By Johnathan Paoli
In a landmark move aimed at revitalising the country’s energy landscape, President Cyril Ramaphosa has approved the formation of the South African National Petroleum Company (SANPC).
It follows the merger of several subsidiaries of the Central Energy Fund (CEF), namely iGas, PetroSA and the Strategic Fuel Fund (SFF).
SANPC spokesperson Jacky Mashapu said the company was set to play a pivotal role in South Africa’s energy sector, focusing on ensuring energy security, driving technological innovation and developing critical infrastructure.
Mashapu outlined his hope that by fostering strategic partnerships, the company would contribute to social and economic development across the nation.
“This new entity will oversee strategic planning and governance of our petroleum resources, aligning with our broader goals of development and economic growth,” Mashapu said on Wednesday.
The decision to merge the subsidiaries stems from President Cyril Ramaphosa’s commitment, articulated in his February 2020 State of the Nation Address, to rationalise SOEs for improved efficiency and support for national growth.
The Cabinet approved the merger on 10 June 2020, responding to the need for a more streamlined approach to energy management.
“The rationalisation aims to ensure that the new company is structured efficiently, avoiding the transfer of operational inefficiencies from the previous entities,” Mashapu said.
While iGas and SFF are deemed financially viable for merger into SANPC, PetroSA’s business underwent a thorough assessment. Only its trading division and assets in Ghana will be integrated into the new company, while the remaining parts will be classified as legacy assets, requiring further evaluation before they can be transferred.
To facilitate the SANPC’s operations, it will initially function as a subsidiary of theCEF Group of Companies, utilising a Lease and Assign model.
This model allows SANPC to strategically select assets from the merging entities while isolating PetroSA’s legacy liabilities and current operational challenges.
Mashapu acknowledged the challenges associated with legacy assets, including the decommissioning of the Gas-to-Liquids Refinery, saying steps were already underway to address these issues, ensuring that once resolved, these assets could be incorporated into the SANPC.
“The Lease and Assignment approach provides a legally sound solution to the constraints linked to the non-profit status of the SFF and enhances our financial risk profile,” Mashapu said.
With a solid foundation built from the strengths of its predecessor companies, the company is poised to capitalise on a market opportunity estimated at R95 billion and aims to leverage these advantages to secure funding, innovate in the energy sector
and expand its infrastructure capabilities.
Mashapu said the establishment of the company represented a strategic pivot for the country’s energy future. With a focus on sustainability, innovation and economic growth, it is expected to become a cornerstone of the nation’s energy policy, addressing both current challenges and future opportunities.
The executive said that as the company gears up for operations, it aimed to play a transformative role in ensuring the stability and growth of South Africa’s energy sector.
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