Last week, energy minister Gwede Mantashe gazetted a bill that, if passed, will create a new national energy company by next year.
The South African National Petroleum Company (SANPC) will be “the state’s energy champion”, according to the bill; tasked with developing the oil and gas sector, and building energy infrastructure.
The SANPC has been on the cards for years after the department announced it would merge three existing state-owned companies: the Petroleum Oil and Gas Corporation of South Africa (PetroSA), the Strategic Fuel Fund (SFF), and the South African Gas Development Company (iGas).
But the mandate outlined in the new bill goes much further by branching into energy generation, putting the SANPC in direct competition with Eskom.
President Cyril Ramaphosa floated the idea of an Eskom 2.0 last year, but it is widely considered Mantashe’s baby: a pro-gas, anti-privatisation SOE just as Eskom 1.0 becomes leaner and greener.
According to the bill, the SANPC is intended to be financially sustainable, but can receive government bailouts and, for the first five years, special levies imposed by the Minister of Finance.
But the bulk of the new SOEs funds will come from taking over the existing business of PetroSA, which has been teetering on the brink of bankruptcy for years.
Loadshedding and Eskom’s astronomical diesel bill has been a godsend for PetroSA helping it to turn a small profit by buying imported diesel and selling it to Eskom.
But PetroSA’s long-term survival – and hence the survival of the new SANPC – depends on it reinstating its in-house refining capacity, particularly the gas-to-liquids refinery in Mossel Bay.
Enter the Russians.
Gazprombank, the financial arm of Russia’s state-owned oil and gas company Gazprom, has been trying for years to secure an energy deal from PetroSA and its related companies.
In January, PetroSA issued a tender looking for a partner willing to invest $200-million (R3.7-billion) to refurbish the gas-to-liquids refinery.
Twenty companies submitted bids, but the unusually strict technical criteria resulted in 19 out of the 20 being eliminated. The only bid left standing came from the local subsidiary of Gazprombank.
But as today’s investigation shows, the prospect of partnering with a sanctioned Russian company set off a panic inside PetroSA. Two legal opinions followed, including one that advised PetroSA to cancel the tender and start from scratch.
All indications are that PetroSA ignored this advice. Last month, Mantashe told journalists that PetroSA had shortlisted three state-owned companies and would make an announcement soon.
If the deal goes ahead, Gazprombank will not only invest R3.7-billion and be responsible for refurbishing the refinery, but also provide PetroSA with gas condensate as feedstock for the refinery.
Any diesel the gas-to-liquids refinery produces will likely to sold to Eskom 1.0 to burn in the Open Cycle Gas Turbines. This year, PetroSA’s turnover is likely to top R20-billion, thanks largely to its diesel sales to Eskom.
For a company like Gazprombank, this could be a goldmine.
Susan Comrie
patheticescamGroetnis
Groetnis
