Kubayi to seek approval for new local oil refinery
ENERGY Minister Mmamaloko Kubayi said on Friday that she would be seeking approval from the cabinet to initiate the building of a new oil refinery to reduce South Africa’s reliance on fuel imports.
“I have come to the conclusion that our country, and indeed the sub-region, is ready for a new refinery investment,” Kubayi said 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 the import of finished product by a major economy like ours, located at the southern-most tip of the continent, 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 the cabinet for a firm decision in this regard.”
Kubayi said she would prefer the project to venture between the public sector and a private partner involved in crude oil production.
Glut of products
However, the majority stake in the refinery must be South African. The minister conceded that at present there was a glut of refined oil products on the market, but given currency fluctuations she said it was not in South Africa’s interest to be heavily reliant on imports. She said issues of national sovereignty also came in to play.
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 be embarking on restructuring of the CEF group to create a model that makes it easy for accountability and ensures the entity operates efficiently and in a professional manner.”
Transfer of agency
The exercise will see the transfer of African Exploration Mining and Finance Corporation (AEMFC) and the troubled Petroleum Agency of South Africa to the Department of Mineral Resources during the course of the current financial year.
Kubayi said the director-general of the department, Thabane Zulu, would act as the chief executive of the Strategic Fuel Fund on a secondment basis.
“This is to ensure 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 JoematPettersson, who was fired in a sweeping cabinet reshuffle in March, had denied a sale, saying instead that it had been a rotation of stock of the Strategic Fuel Fund. – ANA