29/10/2015 – PetroSA exploration mission of more than R12 billion a great concern – says ACDP

November 3, 2015



PetroSA exploration mission of more than R12 billion a great concern – says ACDP

“At a time when state departments are facing with severe budgetary constraints, and there is a scramble to find additional funding for tertiary education, it is shocking that parastatals continue to run at losses and seek bailouts from national treasury. These parastatals are beset with financial troubles, boardroom squabbles and mismanagement, with five of the biggest state-owned entities having lost more than R20.6billion in the past financial year.  These are SAA, PetroSA, SABC, SA Post Office and Sanral.  This is scandalous and there is also little hope of their prospects improving drastically in the near future.

SAA, for example, which has received over R30bn in government bailouts, loan guarantees and grants since 2007, and has yet show a profit. Its latest publicly available results, for the 2013/14 financial year, show a loss of R2.59bn.

PetroSA’s financial and governance woes are of even greater concern, as this parastatal is earmarked to hold government’s free-carry stake in the new oil and gas projects, which are already hampered by low oil prices and regulatory uncertainty.

More alarmingly, PetroSA has managed to blow more than R12 billion – that is R12 thousand million – on a fruitless exploration mission off the coast of Mossel Bay in the past financial year bringing its total loss to R 14.5 billion for the 2015 financial year. When I raised this issue with the Deputy President earlier this year, he attributed this loss to the difficult market conditions for oil. It appears however, that this loss is due to the spectacular failure of Project Ikhwezi, aimed at extending the life of Mossgas through tapping new gas fields. This, when only 10% of the predicted 40 to 50 cubic feet of gas, purportedly buried in the area, was found. This exercise resulted in a staggering R12,2 billion impairment – the largest loss ever recorded by a parastatal.

In view of the huge losses, the ACDP calls for an urgent reevaluation of the role these parastatals play, and where necessary to sell-off all or part of those that are underperforming. In this way the continual financial drain on the fiscus will be avoided.

I thank you.”

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