The Central Energy Fund (CEF) can not yet say what price SA paid for the controversial sale of 10.3 million barrels of the country’s strategic oil reserves, or who now owns the stock, according to the chairperson of its board Luvo Makasi.
The secret sale by the Strategic Fuel Fund (SFF) – which is a subsidiary of the CEF – took place in December 2015, at a time when oil prices were at a historical low point.
Speaking to Power98.7 radio host Onkgopotse JJ Tabane on Monday evening, Makasi said that the CEF was still investigating the sale.
Bloomberg reported last month that law firm Allen & Overy led an investigation into the sale, which included a recommendation that a financial analysis of the sale be conducted.
But the fact that the analysis was completed by embattled auditor KPMG SA has caused delays in making the report public.
Minister of Finance Malusi Gigaba last month advised all government departments and entities to review all work done by KPMG to ensure their audit processes had not been compromised.
First rotation, then sale
In March 2016, three months after the sale took place, then-energy minister Tina Joemat-Pettersson claimed in her annual budget vote speech that the fuel had not been sold, but rotated.
“In 2015, we issued a ministerial directive for the rotation of strategic stocks by the Strategic Fuel Fund and this has resulted in the increased revenue base for SFF, whilst at the same time maintaining stocks within our storage tanks for security of supply,” she said at the time.
But earlier this year new Minister of Energy Mmamoloko Kubayi admitted the strategic fuel stock had in fact been sold off.
During Monday’s interview, Makasi also acknowledged the stock had been sold and not rotated.
But he said the CEF board was only involved in the transaction “at the end”, adding the board only got wind of the sale when a “a good amount landed in our (bank) account”.
Makasi acknowledged the fuel had been sold in a “depressed market” at a time when international fuel prices were low.
“If you look at where the market was at the time the product was sold, you would then have to make an assumption that there would have been a loss.
“But what we are busy with now, is we are trying to quantify what was the actual loss to the state,” he said.
He promised the CEF would “come back to the public” with the full details of what the loss amounted to.
Asked if anyone would be held responsible for the secret sale – which took place without the knowledge of National Treasury – Makasi reiterated that the scale of the losses first had to be established.
“Where there is a loss, the Public Finance Management Act puts a positive implication on the board of CEF and all its subsidiaries to investigate those instances,” he said.
“So there will be consequences. And when those losses are established, there will be consequences on all those involved in the process.”
Makasi appeared to imply that the CEF was also still investigating who bought the oil.
“The stock never left our tanks,” he said. “But the question of ownership therefore, that is what we are busy now debating.
“There was an element of sensation around. (But) was there cause for concern? Yes there was.”