New oil works on the cards

Energy Minister Mmamoloko Kubayi will seek approval from Cabinet to initiate the building of a new oil refinery to reduce the country’s reliance on fuel imports.

“Our country, and indeed the subregion, is ready for a new refinery investment,” Kubayi said yesterday in her budget vote speech to parliament.

“By the time any new refinery is completed, the country will be importing in excess of a third of its fuel requirements. This high dependence on imports by a major economy like ours is not in the interest of energy security and does not advance local industrialisation.

“I will, therefore, in the third quarter of this financial year, be approaching Cabinet for a decision.”

Kubayi said she would prefer the project to be a venture between the public sector and a private partner involved in crude oil production. But the majority stake in the refinery must be South African.

The minister conceded that presently, there was a glut of refined oil products on the market, but said it was not in SA’s interest to be heavily reliant on imports, given currency fluctuations.

In her maiden budget vote speech, the minister also announced that her department would restructure the Central Energy Fund to improve ways in which its subsidiaries are run.

“We will, in the coming months, create a model that makes it easy for accountability and ensures the entity operates efficiently.”

The exercise would see the transfer of African Exploration Mining and Finance Corporation and the troubled Petroleum Agency of South Africa to the department of mineral resources during the current financial year.

Kubayi said the director-general of the department, Thabane Zulu, would act as the CEO of the Strategic Fuel Fund.

“This is to ensure that we are able to implement the recommendations in light of the report on the selling of strategic fuel reserves for the country,” she added.

The minister recently confirmed that part of the country’s strategic fuel reserves were sold off on her predecessor’s watch in late 2015. The sale is the subject of an investigation.

Tina Joemat-Pettersson, who was fired in a sweeping Cabinet reshuffle in March, had denied a sale, saying instead it had been a rotation of stock of the Strategic Fuel Fund.

The sale caused an outcry, partly because the stock was disposed off at the low price of $29 a barrel. – ANA

By the time any new refinery is completed, the country will be importing in excess of a third of its fuel requirements.