The South African National Petroleum Company (SANPC) and its holding company Central Energy Fund (CEF) today announced that it has reached an agreement with both organized labour and non -unionized employees of merging entities (iGas, PetroSA and SFF) on issues related to its go-live on the 1st April 2025. The signed agreement paves way for the SANPC to start operating as a fully-fledged subsidiary of the Central Energy Fund (CEF), despite a week’s delay.
This legal status to operate as a new State-Owned Petroleum Company of South Africa, is in line with the National Treasury’s approval in terms of the s51(g) (h) of the Public Finance Management Act of 1999. The incorporation of the SANPC as a subsidiary of CEF Group of Companies will be an interim measure until the National Petroleum Bill is promulgated into law.
However, for the SANPC to kick start its operations, it would use the lease and assign model wherein certain assets of the merging entities will be leased to the new company. The proposed Lease and Assignment model provides the opportunity to strategically select what is leased and assigned to the SANPC by ring-fencing or isolating Petrosa’s legacy assets such as decommissioning liability and current operating challenges of the Gas to Liquid Refinery.
This approach will improve the financial risk profile for SANPC to secure funding as well as provide a legally sound solution to deal with the constraints associated with the non-profit status of SFF. To that effect, we expect that the SANPC will minimise the risk exposure to external dependency for finished products that threatens our security of energy supply in the country, impact positively the balance of payments for the country and keep associated industry and core skills inland.
As part of the approved business case to operationalise the SANPC, a total of 402 employees out of 1022 employees of the merging entities would transfer during the first phase of the merger, which is effective immediately. All other remaining employees (620 in total) associated with ringfenced assets & operations within Legacy entity (i.e. PetroSA) would transfer in the second phase of the project once these assets have been turned around & optimized with the support of SANPC and CEF as the holding company.
Meanwhile, work has begun to address the legacy assets which include the re-instatement of the Gas -To- Liquids (GTL) Refinery and the decommissioning liability methodology and provisioning as well as constraints associated with the non-profit status of SFF. Once all the matters relating to these legacy assets are resolved, they would be ready for transfer to the SANPC.
As we consolidate our internal resources and expertise to power SA’s energy future, we would ensure that no jobs are lost, and no is left behind.
