DA to refer illegal R5bn sale of fuel reserves to Auditor-General

26 May 2016

Minister of Energy, Ms Joemat-Pettersson and Central Energy Fund (CEF) Chief Executive, Mr Sibusiso Gumede’s, collusion without permission from Treasury to sell R5 billion worth of fuel stock/reserves contravened section 54(2d) of the PFMA which states:

“Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction:

(d) acquisition or disposal of a significant asset.”

Accordingly the DA will refer this violation of the PFMA to the Auditor General in order to obtain a full report of the sale which will reveal the full list of parties involved including the incumbent accounting officer, Minister Joemat-Pettersson and CE Gumede as stipulated in the criminal proceedings, section 86(2) of the PFMA. Failing which the DA will urge Treasury to pursue criminal charges as stipulated by the PFMA.

The illegal sell of the country’s strategic fuel stocks/reserves has left the economy exposed with one day of fuel available for cover when there is meant to be a buffer for 20 days. The international standards are at 90 days worth of fuel reserves.

Even worse is that this fuel stock was negligently sold at $28 a barrel when the current price is around $49 a barrel.

This risk exposure threatens to bring our economy to a complete halt as the economy will not function if South Africans cannot attend work or companies cannot function due to a lack of fuel, the estimated costs have been calculated at R1 billion per day to the economy.

Any form of embargo or fuel shortage will send our exchange rate plummeting and will result in further job losses, we cannot allow this to happen for a second time as we still dealing with the pernicious effects of a trampled currency following the surprise axing of the finance minister in December 2015.

The reasons given by the Minister and the CE are that it was a rotation of unsuitable stock which does not require permission from Treasury and it has been done before. However, under the PFMA, the sale of any significant state asset, which in this case amounts to R5 billion, requires approval from Treasury and it is also stipulated in the CEF Act. 

This feeds into a narrative that the CEF and PetroSA are in financial trouble and are looking for a cash injection. PetroSA has been plagued by projects that have gone south, including Ikhwezi and Irene.

The DA will continue to fight for tax payers money that needs to be accountable, transparent, well managed and aimed at growing the economy in order to reduce the appalling number of 8.9 million jobless South Africans.

Issued by Pieter Van Dalen, DA Shadow Deputy Minister of Energy, 26 May 2016