Parliament – An African National Congress (ANC) MP on Tuesday suggested the entire PetroSA board should be axed in the light of R17.3 million in bonuses being paid out to executives, despite the state-owned oil company have suffered a R14.5 billion rand impairment in the 2014/15 financial year.
Briefing Parliament's portfolio committee on energy, officials of PetroSA, in the presence of Energy Minister Tina Joemat-Pettersson, said another impairment projected to be in the region of R1.1 billion was expected this financial year, which ends on March 31.
"We have discussed this thing – PetroSA – for the past three years and it's very embarrassing. I think next year we will come and sit in the same room and talk about the same problems. It's like a merry-go-round, after school you go home and your mother has cooked nice food for you...," ANC MP Motswaledi Matlala said.
"Minister let's fire the board and get the new people who are serious about the lives of the people of this country...who are not working but people are getting bonuses."
Andrew Dippenaar, one of the executives largely responsible for the failed project Ikhwezi, a failed attempt to extend the life of the Mossgas plant by drilling new wells, received a bonus of R2.3 million.
The wells only produced 10 percent of the gas expected, accounting for most of the R14.5 billion loss in 2014/15. While Dippenaar was demoted, no further action was taken against him and the then chief executive officer Nosizwe Nokwe-Macamo and chief financial officer Lindiwe Mthimunye-Bakoro.
The CEO and CFO were later given golden handshakes for leaving the company.
Interim board chairman Bhekabantu Ngubane said the current board resisted paying the bonuses as the company was not performing well, but later learnt the previous board had entered into contracts for "retention bonuses" with executives.
"The legal opinion said the contracts that were entered into did not link the performance to the payment. Those contracts were there when we came in and they [lawyers] said we must honour those contracts," said Ngubane.
"It would be a sad day if you fire the board for the the impairment. It would be a sad day if you fire the board because they paid bonuses."
Acting PetroSA chief financial officer Webster Fanadzo was asked to explain the latest impairment at the state-owned oil company. “There are indications that production assets were overstated by R1.1 bln for the year ending March 2017.”
PetroSA further went on to explain it had a cash balance of R2.5 billion.
Before Project Ikhwezi the balance stood at R12.8 billion. “If we do nothing with the asset…the company will be going down,” said the company’s acting chief operating officer Kholly Zono said.
MPs were not impressed, especially after the board and management tried to present a turnaround strategy, saying it had many grand plans but not practical ways of how it would be implemented and funded.
PetroSA were sent packing and told to come back with a better plan to get the company back on track.