South African National Petroleum Company launches on April 1

By Dominic Ellis
Formation of The South African National Petroleum Company follows the merger of Central Energy Fund, iGas, PetroSA and the Strategic Fuel Fund...

The South African National Petroleum Company swings into action on April 1 following the merger of Central Energy Fund, iGas, PetroSA and the Strategic Fuel Fund.

The merger, driven by the pursuit of implementing a new company that has a streamlined operating model via the development of a shared services system and a common information platform, comes a few months after cabinet approval and the confirmation that PetroSA had incurred losses of R20 billion since 2014.

Additional factors which prompted the move included the determination to strengthen PetroSA which had not had a permanent CEO in five years prior to the appointment of CEO Ishmael Poolo last and, had become majorly ungainful since its failure to secure gas for the gas-to-liquids refinery project in Mossel Bay.  

While the merger deadline has been set, the portfolio committee expressed reservations to the department’s likelihood of meeting the deadline, considering the existing legislative regime, pending issues raised in the SFF and PetroSA forensic reports, as well as PetroSA’s current insolvency and liquidity challenges.

"South Africa’s energy sector is entering a new dawn,” said NJ Ayuk, Executive Chairman of the African Energy Chamber. “With gas discoveries off the coast and the announcement of the REIPPP programme bid window 5 and 6 on the horizon, now is the most opportune time for the merger of the CEF subsidiaries. Of course, it is not an easy task and delays may be anticipated but, this move signals a real change towards a meaningful strategy that will not only be beneficial to the DMRE but to potential investors and local development as well.”

The African Energy Chamber welcomed the move and acknowledges that this is yet another step supporting the country’s determination to restarting the engines of sustainable growth and the transformation of energy policy and infrastructure. 

Rising renewables potential

Amid capacity constraints and pressure on oil prices, South Africa is embracing renewables more. It installed 515MW of new wind power capacity in 2020, making it the premier African market for new annual installations last year as well as for cumulative installations.

It remains the number one wind power market in the region with 2.5GW of cumulative wind power capacity installed. The continued growth of the South African wind market is primarily due to the country’s Renewable Energy Independent Power Producer Procurement (REIPPP) program, which has provided a long-term project pipeline for the industry and attracted investors. 

Emerson Clarke, Director of Growth & Partnerships and Africa Task Force Coordinator at the Global Wind Energy Council, said: “In order to tap into the formidable wind power potential in Africa and the Middle East, we first need the political will, followed by an increase in collaboration between the private and public sectors to build a sustainable market and maximise the local socioeconomic benefits."

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