CEF admits it oversold strategic fuel stock

THE CENTRAL Energy Fund (CEF) yesterday admitted that it oversold its strategic fuel stock for $280 million (R4.02 billion) two years ago after the Parliamentary Portfolio Committee on Energy demanded more answers on the transaction.

The CEF said the sale was now the subject of investigations and legal action with board members having already filed affidavits. However, the fund was still waiting for the court case to be enrolled in the Western Cape High Court after it filed an application last year to declare the sale unlawful and invalid.

Deputy director-general in the Department of Energy and CEF board member Tseliso Maqubela said they were happy with progress made with the investigations.

“As the CEF board, we are confident that those investigations have been managed very well. There will be consequences,” said Maqubela.

He said the law enforcement agencies will deal with the criminal prosecution of the matter.

“It is important that we give those processes and court processes (a chance); that we do not contaminate the evidence that is glaring. We believe we are at the end of the SFF (Strategic Fuel Fund) matter.”

Group chief financial officer Lufuno Makhuba said 1.2 million of the 10 million barrels sold was not pumpable. He said that this could compact seriously on the SFF if the court case went against them.

“On the proceeds on strategic sale, we did receive $280m, and that money is in the ring-fenced account. That money is in US dollars. At year-end, it was R3.38bn,” said Makhuba.

Committee chairperson Fikile Majola said it was shocking that the SFF sold the strategic fuel stock when it knew that some of it was not pumpable. He said the action of the SFF “sounded criminal”.

Acting chairperson of SFF, Neville Mompati, said they sold what they could not deliver.

“In a nutshell, as the DDG (Maqubela) says, things were done in haste. We sold what we could not deliver,” Mompati said. “We oversold the product. That is part of the investigation.” Mompati said there was an outstanding forensic report that needed to be concluded on the sale of the strategic reserves.

The report was done, but the board sent it back as three people who were central to the sale were not interviewed.

Mompati said the forensic report was now 90 percent complete.

He said law enforcement agencies were also close to finalising their investigations.