Leaner, meaner CEF to ‘boost fund’s efficiency’

Kubayi denies move means more direct control

THE restructuring of the state-owned Central Energy Fund group of companies will overcome the “constraints” in the interaction between them and the ministry, Energy Minister Mmamoloko Kubayi says.

The fund is parent to a host of companies, including PetroSA and the Strategic Fuel Fund. PetroSA incurred an impairment that is approaching R16.2-billion on its failed investment in project Ikhwezi, and the Strategic Fuel Fund unlawfully sold off 10 million barrels of strategic oil stocks to foreign firms at bargain basement prices.

Kubayi denied the intention of the restructuring was to bring the troubled group more closely under her control, insisting at the weekend the aim was to make the corporate structure more efficient and effective.

The minister announced the restructuring during her budget vote speech in the National Assembly on Friday. The restructuring will probably result in each of the subsidiary companies losing their independent status and their boards of directors becoming divisions of one company, the Central Energy Fund. Kubayi said the Transnet corporate structure would be used as a model.

Energy fund subsidiaries the African Exploration Mining and Finance Corporation and the Petroleum Agency of SA will be transferred to the Department of Mineral Resources. Despite denying that the intention of the restructuring was to enhance her control, Kubayi did say: “I am a minister but I don’t have direct control over PetroSA. If we were to intervene in PetroSA, I would be taken to court and lose. Because I am not a shareholder.

“Anything that we want to do – either intervention or anything else – has to be done through the CEF [Central Energy Fund] board. You must first have buy-in by the CEF on what you think should be an intervention and wait for them to implement. This is why we need to restructure that group. We have to make sure that these constraints are removed so that we can respond effectively.”

At the same time, the minister insisted that “it is not about power for me. It is about efficiency and effectiveness. It is about preserving the assets of the state. Part of the problem is the decision-making cycles”, which had to go from the subsidiaries to the fund’s board and then on to the minister.

This could take three weeks to two months, which was not conducive to the functioning of a commercial entity that operated in fast-moving investment and currency markets. — BDLive