Audit adds fuel to damning fire
R3.3bn loss from illegal sale of oil stock – KPMG
SOUTH Africa will suffer a loss of at least R3.3-billion because of the illegal sale of the country’s strategic fuel reserves in December 2015 and January last year, a confidential forensic audit report the government has kept under wraps for months, has concluded.
The audit report, which has been leaked to Business Times, officially gives the lie to former energy minister Tina JoematPettersson’s repeated statements that the fuel stock was not sold but “rotated” – the industry term for replacing the fuel.
In fact, South Africa will now have to cough up about R6.483billion to replace the 10 million barrels of strategic crude oil sold.
Contacted on Thursday and confronted with the difference between her version of events and the audit findings, JoematPettersson said: “I have not seen the audit report, so I cannot comment on it”.
In July, the report, by auditing firm KPMG, was provided to Joemat-Pettersson’s successor, Mmamoloko Kubayi – who in turn was removed on Tuesday after only seven months in office.
Kubayi never released the damning audit findings to the public, and did not reply to questions put to her this week.
The oil is still in South African tanks, but no longer belongs to South Africa, having been sold and in some instances resold.
But according to DA MP Gordon Mackay, the DA has been reliably informed that the three companies which bought the oil, are all now insisting on lifting the oil from the South African tanks and physically removing it.
A case in point is Nigerian conglomerate Taleveras, which has sold its part of the oil to the Bank of France at a much higher price. The report states that: ● The contracts entered into regarding the sale of the fuel stock are rendered invalid by a failure to comply with regulatory approvals;
● Of the 10 million barrels sold, the equivalent of 1.2 million cannot be pumped out for a variety of reasons – but the oil must still go to the buyers. So South Africa will have to purchase 1.2 million barrels of oil at market prices (currently about $56 per barrel) and hand it over to the companies which bought it for rock-bottom prices of between $26 and $30 a barrel;
● Despite what Joemat-Pettersson has claimed, the audit finding confirms that “the purported stock rotations amounted to stock disposals”;
● The discounts offered to buyers of the strategic fuel stock did not tie up to the relevant oil prices, and the matter of pricing requires further investigation;
● The sales were backed up by new stock, exposing the Strategic Fuel Fund to market risk;
● Although South Africa received about $300-million (R4.1billion) for the sale of the stock, the cost to replace it will be $486million (R6.6-billion) plus the sale and replenishment of the 1.2 million barrels which cannot be pumped out of the tanks, which adds a cost of $58-million (R791.2million) for a total loss of $244million (R3.3-billion); and
To this, legal costs must added.
“Everything points to political interference, with the country and its people losing out to ANC mismanagement,” Mackay said.
New Energy Minister David Mahlobo said he had not been briefed on the report yet and could not comment. — DDC be