2015 sale of 10 million barrels of CEF oil invalid
JOHANNESBURG - THE HIGH COURT ruled on Friday that the 2015 sale of 10 million barrels of oil from the nation’s strategic reserves was invalid, after the government challenged the legality of the transaction that has been subject to allegations of irregularities.
The state-controlled Central Energy Fund (CEF), which runs the strategic reserve, welcomed the ruling, saying the former chief executive of CEF unit the Strategic Fuel Fund (SFF), Sibusiso Gamede, unlawfully concluded a series of deals. Gamede could not be reached for comment and has not commented on the matter previously.
The crude, consisting of 5 million barrels of Iraqi Basrah Light and another 5 million barrels of Nigerian Bonny Light, was sold in late 2015 and early 2016 for $281 million (about R4.33 billion), or about $28 a barrel, a price analysts say was below the market value at the time.
“Even if SFF did not have to follow a process which was fair, equitable, transparent and competitive, the disposal awards were irrational,” the judgment said.
“We are vindicated by this high court ruling,” said Godfrey Moagi, chief executive of the SFF. “If these unlawful transactions were left unchallenged, the country would have suffered huge financial losses given the repurchase price of the oil reserves at the prevailing market rates.”
Multiple oil traders, including Vitol, Glencore and Taleveras Petroleum Trading, purchased the oil, which the CEF confirmed on Friday had never left South Africa due to internal government investigations and court challenges from March 2018.
Moagi said all the traders had agreed that the sales were invalid and, as part of the settlement, the SFF would refund all monies paid to it with interest.