Central Energy Fund: PetroSA, Oil Pollution Control South Africa, iGas, Petroleum Agency SA, Strategic Fuel Fund: hearing

SUMMARY
The Central Energy Fund Group was asked about matters that had concerned the Auditor General during his audit of the Group which included the following companies: PetroSA, Oil Pollution Control South Africa, iGas, Petroleum Agency SA and the Strategic Fuel Fund.

PetroSA and the Strategic Fuel Fund (SFF) were asked to explain the costs and losses at which it carried the dormant companies in the 2002/2003 and 2003/2004 financial years. Oil Pollution Control South Africa was asked if it would be converted from a Section 21 into a normal trading company now that it was generating its own profits. The sustained viability of iGas was questioned as it had reported a tax loss of R3,7 million. Petroleum Agency South Africa (PASA) was questioned if it would continue indefinitely to be reliant on PetroSA for its revenue. Clarity was sought on the current status and findings of the CEF investigation into the viability of the SFF. The CEF was asked to explain whether disciplinary action had been taken against a senior SFF employee who had resigned and was subsequently employed by another company in the Group, when he was in fact responsible for the loss of R1 million in that financial year. The Committee questioned whether the remuneration and allowances paid to the CEF Board of Directors (R1,5 million, R1,2 million, and R4,3 million) complied with the legislation. Also discussed was the fact that PetroSA was locked into renting offices at the Waterfront office for R583 605 per month until 2008 when it owned its Parow offices. Finally PetroSA was asked about the funds advanced to Imvume Management and whether it believed that Imvume Management had acted fraudulently in using the funds advanced for a purpose other than that disclosed to PetroSA.

MINUTES
Introduction by Chairperson
The Chair outlined the Committee’s constitutional mandate for holding these hearings with the Central Energy Fund (CEF), PetroSA, Oil Pollution Control South Africa (OPSCA) and the Strategic Fuel Fund (SFF). He welcomed the Chairperson of the Portfolio Committee on Minerals and Energy Affairs, Mr E Mthethwa (ANC), and his Committee to the meeting. He requested the accounting officers to limit their inputs to brief and concise responses in the interests of time. The Committee had already been thoroughly briefed by the Office of the Auditor-General and thus long speeches from the accounting officers were not called for. The focus of the meeting lay with financial accountability and not policy issues, as the latter was the domain of the Portfolio Committee.

Introductory remarks by hearing convenor
Mr P Gerber (ANC) stated that the image of the oil industry worldwide was in many respects controversial, non-transparent and that it was a very lucrative environment. During the old Apartheid days of economic sanctions only one oil company disinvested and pulled out of South Africa, which was Mobil. The South African market was so lucrative that the rest of the companies remained, which clearly meant that huge profits were made from the South African people. It would be sad if the South African oil industry failed to continue to change that old image.

This Committee processed 280 financial and annual reports of government departments and agencies produced by the Auditor-General. It was a mammoth task that was appreciated by very few people. Be that as it may, this Committee tended to neglect the parastatals because the government departments occupied so much of its time. The Committee had however begun to change that and had had parastatals such as Transnet appear before it.

At the SCOPA workshop in February 2005 the Committee, together with the Office of the Auditor-General, identified certain government departments and parastatals that would be called for a hearing. Although the financial reports of these parastatals were not qualified "it was not exactly financial poetry either". Various emphases of matter or "red flags" had been reported in the Auditor-General’s Report on the CEF Group which would be examined during this hearing. He ended by commenting that the Committee would be doing the parastatals present today a favour by placing too much focus on the Imvume affair as that might draw too much attention away from the many other problems identified by the Committee.

PetroSA and SFF dormant companies
Mr G Madikiza (UDM) asked the CEF to explain the cost at which it carried PetroSA and SFF dormant companies in the 2002/2003 and 2003/2004 financial years, as well as the losses or profits at which they were carried.

Mr Ayanda Mjekula, Chairperson: Central Energy Fund (CEF), responded that there were a number of dormant companies. They were however in the process of being liquidated primarily because they have not been generating any revenue, which was the very reason for their dormancy. Those companies had been established in terms of ministerial directives with an aim to perform functions within the scope of the Central Energy Act, but some of those initiatives had to be abandoned because the research they had been commissioned to conduct yielded no results.

Mr Madikiza asked whether this meant that those companies ran at a loss from the very outset.

Mr Mjekula replied that companies whose main function was primarily research never retained any profit. They were instead an investment made in the hope that the research findings would yield positive results, which would then be commercialised and in turn provide positive cash flows. In this particular instance the research had not yielded any particular results and a decision was then made to close those companies.

Mr Madikiza stated that it was already the latter half of 2005 yet the ministerial directives dated 10 December 2003 which required the closure of those dormant companies had not yet been fulfilled.

Mr Mjekula requested clarity on the specific company referred to, as ministerial directive were company specific. He stated that that, in general, there were certain legal issues that needed to be investigated and finalised before a company could be wound up. A ministerial directive had been issued which required the investigation of the possible winding up of the SFF, which was a major undertaking. It required considerable legal opinion which held that an entity could not be closed if it had an environmental liability.

Mr Madikiza sought the progress that had been made in this regard.

Mr Mjekula replied that there remained the ministerial directive that required the production of 14.5 barrels of oil per annum. This had associated costs which, unfortunately, had to be borne by SFF. In other words the public had to bear the cost of maintaining the strategic stock. The oil had previously been stored in containers that resulted in an environmental liability. Unless instruction was received to get rid of the stock, it could not get rid of the environmental liability. It thus did not seem possible to wind up SFF because current legislation did not allow the transfer of an environmental liability. It was possible to remove the holding as was currently the case, because it was managed by PetroSA on an agency basis and the mining rights currently held by SFF could be taken away, but the environmental liability could not be removed.

Mr Madikiza stated that the original title deeds for some of the SFF properties for dormant companies were not available for auditing by the Auditor-General. He sought clarity on the implications of the failure to produce these documents.

Mr Mjekula responded that those title deeds had no impact at all. Applications could have been made for those title deeds, at great expense, but the new Minerals and Petroleum Development law obviated the need to pursue those title deeds because application had already been made for the mineral rights under the new legislation

Mr Madikiza stated that the responses focused on SFF dormant companies, and sought an explanation with regard to the PetroSA dormant companies.

Mr Mjekula replied that the PetroSA companies that were currently dormant were actually targeted to be used for future activities on the continent currently being initiated by PetroSA.

Mr S Mkhize, President and CEO: PetroSA, added that in acquiring exploration concessions in the various African countries, PetroSA was required by their domestic laws to first establish subsidiaries before commencing exploration. The companies that were dormant would be used for that purpose. Furthermore, they allowed PetroSA to re-class the risk in case of any liabilities that could arise, so that they were not transferred back to PetroSA. One subsidiary company was required to be established for every concession held in the country. At the moment South Africa had concessions in Nigeria, Gabon, Equitorial Guinea and Sudan each of which required the establishment of a subsidiary company. PetroSA had trading operations in Europe, it was looking into establishing a subsidiary in the United States as PetroSA had operations there.

Mr Madikiza asked whether the decision to keep those companies in operation was a good business decision.

Mr Mkhize answered that it was. If the concession did not produce the discovery of oil or gas within the standard three to five year period then the project was shut down.

Oil Pollution Control South Africa
Dr G Woods (IFP) pointed out that there were approximately thirteen companies that had not been trading for a number of years, many of which had single items on their balance sheets. It would simply require one Board decision and a deregistration to get that company off the books. He asked why those companies were being retained in their non-trading state.

Secondly, Oil Pollution Control South Africa (OPSCA) had incurred a net loss in the previous financial year of R8 million, and it appeared to be technically insolvent. There was no suggestion that the situation would improve in the near future. He sought clarity as to how OPSCA generated revenue.

Mr Mjekula replied that it generated revenue through oil pollution management and control on behalf of PetroSA and Caltex.

Dr Woods asked whether there was scope for OPSCA to increase its market and trading in order to ensure profitability.

Mr Mjekula responded that OPSCA possessed extensive oil pollution and management capacity. It was currently in negotiations with the National Port Authority (NPA) to take over all provision control and management in all the South African harbours, and those negotiations were being concluded at this very moment. Additionally negotiations had been ongoing with the Department of Environmental Affairs and Tourism (DEAT), which was the legal entity that was responsible for all the regulation of pollution in South Africa but which did not have the actual capability to manage pollution when it did occur. The difference between OPSCA and DEAT was that OPSCA had the actual capability of taking action in the event of a spill. OPSCA was currently engaged in negotiations which would result in it becoming the designated company in South Africa responsible for oil pollution management and control. This was detailed in the OPSCA business plan. He believed that OPSCA would become profitable as of the next financial year.

Dr Woods stated that OPSCA’s original business plan outlined that it was not intended to make a profit as it was a Section 21 company. Yet now, 13 years down the line, it appeared that OPSCA would begin generating profits. He asked whether OPSCA would then be changed from a Section 21 company, and whether OPSCA was confident enough that its business plan would ensure profitability from the NPA and DEAT negotiations.

Mr Mjekula replied that the business plan was fairly robust and clearly the OPSCA had to be substantial enough to cover the costs it incurred. The intention was indeed to turn it from a Section 21 company into an ordinary company. The issue was that South Africa did not have any oil pollution certainty as there were various organisations that held themselves to be responsible for oil control and management, but they did not have the necessary capacity to conduct the work. Oil control and management services were needed in the Durban Harbour where most of the activity happened.

He stated that OPSCA had conducted research into the oil pollution capacity in South Africa and it was discovered an overseas company was relied on to clean up an oil spill in South Africa. It was common knowledge that, in the 36 hours it would take an overseas entity to reach South African shores, the damage reaked would have been considerable. The research also established that there were entities within South Africa that purported to be conducting pollution control services, when in fact they were not.

It was thus discovered that there was vast scope to extend the OPSCA services, at a price, because it possessed the necessary expertise to provide oil pollution services to all South African harbours. The NPA itself realised that oil pollution was not its core business and it was for that reason that it was prepared to hand over oil pollution and management functions to OPSCA, who would then provide the services on behalf of the NPA at a cost that would cover the costs of running an oil pollution control company.

If OPSCA were to be designated by the DEAT as an agency that would provide oil pollution management services for any oil spill, OPSCA would provide that service at a cost which it was more than confident would cover its operational costs. The aim was thus for OPSCA to become an asset to the country for oil pollution control and management, and to provide the certainty needed with regard to the capability for pollution control.

Dr Woods sought the time frame within which this would take place.

Mr Mjekula responded that negotiations with the NPA were currently being concluded, and he expected OPSCA to kick off at least at the beginning of 2006. The negotiations with DEAT had become somewhat "dragged" because of the change of personnel both within that department and the Department of Minerals and Energy Affairs. OPSCA had last contacted them on 11 July 2005 and they promised to get back to OPSCA within two weeks, but nothing had happened since. There was thus a measure of uncertainty as to when the DEAT negotiations would be concluded. He stated that he was hopeful that the negotiations would be concluded by the end of the current financial year and that an agreement would be concluded.

iGas
Dr Woods stated that iGas tax loss was in the region of R3,7 million for the year under review, and the viability of this concern was thus brought into question. He requested an explanation on the nature of its operations, progress made and future scope for the diversification of energy usage in hydrocarbon gas in South Africa.

Mr Mjekula replied that the company was established to hold government’s assets in the hydrocarbon area and to ensure a diversification of gas usage in the country. The company had not generated any revenue to date as it was primarily set up to hold government’s 25% in the Republic of Mozambique Pipeline Investments Company (Rompco) Pipeline, which was built by SASOL and which ran from Mozambique to Secunda. However the option to take up the 25%, which would result in revenue generation, had just been taken up. SASOL had thus been paid for the 25% and there would now be a dividend stream that would accrue to iGas going forward. Its feasibility has shown that it would be a profitable concern as soon as the purchase of the 25% was consummated.

There were other plans for the company, going forward. iGas was currently looking at possible involvement at the gassification plant at Koega, at the planned Eskom gas power station. He stated that he was quite confident that those investments would prove valuable to the company.

Dr Woods asked where the funds for the exercise of the 25% option was sourced from..

Mr Mjekula responded that the funds were provided by CEF.

Dr Woods asked if the funds were provided in the form of a loan and, if so, what the terms were.

Mr Mjekula replied that the funds were provided by CEF as an investment, and when iGas began generating returns then the loan would become payable to CEF.

Dr Woods stated that the documentation indicated that there were a number of accounts in which CEF had provided funds and supported the companies on the assumption that they would turn around one day. This was not a very desirable situation. He asked whether assurance could be given that the iGas business plan would prove a prudent investment by CEF.

Mr Mjekula answered in the affirmative. The business plan was first and foremost developed by the company itself, was then scrutinised by the management of CEF, was eventually passed by the iGas Board itself and the final approval was then provided by the CEF Board. The consent of the Minister as well as National Treasury was also required before the investment could be entered into, and the consent was obtained. There were thus checks and balances in place.

Dr Woods asked for an indication as to when iGas would find itself in a profit-generating situation.

Mr Mjekula responded that iGas would be profitable from the next financial year, but it would take seven years to repay the loan to CEF.

Petroleum Agency South Africa
Dr Woods stated that Petroleum Agency South Africa (PASA) had reported profits of R7,5 million but that was only less than half of the profits reported in the previous financial year. He asked whether the current situation in which PASA was reliant on PetroSA for its revenue would continue indefinitely.

Mr Mjekula replied that it was a very difficult question to answer because PASA was accountable for the regulation of exploration activity in South Africa. It derived its revenue from the finding of productive oil wells. It was thus true that it was PetroSA that had been successful in finding oil in three wells because of the exploration work done by PASA, hence its dependence on PetroSA.

Dr Woods noted that PASA’s current revenues derived from royalties paid by PetroSA for the rights to explorations, and PASA reported that the shortfall in its income over the past year was as a result of the closing down of the Mossel Bay plant. He stated that he was unable to understand how these two events reconciled and why the shortfall could be attributed to the plant.

Mr Mjekula responded that PASA obtained its revenue from the production of the oil field. The stoppage at PetroSA meant that there was less oil production, and thus less revenue generated. PASA did acquire royalties initially for the find but also derived ongoing revenue from the production of that particular field.

Dr Woods asked whether the Committee could assume that, with the resumption of operations of the Mossel Bay plant, that PASA’s profitability had since recovered.

Mr Mjekula replied that because PetroSA had been at almost 100% production in the current year it made a profit of R31 million, which would in turn ensure the profitability of PASA..

Dr Woods sought clarity on the current state of affairs at PASA, and whether it was operating to its maximum potential.

Mr Mjekula responded that PASA had previously had been a relatively passive regulator of exploration rights, but the restructuring ensured a more aggressive and pro-active exploration activities. This would attract some attention to South Africa, particularly with the forthcoming 18^th World Petroleum Congress which would be held in South Africa. It was hoped that the attention would in turn generate significant interest in exploration, especially in view of the huge revenues derived by various companies as a result of the increased oil price.

Dr Woods stated that one of the key risk areas for PASA was that if it was unable to find new fields to explore its viability would come into question. He sought clarity on this key risk area.

Dr R Crompton, Department Deputy Director-General: Hydrocarbons and Energy Planning, replied that historically the regulatory activities that were performed by PASA were part of a commercial entity called Soekor. The 1998 White Paper on Energy Policy stipulated that the regulatory functions should be separated out from the commercial functions, in other words it separated the player and the referee. That lead to a Ministerial directive which resulted in the establishment of PASA.

Subsequently the Minerals and Petroleum Resources and Development Act was passed which made provision for a designated entity to perform the same kind of regulatory function in terms of oil and gas as was played by the Department in terms of hard rock minerals. The PASA has now been designated as that agency. This meant that if its sources of income were to decline in future as a result of declining production from oil and gas, the fiscus would have a responsibility to fund that regulatory activity. The risk and the unknown question, as pointed out by Dr Woods, was how many oil and gas fields would be found. This was very difficult to quantify, even with regard to hard rock minerals. This was one of the risks inherent in the mining industry.

Strategic Fuel Fund
Mr T Mofokeng (ANC) stated that although the Auditor-General did not report a qualified audit of the Strategic Fuel Fund (SFF) books, the company was not a stable going concern because it had reported several losses. It had incurred a net loss of R72 million in 2003 and made R277 million in the financial year ending 31 March 2004, and it had other administrative costs as well. He sought clarity on the current status and findings made thus far by the CEF investigation into the viability of the SFF, when those investigations would be finalised and who would fund the risk, current and potential future losses of the SFF.

Mr Mjekula responded that the issue of the SFF was a very difficult one. It was mandated to maintain strategic stock on behalf of the people of South Africa and government, which had associated costs. In the past SFF used to trade in stock and generated profits to fund the holding costs. However the current situation was that SFF was not fully compliant with the ministerial directive which required the SFF to hold 14,5 million barrels, as it was currently holding barrels in the order of 9,1 million. On the other hand the SFF was sitting with cash to the value of R1 billion but it was insufficient to buy the number of barrels needed to meet the ministerial directive. It was for that reason that the Minister requested an investigation into the possible winding down of the SFF.

He stated that as he explained earlier, the SFF could be wound down and outsource the oil storage function of the SFF, but the associated costs must be picked up. An audience with the Minister was awaited to find means to approach National Treasury as the public would be footing the bill for carrying the strategic stock, as the SFF was merely the custodian of the stock itself.

The stock was traded, as mentioned earlier, which required that the SFF kept an account that was dollar determinated. The losses recorded in 2003 were primarily due to that, but the losses were negligible in relation to the losses the SFF had incurred because the Rand had strengthened. In 2002 the loss stood at R362 million and was a result of the Dollar-denominated account and the gyrations in the Rand-Dollar exchange rate. He stated that, with the current purchasing price of oil and the SFF’s inability to purchase the oil in sufficient volumes, the necessity of retaining that Dollar-denominated account was being evaluated. The fact of the matter was that the current conditions were not conducive to trading in oil.

Mr Mofokeng noted that a senior SFF employee had resigned and was subsequently employed by another company in the group, when he was in fact responsible for a net loss of the group in that financial year. He asked whether any measures had been put in place to prevent such losses from being incurred in the future, what disciplinary measures were taken against that employee and how it was possible that that employee was again employed by the group.

Mr M Damane, CEO: CEF, affirmed that the loss of approximately R1 million was caused by the employee in question. It happened at a time when the trading activities within the SFF were being wound down and transferred to CEF, through PetroSA. The employee in question was employed by SFF at that time. His take on the matter was that because the SFF employees knew they were about to lose their jobs they were demotivated, and that the employee thus resigned. He believed that the loss was caused because the employee was demotivated. The SFF decided not to offer him the package but instead asked him to leave the SFF because he caused the R1 million loss, and he thus lost the package he would have received had SFF been terminated during his active employment.

The companies within the group operated in silos and consequently, unbeknownst to SFF, he was re-employed by another company within the group because he did possess the necessary skills. He stated that to the extent that the SFF operations had been closed, there was nothing that could have been done to prevent further losses. PetroSA was not aware that the employee had been employed by SFF and it secured a legal opinion on the matter which concluded that because he was requested to resign, PetroSA was perfectly within its rights to employ him, and if any action were taken against him he could institute a huge case against PetroSA at the CCMA. It was for that reason that no action was taken against the employee.

Mr Mjekula added that SFF was no longer a trading company, and there was thus no longer any prospect of something like that occurring again in future. Any future trading, pursuant to the ministerial directive, would take place within PetroSA.

Mr Mofokeng stated that it was true that SFF did not comply with Regulation 28(1) which related to the development of a materiality and significance framework, when requesting funds from National Treasury.

Mr Mjekula replied that the functions of the SFF were sourced on an agency basis by PetroSA on the one hand, and OPSCA on the other. There was thus no real activity within the SFF except in name, and because of that its management did not believe that a materiality and significance framework was necessary. It was however pointed out to SFF that it nevertheless needed to produce a materiality and significance framework even though its functions were performed elsewhere. This has thus been developed.

Mr Shauket Fakie, Auditor-General, stated that the ministerial directive with regard to the strategic stock was an issue that had been coming on for quiet a while. As long as there was non-compliance with that directive, notwithstanding the current difficulty, the Office of the Auditor-General would have to continue to report on the non-compliance with the directive. He questioned whether the Committee should not be engaging with the Minister on the matter to try and pass a resolution going forward as to how to deal with the levels of strategic stock, and whether the current directive needed to be revisited.

The Chair stated that the Committee would have to consult the Portfolio Committee on the matter.

Dr Crompton responded that he would like to clarify the ministerial directive in question. He stated that it was correct that it set down the quantities of strategic stock that needed to be maintained. Yet it also stated "please also direct SFF to devise funding mechanisms in consultation with my Department". It was thus clear that, at the time of issuing the directive, the Minister knew full well that the SFF did not have the necessary cash resources to comply with the directive. The consultations referred to in the directive have taken place, and the Department has also consulted National Treasury in this regard. It was however very important for all parties to understand that, as it would clarify matters completely.

The Chair stated that this policy matter would have to be discussed in detail.

Petro SA
Mr Gerber noted in response to the Auditor-General’s statement that PetroSA handed back R2,2 billion to the State as prescribed by law, and he would have thought that the R2,2 billion could have been used to meet the 14,5 barrels of oil requirement.

Furthermore he noted that the Auditor-General noted in his emphases of matter that some of the 23 companies in the group had not held an Annual General Meeting as required by Section 179 of the Companies Act, nor had they submitted to the Registrar the statutory forms required by Section 216 of the Companies Act. He sought an explanation for this as it was a common theme throughout the group.

Mr Mjekula replied that it was true that the meetings were not held, but that was a consequence of the dormancy of those companies that the Board tended not to pay too much attention to those companies. The Board was however concerned by the same issues as well and it had since put systems in place to ensure that in future there was compliance.

Mr Gerber noted that Caltex had offered a total of R50,4 million for the tank farm at Killarney in the Western Cape. He asked whether that deal had been concluded and, if so, whether PetroSA considered several valuations or whether it simply accepted the Caltex offer as a fair valuation.

Mr Mjekula responded that the tank farm was on offer over a protracted period but there were no buyers. The transaction was concluded for R50,4 million because, firstly, that was the amount produced by the valuator commissioned and secondly PetroSA had not been able to dispose of the tank farm. .

Mr Gerber asked whether the R50,4 million included the tank farm itself or the entire facility.

Mr Mjekula replied that a complicating factor was that the facility was on Caltex’s name with the result that PetroSA was selling the facility but the land, strictly speaking, belonged Caltex. Caltex could thus have claimed the facility for itself it so chose.

Mr Gerber stated that the Central Energy Fund Act stipulated that the remuneration and allowances paid to the Board of Directors was determined jointly by the Minister and the Minister of Finance. He noted that the directors were paid huge amounts with one being paid R1,5 million, another R1,2 million, and even R4,3 million. He asked whether those remunerations complied with the legislation.

Mr Mjekula responded that the remuneration of the non-executive directors was in accordance with the ministerial directive. The remuneration of the executive directors was determined by the respective Boards. He avered that the remuneration levels were market-related. The R4,4 million referred to was an extraordinary event as a substantial portion of that amount related to a severance package and other extraordinary circumstances. It was isolated incidences. The others were however fairly market-related and had full Board approval.

Mr Gerber stated that he did not understand the legislation to make a distinction between the salaries paid to executive and non-executive directors.

Ms O Mans, CFO: CEF, replied that the directive referred purely to directors fees and not to remuneration for services outside the directorship as an executive director. The Public Finance Management Act (PFMA) now required the disclosure of remuneration of executive directors and executive members, which related to remuneration not only in terms of the directorship but also in terms of salary. She stated that it was the directive that related to the fees of directors was the one that required concurrence of the two Ministers.

Mr Gerber asked whether the Board was satisfied that the directors earned more than the State President.

Mr Mjekula responded that he was happy to pay an employee who was competent to look after the assets of government, for which he was accountable. He stated that he did not appreciate the statements made that he compromised on the competence to manage the assets of the magnitude that were currently managed, on behalf of the State, by compromising the competency to manage those assets.

Mr Gerber noted that PetroSA had offices in Rotterdam in Holland, in Sandton in Johannesburg, Mossel Bay and in Parow and the Waterfront in Cape Town. He sought clarity as to which of those were owned by PetroSA and which were rented.

Mr Mjekula replied that the offices in Mossel Bay and Parow were the only owned properties.

Mr Gerber noted that a rental contract was entered into for the Waterfront office of R583 605 per month from 1 January 2003 till 31 December 2008. This amounted to a total cost of R42 million for the six year lease. He asked whether any decision had been taken to move back to the Parow offices.

Mr Mjekula answered in the affirmative.

Mr Mkhize responded that during the merger of Mosgas, Soekor and SFF a movement of personnel was required. Unfortunately during that time, space in the Parow offices was being rented by Telkom and Eskom, and there was thus insufficient space to move all the transferred personnel. It was for that reason that the offices at the Waterfront were leased. PetroSA then calculated the economic benefit analysis of the space at the Waterfront and the Parow offices, because the intention was that the Parow building would be sold for R50 million if the Waterfront offices were to be rented. Yet no interest was expressed in the R50 million price tag and PetroSA thus decided the most feasible option would be for it to occupy the offices. Since Telkom and Eskom had since moved out, the Parow offices were being prepared for occupation by PetroSA personnel as of 1 September 2005. Even though their lease expired in 2007 it was still economically worthwhile for PetroSA to vacate the building.

Mr Gerber asked whether he understood correctly that PetroSA’s rental contract at the Waterfront did not contain an escape clause or sunset clause to prevent the current situation.

Mr Mkhize replied that in principle PetroSA had to pay rent until the end of the lease period.

Mr Gerber stated that the new legislation required all holders of mineral rights to register as holders of mineral rights by the end of May 2005, which had already passed. He asked whether this had been done for all PetroSA’s new endeavours in which it held both the property and the mineral rights.

Mr Mjekula responded that they did comply.

Mr Gerber sought clarity as to the kinds of minerals involved.

Mr Mjekula replied that they were coal.

Mr Gerber sought clarity on the billion dollar loan.

Mr Mjekula responded that the loans were extended primarily to finance some of the activities at PetroSA, but the loan was provided by the holding company rather than the company itself.

Ms Mans confirmed that the loans were granted to furnish that three out of the four loans had already been paid back.

Mr Gerber requested clarity on the contingent liability and guarantee of R877 million for a PetroSA rental contract with a UK company.

Ms Mans replied that it was a parent company contractual guarantee that PetroSA was involved in.

Mr Gerber stated that during the course of the audit the Auditor-General came across two patents for which a fair value could not be established. He sought clarity on these patents.

Ms Mans responded that the Cotec patent was valued at R10 000 by those responsible for managing the patents. The Enerkom patent was valued at R1,5 million.

Mr Gerber sought clarity on the unsecured bank overdraft of R689 for PetroSA Nigeria.

Mr N Nika, CFO: Petro SA, replied that it was unsecured in that there was no recourse to PetroSA. It was mainly a bank account that normally absorbed the bank charges, and was not an operating overdraft. The overdraft had since been cleared.

Mr Gerber sought clarity on the procurement of 1,8 million barrels of crude oil, and who it was bought from.

Mr Mjekula responded that he did not have the information at his fingertips, and would have to get back to the Committee.

Mr Gerber inquired as to the progress made to date with the forensic investigation into processing and awarding of licences and the corporate governance requirements in the human resource department.

Mr Mjekula replied that the investigations did take place. An audit conducted by Gobodo and Associated led to allegations being made against the then CEO of the company, which resulted in the suspension of that CEO. A hearing was scheduled but before the hearings could be held that CEO opted for early retirement, which was granted. There improprieties alleged both regarding the employment of a staff member and the granting of concessions on the Tugela Basin.

Mr Gerber asked whether those investigations had been completed.

Mr Nina answered in the affirmative.

Mr Gerber noted government’s policy that BEE companies should supply PetroSA with oil, with the backing of the usual suppliers. He asked whether this was in fact the case.

Mr Damane responded in the affirmative.

Mr Gerber asked whether it was possible for PetroSA to buy oil directly from its foreign traders.

Mr Damane replied that the current procurement policy stipulated that BEE companies would be favoured suppliers, and PetroSA had been abiding by that policy. It was however possible for PetroSA to buy directly from its foreign traders.

Mr Gerber stated that PetroSA bought oil indirectly from Glencor for a certain price, which would either provide a discount to a BEE company, or it would increase its price. He asked PetroSA to explain how it normally worked in practice.

Mr Damane responded that oil was an internationally traded commodity and PetroSA bought at internationally quoted prices. PetroSA would not pay a premium, because it bought via a BEE company had bought the oil from an international company.

Mr Gerber was satisfied with the answer and stated that he would have been concerned if the BEE policy had resulted in a higher price for South African consumers.

PetroSA and Imvume Management
Ms A Dreyer (DA) stated that he questions would be directed at the PetroSA Chairperson, Dr Popo Molefe. She sought clarity on the actual request regarding the advance payment made by Imvume Mangement to PetroSA.

Dr Molefe replied that Imvume Management requested an advance payment from PetroSA because it was experiencing cash flow problems for that month. In any event the contract had already been entered into with Imvume Management and monies were in any even going to be paid, and the delivery of the Imvume Management condensate was about to be effected in a matter of days.

Ms Dreyer asked whether PetroSA had any idea of the close working relationship between Imvume Management and the ANC.

Dr Molefe answered in the negative. He stated that he only joined PetroSA in September 2004 and was thus not intimately familiar with all the details of the Imvume Management transaction, but the records did not indicate such a disclosure by Imvume Management. There was thus no indication that the PetroSA Board had any knowledge of the kind of relationship referred to..

Ms Dreyer asked Dr Molefe to explain on how many previous occasions the PetroSA Board had agreed to effective advance payments, as well as the dates on which these took place as well as the name of the companies involved.

Dr Molefe responded that a policy was arrived at in anticipation of the normal problem that BEE companies experience, and that policy was intended to place PetroSA in a position in which it could effect advance payments which in some instances could serve as bridging finances.

Mr Mkhize stated that as far as he knew there had been such advance payments in the past.

Mr Nika explained that requests for advance payment were not always made by BEE companies. Some suppliers required PetroSA pay for the product immediately, and some BEE’s request that instead of paying for the product PetroSA instead pay on invoice or pay on delivery. Thus the Imvume Management request was not an extraordinary one.

Ms Dreyer contended that the request in question was unusual in two regards: firstly, it was a request for advance payment and, secondly, Imvume Management requested that the funds be deposited into an account different to the one used for normal business purposes. She asked whether that had ever happened before, and whether the dates on which these took place as well as the name of the companies involved could be provided.
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Mr Nika replied that the facts of the issue was that when the request was made the product was due to dock in Mossel Bay in approximately four days. The advance requested was received in the form of a pro forma invoice, which was standard practice. It was true that although the contract was denominated in Dollars and the previous payments were made in Dollars, the advance was requested in Rands. The nominated a different account from the one used for the previous payments because the request was made to address Imvume Management’s temporal cash flow problem and also because PetroSA did not keep uncommitted Dollars. It would have taken a few days at least to pay in Dollars, as currency would have had to be secured from the open market.

Ms Dreyer stated she was not satisfied with the answer, because she asked whether advance payments had been made to an account different to the one used for normal business purposes

Mr Nika answered with a categoric no.

Ms Dreyer asked whether PetroSA would then agree that it was a highly unusual request.

Dr Molefe responded that it was a "new" request, but it must be remembered that it occurred at a time when the CEO was on leave and an acting PetroSA CEO was in office. In looking at the discussion of the Board at the time there appeared to be an admission by the acting CEO at the time that it was an oversight, and that he did not monitor that particular transaction.

Ms Dreyer asked whether PetroSA investigated the nature of Imvume Management’s cash flow problem and, if so, she requested an explanation of the cash flow problems.

Dr Molefe replied that as he understood it the request took place at the end of the year when the employees of Imvume Management expected certain remuneration which included bonuses. He stated that his recollection at the time was that Imvume Management experienced the problem for that month only, and that it was a temporary problem.

Ms Dreyer stated that it appeared that the South African taxpayers had to advance cash to Imvume Management so that it could pay the bonuses of its employees.

Dr Molefe responded that part of the funds advanced to Imvume Management were used for the payment of bonuses.

Ms Dreyer argued that this fact, together with the unusual request that the funds be deposited in a different bank account, pointed to negligence on the part of the then acting CEO in agreeing to effect the transfer.

Dr Molefe replied that, as stated earlier, the then acting CEO admitted that there was a lapse in monitoring the issue closely, especially with regard to allowing the transfer into a different account.

Ms Dreyer requested copies of the PetroSA’s policy on the allocations of loans to BEE companies, as referred to earlier by Mr Nika.

Mr Mkhize responded that it could be provided to the Committee. All allocations were checked against the policy.

Ms Dreyer stated that PetroSA declared a presentation-tax profit of R3,3 billion in 2003, whereas in 2004 it reported a presentation-ax profit of R240 million. This was a decrease of 93%. Given the reduction in profits, she asked PetroSA to explain the compelling reasons adduced by Imvume Management that convinced to extend the advance payment.

Dr Molefe replied that PetroSA’s 2003/2004 Annual Report indicated that the amount would have been declared after June that year.

Mr Mkhize stated that Imvume Management was providing the core product needed by PetroSA to produce oil, without which PetroSA would have had to shut down the plant. When Imvume Management made the request for advance payment PetroSA realised that if it did not assist Imvume Management it would not have received the product, which would in turn have affected PetroSA’s operations. Secondly, PetroSA was coming off the long sustained shut down and it was beginning its operations. PetroSA thus realised that if it did not assist Imvume Management it would also suffer, to the tune of $1 million per day, and it was decided that the best decision in the interest of production would be to extend the advance payment.

Ms Dreyer stated that she realised the risk to PetroSA, but asked whether Imvume Management offered any guarentee.

Dr Molefe responded that the record indicated that when the request was made there had already been delivery, and thus a track record had already been established. There was a commitment that there would have been no risk of non-delivery. The risk referred to by Ms Dreyer must be viewed on a balance of probabilities in relation to the bigger risk that Mr Mkhize referred to: the shutting down of a plant at a loss of $1 million per day.

Ms Dreyer stated that her concern was that PetroSA did not conduct a risk assessment of Imvume Management before extending the loan. PetroSA had no guarentee that Imvume Management would repay the loan with interest.

Mr Mkhize reiterated that at the time of the request the product was already on its way and the $10 million was for a past payment. Irrespective of whether PetroSA had decided to grant the extension or not, it would still have had to pay $7,2 million for the balance.

Ms Dreyer asked whether the revelation that Imvume Management proved a risk would affect the future relations between it and PetroSA.

Dr Molefe replied that the experience certainly changed the relationship radically. Secondly they would in future be required to pay with interest when requesting an advance payment which would bind them to a contractual arrangement.

Ms Dreyer asked PetroSA to indicate the date by which Imvume Management was expected to repay, and what the interest was.

Mr Mkhize responded that the interest was prime plus two. An arrangement was finalised which required Imvume Management to pay R500 000 per month.

Ms Dreyer requested that PetroSA keep the Committee informed of the repayments. She noted that the Auditor-General’s report differed from Dr Molefe’s view of the internal controls within PetroSA as the Auditor-General stipulated that there were weaknesses.

Dr Molefe replied that he really referred to the materialty with regard to PetroSA’s internal controls. He stated that PetroSA now had a strong internal audit mechanism and a strong risk management mechanism. It was for those reasons that he believed PetroSA was in control of the process.

PetroSA: General issues
Dr Woods asked who produced the BEE policy document and who authorised it.

Dr Molefe responded that it was discussed and approved by the Board

Dr Woods asked whether PetroSA informed Imvume Management when it requested the loan that it was not proper and usual practice for companies to act as a lender of State money, and them advised Imvume Management to request the funds somewhere else.

Mr Molefe replied that he was not sure as he was not with PetroSA at the time.

Mr Mkhize stated that the weaknesses in the procurement contract and the accrual had subsequently been reviewed. PetroSA did not advise Imvume Management to secure funding elsewhere.

Dr Woods sought clarity on the conditions for the repayment.

Mr Mkhize responded that the loan was granted on the basis that Imvume Management had $10 million coming to them within the next ten days. The agreement was that PetroSA would pay the balance of the cargo and it would subtract the full payment.

Dr Woods stated that the payment was made by PetroSA for the product supplied by Imvume Management, whereas Imvume Management actually used the funds to pay employees. He proposed that Imvume Management misled PetroSA with regard to the purpose of the funds.

Dr Molefe replied that Imvume Management did not mislead PetroSA.

Dr Woods stated that it would be interesting to observe the relationship between PetroSA and Imvume Management from here on.

PetroSA: Internal controls & employment equity
Dr G Koornhof (ANC) noted that the bonus and performance payment to executive directors and executive mangement, totaling eight members, amounted to R3,8 billion for the year under review. This was despite the fact that PetroSA reported a substantial drop in profits from the previous year. He requested an explanation of the criteria used by PetroSA to determine the payment of bonuses.

Mr Mkhize responded that the bonuses were only paid if there had been value-add or profitability at PetroSA, and this was calculated after the end of March of that financial year. They were paid in the following year and could thus not be deducted in the previous financial year. Thus the bonuses were paid in the 2003/4 year for the R3,8 billion.

The Auditor-General stated that PetroSA prepared the accounts on an accrual basis and for that reason they should be providing for the bonuses due for that financial year. Although, from a cash flow point of view, PetroSA might have paid in the following financial year, but the actual reflection of the bonus paid would be reflected in the year in which the profit was made.

Dr Koornhof stated that his question thus stood, and had not yet been answered.

Mr Nika replied that allocations were based on the economic value added model used by PetroSA. The payment of bonuses was triggered by a positive change to the economic value-added. In the year in question there was no accrual made for bonuses, and it was for that reason that when PetroSA realised there was economical value-added, it would accrue funds for those bonuses. Over and above the economic value-added which triggered the payment of the bonuses, each executive staff member entered into a contract with the line function to attain presentation-determined objectives. The computation of the bonus was then based on the total guaranteed salary of the particular executive on the condition that all the presentation-determined objectives in the compact were achieved.

Dr Koornhof stated that he accepted the answer given although he did not understand the reasoning. He proposed that the Committee keep an eye on this matter. He asked PetroSA to indicate the measures it had put in place to assure the improvement of its internal control mechanisms referred to by the Auditor-General, especially the salary suspense account, the housing guarentees and the obsolete stock.

Mr Nika responded that all those issues have since been cleared and PetroSA did have policies in place to deal with the housing policy. The problem with the suspense account arose during the time of the merger as people from the other entities were transferred. The individual employees who appeared on the expense account was as a result of a weakness in paying people in their last month on the employ of the PetroSA by using what was termed manual cheques. The PetroSA appeared to use the suspense account for that purpose, and that practice was now under strict control..

He stated that PetroSA deliberated for quite some time with the Auditor-General on the issue of obsolete stock because PetroSA believed that its procedure was consistent from period to period. Yet PetroSA did not have a documented policy, which it had since introduced. Housing guarantees were inherited from the old organisations which assisted employees to acquire houses. PetroSA was currently in negotiations with the commercial banks to take over those functions.

Dr Koornhof stated that the Committee was concerned that the reduction in profits and revenues to PetroSA and CEF were occurring on a continuous basis, and requested an assurance that it would not continue.

Mr Nika replied that, as explained earlier, the year under review was not the best year for PetroSA as far as financial were concerned. There was the planned once-month shut down but there was a technical breakdown in midyear which resulted in the plant being down for six months. PetroSA lost volumes that it could not sell in those six months. The second reason is that the strengthening of the Rand eroded the revenues made in the previous financial year, because PetroSA traded in American Dollars. The plant has stabilised in the current financial year and nearly 100% availability was achieved, as well as revenue growth with regard to volumes. The Rand had been fairly stable and the price of crude oil had been very favourable to the organisation. There was thus a complete turn around with PetroSA reporting a profit in the financial year of R1,7 billion.

Dr Koornhof asked who was responsible for the breakdown at the Mossel Bay plant and, if the person responsible was found, what steps have been taken against such person.

Mr Mkhize responded that the background of the incident was important. The initiation of the complete breakdown began with the commissioning of a valve that, when tested, was working perfectly. When operations began the valve failed to work and this was not picked up timeously by the operators in the control room. This resulted in major damage which occurred very rapidly. The insurance investigators confirmed this finding. Due to this PetroSA overhauled the entire system as well as the communication between the staff. Upon revisiting the plant the insurers were satisfied that everything was satisfactory, and noted that the PetroSA model could be used as a benchmark in this regard.

Dr Koornhof sought progress with regard to reaching its employment equity targets.

Mr Mkhize replied that there were areas such as in technical skills that the target had not been achieved, and PetroSA had put plans in place for training and personnel development with regard to historically disadvantaged and women.

Dr Koornhof sought clarity on the gender and disability targets.

Mr Mkhize responded that these targets had been set, but PetroSA had to configure its plant to accommodate these. There were however some areas in the plant, such as the refinery, that would not be able to accommodate disabled persons because of the way the plant had been built.

Dr Koornhof stated that PetroSA had indicated that by the end of 2005 it planned to increase number of female employees to 35% and the number of employees with disabilities to 3%. He asked whether PetroSA was on track to reach these targets within the stated time frame.

Mr Mkhize replied that, as he had just stated, there were some areas of the plant in which disabled persons could not be accommodated overnight. PetroSA was however doing all it could to ensure the targets were reached as soon as possible. Efforts were currently underway to reconfigure PetroSA’s offices t accommodate disabled persons, and it would advertise appropriately for the position by the end of the financial year..

Dr Koornhof asked PetroSA to indicate the number of female staff members and people with disabilities it currently employed.

Mr Mkhize responded that PetroSA currently employed zero people with disabilities, and the figures on female employees would be provided to the Committee at a later date.

The Chair asked for the full figure received by the insurance company after the plant breakdown.

Mr Nika replied that R751 million was received by PetroSA.

Dr Koornhof noted that PetroSA planned to pursue alternative feed stock sources in an attempt to extend its current feed stock beyond 2014. He requested an indication of the progress made.

Mr Mkhize responded that to date PetroSA had identified two options: gas or the conversion of the refinery into a crude refinery. Unfortunately the prices were either based on the Japanese model or American model, and they were unattractive for PetroSA. PetroSA was thus relooking those assumptions, and also the possibility of owning the gas and the plant. The studies should be finalised by the end of next year.

CEF: General issues
Mr D Gumede (ANC) note the decrease in groups profits in 2003/2004 financial year, and there appeared to be a recovery in 2005 as the group’s profits after tax. Yet that the recovery was due to the reclaimed insurance claim. He asked for the exact figure of the group’s profits after tax, excluding the insurance claim. Secondly, he asked whether the group was recording losses and, if so, why. Thirdly, he asked the CEF to indicate the causes of the slow recovery in profits. Fourthly, he asked the CEF to explain the mechanisms put in place to ensure the long-term profitability of the group.

Mr Mjekula replied that the major component of the group profit was PetroSA’s contribution, and thus the group profitability followed the fortunes of PetroSA. The reasons for the decline in profitability in that year was a once-off which was attributed to the closure of PetroSA, and there was therefore nothing extraordinary about it. The insurance mentioned was provided for in the previous year and thus the profits in the year referred to were not inclusive of the insurance payout. There were overall plans for CEF to reduce its over-reliance on PetroSA’s profitability via the Energy Development Corporation (EDC) which owned certain mining rights that would not be dependent on PetroSA.

The figures did not reflect declining profitability. It could be that in 2005/2006, due to the investments that were being made, the business plan would show increasing profitability. The profit for the past financial year stood at R1,7 billion.

Mr Gumede stated that the Committee would track this. He stated that in December 2002 the then Minister had directed the termination of the funding of the research project Enerkom as well as its operations, and that the costs of winding down the company be borne by CEF. He asked whether CEF had complied with the directive and, if so, how.

Mr Mjekula responded that CEF had complied fully with the directive and it had recovered the costs of winding it down. Its activities had long ceased and all that remained was the finalisation of the legalities.

Mr Gumede asked whether CEF believed there was no fraud or theft involved in the extension of advance payment to Imvume Management by PetroSA, or any fault on the part of PetroSA itself.

Mr Mjekula replied that from the group perspective he would like to state unequivocally that there was no corruption at all or any wrongdoing. The transaction happened in the course of business. PetroSA was faced with the option of either recording losses or of recovering monies owed to it.

General discussion
Ms Dreyer stated that she had not received a clear answer to the question of whether PetroSA had conducted a risk assessment of Imvume Management at the time of receiving the request.

Dr Molefe responded that PetroSA was satisfied at the time that the Board had conducted sufficient due diligence.

Ms Dreyer asked whether a risk assessment had been done.

Dr Molefe replied that when the request was made Imvume Management had an established track record, and the risk assessment was done when the adjudication of the tender was conducted and there was adjudged to have been no risk as thy had delivered several times. The risk was thus not an issue at that time.

Mr Mkhize added that when a BEE company partnered with an established company PetroSA evaluated the strength of the company on the basis of both companies. Thus if the Bee company, in this case Imvume Management, were considered in isolation then PetroSA would not have granted the loan. Thus in such situations PetroSA expected the BEE company to have a solid partner.

Ms Dreyer asked whether it was then the case that because no risk assessment was not done that also meant that no guarantees for repayment of the advance was given by Imvume Management.

Dr Molefe responded that he would not say that there was absolutely no risk assessment because the Board had to consider the matter, applied its mind fully to the matter and concluded on the balance that payment needed to be effected to Imvume Management. As stated earlier Imvume Management’s proven track record of timeous delivery, together with the fact that when payment was effected the product was already at sea being transported to PetroSA, satisfied the Board that the payment could be advanced. The cargo arrived approximately five days after the payment was effected. The Board also acted within the scope of the PetroSA BEE policy. Furthermore, the Public Protector was tasked with investigating the matter and concluded that there was nothing untoward in the advance payment extended to Imvume Management.

Ms L Mashiane (ANC) stated that she believed this matter had been "torn to pieces" and the same answers were being received from PetroSA. She proposed that the matter be laid to rest.

The Chair agreed.

Mr G Madikiza (UDM) sought clarity as to why the group granted the early retirement to the official during the process of a forensic investigation, when there was the distinct possibility of a disciplinary hearing. He suggested that it would not be possible to secure the attendance of the official at a disciplinary commission as he was no longer in the employ of the CEF.

Mr Mjekula replied that early retirement was granted after the forensic investigation. It was true that a disciplinary hearing was pending, but when the CEF considered the issues, it decided that the costs involved in pursuing the matter were not favourable and thus decided on the compromise by granting the early retirement.

Mr Gumede suggested that the Minister should be advised to discontinue some of the dormant companies. He asked whether any criteria existed on which such advice could be based.

Mr Mjekula responded that the matter was receiving the urgent attention of the Board, and the Board had taken a decision that those companies actually be deregistered. All that remained was for the legalities to be finalised. The decision to continue or discontinue a company was based on whether the activities of that company were relevant, profitable and within the mandate. If it failed on any of these grounds it would be terminated..

Mr L Greyling (ID) requested that PetroSA’s internal audit documents be provided to the Committee, so that it could assess first hand whether untoward behaviour was involved in the Imvume Management transaction. Secondly, he requested any correspondence between PetroSA and Imvume Management regarding the transaction.

The Chair intervened and said that the decision as to which documents would be requested from the entity had been taken before the meeting.

Mr Greyling asked whether the initial bid document stated that PetroSA would pay Glencor directly for the oil condensate and, if so, at what stage did this change to paying Imvume Management and the reasons for the change.

Mr Mkhize replied that initial bid document proposed that the funds be paid to Glencor, but the Board decided that the power be granted to the BEE company so that it at least controlled the amount and would receive transfer of skills in the process.

Mr Greyling stated that PetroSA indicated that a due diligence was not conducted by PetroSA, yet the Auditor-General indicated that it had been conducted. He sought clarity on the matter.

Secondly, he noted that the PetroSA indicated that the Imvume Management shipment had already been at sea when the advance payment was effected to Imvume Management, and sought clarity as to whether Imvume Management or PetroSA owned the cargo at that point. He stated that he understood the cargo to belong to PetroSA at that point in time, which meant that it would be able to take legal action to ensure the cargo was released to it.

Dr Molefe replied that it would belong to PetroSA when it paid for the cargo. He stated that Imvume Management did not deliver the cargo and for that reason PetroSA was taking legal action to recover the funds in the form of a civil action.

Mr Greyling stated that he agreed with Dr Woods that Imvume Management acted fraudulently in using the funds advanced for a purpose other than the purpose disclosed to PetroSA. He asked whether PetroSA had considered instituting legal action for fraud charges against Imvume Management. PetroSA had not decided to take any other legal action. Naturally if the funds were not recovered then PetroSA would have to consider drastic measures.

Dr Molefe responded that PetroSA was satisfied at the time that there was no corruption at play and that its decision to extend the funds were in accordance with its BEE policy.

Concluding remarks
Mr Mthethwa stated that he appreciated the valuable input made and thanked the Committee for the invitation and welcomed future interaction on the issues raised.

Mr Gerber thanked the CEF, PetroSA, National Treasury, Office of the Auditor-General and Department officials for their attendance. The CEF group was relied on to take care of this lifeline industry so that South Africa had an energy source, and it was literally responsible for oiling the gears of this vibrant country. He assured them that their aim was to assist the entities in improving their performance. He encouraged the group to remain focused on keeping the fuel industry oiled and cautioned against becoming distracted with political sideshows.

The meeting was adjourned.

Appendix:
CENTAL ENERGY FUND DELEGATION

Mr A Mjekula Chairman

Mr M Damane Chief Executive oflicer

Ms B Mabuza Director of CEF / Chair of the Board / Audit Committee

Ms O Mans Chief Financial Officer of CEF

Ms M Joubert Head of Internal Audit of CEF

Dr P Molefe Chairperson of Board of Directors

Ms I Chikane Chairperson of the Board / Audit Committee

Mr S Mkhize President and CEO

Mr N Nika Chief Financial Officer

Adv S Nogxina Director General

Mr S Simelana Chief Finance Officer

Dr R Crompton DOG Hydrocarbons Energy Planning

Ms T Zungu Chief Compliance Officer

Ms Y MsoIo Chief Director Communication

Mr N Marais Parliamentary Officer

Mr N Radebe Director: Asset Management

Mr R RajIal Deputy Director Asset Management

Mr S Fakie Auditor General

Mr Wally Van Heerden Executive Manager

Mr Barry Wheeler Auditor

Mr Hermie Mostert Auditor

Mr P Mosaka Business Executive Manager

Mr C Botes Senior Manager

Zanele Keto Group 1 Parliamentary Manager