Troubled CEF plans to restructure its subsidiaries
JOHANNESBURG - The Central Energy Fund (CEF) plans to restructure its subsidiaries to bring an end to the duplication of services as the depletion of its reserves threatens to bring the state-owned energy company to its knees.
CEF chairman Monde Mnyande told Parliament's portfolio committee of mineral resources and energy earlier on Tuesday that the organisation was not in the business of asking the government for a bailout, as he presented the group's 2020-2025 corporate strategy.
"We are not coming to ask for a bailout from the government. The reason why we are asking for your support as the portfolio committee is that we would like the restructuring of or consolidating our entities," said Mnyande, adding that their board had realised six months ago that there was too much duplication between PetroSA and iGas, and Strategic Fuel Fund (SFF).
Mnyande said the group was fast running out of reserves.
"From an institution that had about R24 billion in revenues, or reserves, to currently less than R 1bn, something went wrong and something was wrong. It was not this board or the current minister. Something should have been asked in 2014 to say what happened for the reserves to decline to this current level," said Mnyande.
Mnyande believed that despite the uncertainty, the CEF could continue to secure energy in the state.
"These institutions that we have should change so that we make money for the government and breakeven with the losses that have been made, particularly at the PetroSA side," said Mnyande.
Mnyande also said that the company had not been functioning well because it did not have full-time leadership, adding that while entities SFF and iGas had done well but PetroSA did not do well.
"Any organisation without leadership is bound not to be able to function well," Mnyande said.
On Monday the CEF announced that the board had filled all vacant chief executive positions at all its subsidiaries including the CEF itself after not having permanent chief executives since 2014.
The group said on Monday that it had experienced a “turbulent period” in fulfilling its mandate over the years while a number of executives were in acting chief executive roles.
Mnyande said that one of the company's biggest mistakes was to think it could operate alone without the government.
"We have realized the importance of a strategic partnership. We have started to do that," he said.
Mnyande said the company was considering acquiring assets from petrochemicals giant Sasol to build its portfolio.