio committee on mineral resources and energy in this regard.
The public and Parliament deserve nothing less than full transparency on what the consolidation of these entities will entail. This is especially true, given the profitability and cash flow challenges that are being experienced by PetroSA. Combining one bad entity with reasonably performing ones could end up in all of them being dragged down.

The last thing that the South African economy and the taxpayer need is another bloated and dysfunctional state owned entity (SOE) sucking the fiscus dry with bailout after bailout. We, therefore, need complete transparency on the financial implications, potential revenues and expenditures, and a comprehensive business plan for this new structure.

Should the DA not be satisfied that the consolidation process of these entities have been planned thoroughly and implemented properly, we will explore our options to oppose it.

Regards

Kevin Mileham MP
DA Shadow Minister of Mineral Resources and Energy

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