By Lesedi Sibiya-Diplomatic Inside

Minister of Mineral Resources and Energy, Gwede Mantashe, officially launches the new state-owned company called The South African National Petroleum Company (SANPC) today in Sandton. A bill that was cabinet approved back in 2020 to parliament. The company will merge three existing companies, PetroSA, South African Gas Development Company (iGas) and Strategic Fuel Fund (SFF) in order to create one state-owned company. “This marks as a great turning point in our process of stabilizing state owned entities…we were told a few years ago to console your state owned entities and make them work more efficiently…we took a decision that we are going to take three entities, merge them and create an energy champion for the country” said Minister Manstashe in his opening statement at the SANPC launch. Mantashe has further expressed on X (Twitter) “Notwithstanding the shift in demand towards cleaner sources of energy production, the increasing population and the need for industrial growth in the short to medium term, means the demand for fossil fuels is expected to rise for the foreseeable future”. “The SANPC is expected to oversee strategic planning, coordination, and governance of the country’s petroleum resources and thereby contribute to the country’s sustainable development and inclusive economic growth.” Mantashe said.

The reason for this merger is because International Oil Companies (IOCs) have been involved in South Africa’s oil investments which poses a risk to the security of the country’s liquid fuels as these IOCs are shutting down refineries. This has pressed the government to structure a state-owned oil and gas company in order to localise the manufacturing of its own oil reserves instead of relying on external resources. The SANPC is also expected to be the overseers of strategic planning and coordination of South Africa’s sustainability and economic growth. The SANPC will also be a temporary subsidiary company of the Central Energy Fund (CEF) group of companies until the National Petroleum bill goes into full effect. “The purpose of the bill is to ensure security of petroleum products and orderly development of the petroleum products sector, including the introduction of modern, cleaner products and renewable components which will improve the energy mix” says Minister of the Presidency Khumbudzo Ntshavheni back in 2020.

The CEO of SANPC, Godfrey Moagi, has said “SANPC is going to be an integrated oil and fuel company, it is important to acknowledge that although we are a new company, we actually do have assets, we are not going to be starting from scratch. For the SANPC to operate they will need to lease certain assets from the merging companies by way of the lease and assign model. The model serves as a platform to select what is leased and assigned to the SANPC by way of decommissioning liability and current operating challenges for the gas-to-liquid refinery. This model hopes to improve upon the financial risk profile of SANPC to secure their funding. This model will also aim for South Africa to not be dependent on external funding in the long term to ensure that our energy supply is sustainable. “In 2010, we used to supply 80% of our fuel needs as a country, but currently that number has gone down to 35%…so, the difference of 70% is what we import…it means that our dependency has been outsourced to other countries as we import from other countries and yet we do have facilities some of which are currently not operational” says CEF Chairperson Ayanda Noah. 

In the long term the SANPC aims to have a sustainable supply of energy without the full dependence of foreign entities and to manage the growth and sustainability of South Africa’s economy.