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South African Ministers Clash Over Control of Oil and Gas Assets Amid Policy Discord

Published March 23, 2024
2 months ago

Cape Town - Conflict escalates within the ANC as two of South Africa's key government ministers, Public Enterprises Minister Pravin Gordhan and Mineral Resources and Energy Minister Gwede Mantashe, lock horns over the strategic direction of the state's oil and gas assets. This struggle underlines the friction between different sections of the ruling party and delineates differing visions for South Africa's energy future.

In what has become a public tug-of-war, Gordhan’s National State Enterprises Bill aims to transfer control of the Central Energy Fund (CEF) away from the Department of Mineral Resources and Energy to a new, more independent holding entity. This entity would manage several state-owned enterprises (SOEs), potentially minimizing political meddling and past scandals like those which have beset PetroSA, the state oil company.

On the other side, Mantashe's South African National Petroleum Company Bill proposes the creation of SANPC, consolidating oil and gas assets under his department's auspices. This move would, in essence, strip CEF of significant holdings. Mantashe's plan suggests a clear intent to centralize control over the state's petroleum interests.

The CEF, critical for South Africa's energy security, has been marred by previous controversies and financial mismanagement, adding a layer of complexity to the ongoing dispute. Despite making a hefty R1.7-billion profit this year, questions remain regarding the sustainability of these figures, as significant portions stem from accounting changes rather than operational successes.

Central to this is the proposed role of SOEs and their governance. Gordhan advocates for separation between ownership and policy-making to protect the state's financial interests, building on the Presidential SOE Council's suggestions. Conversely, the ANC's resolution looks to keep specific SOEs under respective government departments’ purview.

As Parliament deliberates on these conflicting legislative proposals, the future of the CEF and, by extension, South Africa's oil and gas strategy hangs in the balance. The merger of CEF subsidiaries such as iGas, PetroSA, and the Strategic Fuel Fund into the SANPC is anticipated, with full consolidation expected by August 2024.

However, while this merger occurs, the issue of transparency remains a significant concern. Recently, PetroSA faced criticism for its opaque dealings in diesel supply contracts and questionable financial maneuvers, such as the unapproved sale of strategic fuel reserves and a contentious deal with a sanctioned Russian bank.

The situation raises broad questions about oversight and effective management within South Africa's energy sector—issues that the proposed SANPC under Mantashe's control must navigate carefully amid national and international scrutiny.

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