National Petroleum Company’s bold plan to secure SA’s energy security

The South African National Petroleum Company (SANPC) was launched last month with the bold aim of securing SA’s energy security.

It creates a new state-owned entity (SOE) by merging three Central Energy Fund (CEF) subsidiaries: PetroSA, iGas, and the Strategic Fuel Fund (SFF). This is the product of the SANPC Bill, which creates a new government-owned entity to manage strategic oil reserves and storage. 

Given the government’s abysmal track record in managing state-owned entities – which received more than R520 billion in taxpayer-funded bailouts over the last decade – there remains understandable concern that this new entity will feed from the same trough.

The Economic Freedom Fighters (EFF) doesn’t like it one bit, arguing that the reliance on outsourcing creates a platform for corruption, with private sector companies exploiting state assets.

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Unlocking opportunities

This week government put flesh to the corporate skeleton and filled in some of the gaps in how exactly the SANPC would go about unlocking R95 billion in promised market opportunities and extracting R1.5 billion a year in “synergy optimisation”.

Rather than merging and amalgamating the three entities, the new company will operate on a lease and assignment model, which is a legal way of ring-fencing the troubled PetroSA’s legacy assets, such as its gas-to-liquids refinery in Mossel Bay, where reserves have run out, as well as decommissioning liabilities of about R1 billion. 

Key leases and contracts have now been transferred to SANPC.

These include SFF fuel tank farms in Milnerton and Saldanha in the Cape, the Montague Gardens depot in Cape Town (owned jointly by SFF and BP), cash and various assets owned by the SFF and PetroSA in Ghana and Sudan.

The SANPC intends to rescue SA’s rapidly depleting fuel refining sector, with less than 35% of refined fuel now being locally produced, compared with 80% in 2010. SA now imports 18.7 billion litres out of 25 billion litres of refined fuel consumed. 

“This new emerging trend was not only threatening the country’s economic stability, as well as the security of supply of petroleum products but it also meant the exportation of jobs that are so needed in the country given the stubbornly high level of unemployment,” said CEF chair Ayanda Noah at a media presentation on Wednesday. 

Back in 2010, SA produced about 720 barrels a day in refined product through six refineries, but that figure has fizzled due to the estimated R40-60 billion in upgrades needed to meet cleaner fuel standards.

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Sapref in Durban, once supplying more than a third of SA’s refining capacity, was shuttered in 2022 and then purchased by the CEF in 2024 with a view to rehabilitating and expanding its capacity.

This has since been renamed the SANPC Refinery, with plans to expand output from 180 000 barrels a day to more than 600 000 barrels a day.

Plans are also in place to restore PetroSA’s Mossel Bay gas-to-liquids (GTL) refinery in Mossel Bay, reduce overheads, and assist in settling its trading debts.

The GTL refinery will be recapitalised and rebooted as part of the plan to restore SA’s energy independence. 

In April, Africa Intelligence reported that PetroSA owed Swiss trading firm Gunvor nearly R616 million for two cargo ships of fuel as well as demurrage fees. As of March 2025, it also reportedly owes more than R1.5 billion to other traders, including the SFF, a fellow state-owned entity, as well as Nako Energy and Addax Energy.

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New entity ‘will be a game-changer’

The CEO of the SANPC is Godfrey Moagi, who is also CEO of the SFF and previously worked at BP Oil International in trading and strategy.

His experience in the sector should quash fears that the new SOE would be stuffed with cadres. 

CEF’s Noah says the new company will be able to improve efficiencies and minimise duplications, resulting in cost reductions.

“The operationalisation of a commercially viable South African National Petroleum Company will be a game-changer not only for South Africa but also for the continent. This new entity will play a critical role in supporting the government’s broader strategic initiatives as well as fostering regional integration on matters related to oil and gas.”

This week’s handover of assets and funding to the SANPC has the blessing of organised labour and means jobs for 402 employees previously employed by the CEF’s three subsidiaries. These will be followed by a further 620 employees currently employed by PetroSA.

The goals are ambitious and, by some estimates, could attract $2-3 billion in foreign direct investment in oil and gas exploration.

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Scepticism and concerns

The creation of a new SOE has attracted plenty of scepticism, given the potential for mismanagement and corruption following the sale of strategic oil reserves by the SFF to private companies at heavily discounted prices between December 2015 and January 2016.

The Western Cape High Court overturned those sales in 2020, when it appeared the SFF and CEF boards were not aware of the deals until they were signed.

There are also concerns over PetroSA’s assets, of which about R500 million are considered non-viable. The ring-fencing nature of the deal effectively delays having to deal with that now.

There’s also pushback from the green lobby, given the SANPC’s emphasis on oil and gas at a time when SA has undertaken to reduce exposure to these energy sources.

Not everyone agrees with these criticisms. The Africa Energy Chamber and the EU-Africa Chamber of Commerce see the SANPC as a catalyst for investment, economic development, and energy security.

This article was republished from Moneyweb. Read the original here.