A file image of PetroSA. Picture: Supplied

Johannesburg – State-owned PetroSA says its board does not intend placing the company under business rescue.

The petroleum company notes in a statement issued on Monday that its financial report, for the year to March – which is currently being prepared – shows an “adequate” cash balance.

In addition, PetroSA says, its current assets and its cash flow projections show that the company will have adequate cash resources for the business to carry on with its normal trading activities and meet its financial obligations for the foreseeable future.

“The present position of the company is that it is not in financial distress.”

PetroSA’s statement comes after it said it was set to suffer a projected devaluation of assets of R1.1 billion this financial year, in addition to the R14.5 billion in impairment it suffered in the 2014/15 financial year.

PetroSA in March gave Parliament’s portfolio committee on energy an insight into several investigations into the R14.5 billion loss resulting from mostly the failed Project Ikwezi, which brought in much less gas than anticipated after the company spent billions on infrastructure.

“There are indications that production assets were overstated by R1.1bn for the year ending March 2017,” acting CFO Webster Fanadzo was quoted by ANA as saying, adding that the latest impairment did not mean that PetroSA lost or damaged any assets.

PetroSA said it had a cash balance of R2.5 billion.

In addition, Energy Minister Mmamoloko Kubayi has lashed out at the executives of PetroSA for paying themselves millions of rands in bonuses after the entity had suffered the financial loss.

Read also: PetroSA assets to be devalued by R1.1bn

PetroSA notes it has correctly accounted for the Ikwezi abandonment liability and has set aside a partial amount in a special purpose vehicle towards meeting this obligation. It should be noted that this liability is not immediately due.

It adds it is planning for the scheduled maintenance shutdown of the refinery towards the end of 2017.

In the statement, the state-owned company says it has embarked on a detailed turnaround plan, which includes the partial modification of the refinery to produce fuels from light crude (condensate).

“PetroSA is already producing almost half of its planned production capacity from light crude. There has not been any breakdown of the refinery as a result of the processing of condensate, after the modification.”

It says: “Other turnaround initiatives are at embryonic stages and some will take longer, since they will require support from the shareholder and approvals at other levels. These, by their very nature, have long lead times before they reach maturity.”