The Chairperson of the CEF Board, Mr. Luvo Makasi yesterday, 12 June 2018, briefed Parliament’s Select Committee on Economic and Business Development about its state of affairs and progress made in bringing stability within the group.
In his presentation, Mr Makasi pointed out that the CEF Group is faced with a number of operational inefficiencies and challenges. These challenges ranges from less than 6% market penetration in the refinery business, unbalanced portfolio and no significant group profitability.
He further indicated that one of its biggest subsidiary, PetroSA which accounts for around 90% of the group’s revenue is in a difficult financial situation. He emphasised that PetroSA’s financial and operational efficiencies are also threatened by the fact that it could run out of cash and gas reserves by 2022. Added to these challenges is the decommissioning liability amounting to R9,6 billion.
He reassured the Committee that all is not lost as CEF has embarked on a new turnaround plan geared not only to address PetroSA woes but also looking at growth path of the group. The plan is awaiting final sign-off from the shareholder, Minister of Energy, Honourable Jeff Radebe.
- The cardinal pillars of this turn-around plan include the following:
- Turnaround PetroSA to a viable company;
- Accelerate the transition of vehicle industry from oil to electric;
- Build a retail position to support electric vehicle industry;
- Catalyse local E&P to facilitate the transition to natural gas;
- Partner DoE to lead in the transition to clean fuel;
- Improve the governance processes in managing the Strategic Fuel Stock business.
On the issue of the sale or the rotation of the strategic fuel, the Chair confirmed to the Committee that indeed the stock was sold. He, however, informed the Committee that CEF and SFF filed founding affidavit in the Western Cape High Court, on the 12 March 2018, to seek a declaratory order to set aside the sale of SA’s Strategic Crude Oil Reserves. This also include a forensic investigation whereby CEF/SFF have partnered with relevant law enforcement agencies to prosecute all implicated in this illegal transaction.