Central Energy Fund loses R1 billion in bad investments
The Central Energy Fund (CEF) has lost more than R1 billion in bad investments. I will write to the board of directors of the CEF to ask that they justify these investment decisions to the Parliamentary Portfolio Committee on Energy. With the CEO's recent resignation, the board as a whole needs to explain why these investments were chosen and what went wrong. A copy of the report from the independent auditors can be seen here.
The report explains that the independent auditors wrote off R1.046 billion in assets. This included:
- A R42.5 million reduction in the valuation of the CEF's associate companies (relevant information can be viewed here).
- Losses totalling R77 million due to the liquidation of CCE Solutions Limited, a subsidiary company.
- PetroSA writing off a loan totalling R945 million to PetroSA Gryphon Marin due to an inability to recover these funds (relevant information can be viewed here).
These enormous losses drove the CEF into the red for the year, with the Fund posting a loss of R86 million.
The CEF is a massive entity. It has roughly R17 billion in cash and cash equivalents at its disposal and manages entities that are of vital strategic importance. It is an important role-player in our energy and industrial sectors and a potential jobs-driver in our economy. As such, it needs to make smart investments that create jobs and enhance our capacity to generate and distribute energy. We cannot allow mismanagement to occur without the relevant people being held to account. The board therefore needs to explain what happened here.
Statement issued by Sejamothopo Motau MP, DA Shadow Minister of Energy, September 27 2011
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