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Real Economy News in Real Time
R/€ = 15.52 Change: 0.02
R/$ = 13.90 Change: -0.04
Au 1425.00 $/oz Change: -2.70
Pt 852.58 $/oz Change: 2.10
 
 
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Outa calls on Mantashe to intervene to save crude oil reserves

25th June 2019 BY: Marleny Arnoldi
Creamer Media Online Writer

The Organisation Undoing Tax Abuse (Outa) says a Cape High Court case on Friday will determine the fate of South Africa’s strategic crude oil reserves that are worth more than R9.3-billion.

Outa states that, between December 2015 and January 2016, South Africa’s strategic oil reserves had been sold illegally to several companies without due process and with a disregard for any required approval of the boards of directors of both the Central Energy Fund (CEF) and the Strategic Fuel Fund.

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“The decision to sell our oil reserves was done without notifying the Minister of Finance, which is a statutory requirement.”

Outa adds that this unlawful transaction has placed South Africa at risk, as the country could find itself in a dire situation if faced with unforeseen emergencies.

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South Africa’s strategic oil reserves allow the country the liberty of being self-reliant, and, in the case of an emergency, South Africa would be able to meet its daily national petroleum products demand of 704 000 bbl/d.

“Surprisingly, these crucial strategic reserves were sold at a ridiculously low price of $31/bl under false pretences that the government will have an option to buy it back at an inflated rate. 

“In today’s terms, Brent crude oil is trading at $64/bl. Another factor is that the sale took place outside an approved Strategic Stocks Rotation Policy to protect the country from any negative exposure,” Outa says.

Nicknamed “Oilgate” the media and public applied pressure on the CEF to prevent the deal from taking place. Now, almost three years later, one of the affected companies, Glencore, has approached the court for an order that SFF/ CEF is not entitled to file supplementary affidavits.

This case is to be heard on Friday.

Outa emphasises that if the court finds in favour of Glencore, very important information may not be placed before the court, which may result in the main application being dismissed. This will mean the original contracts will proceed and South Africa will lose its strategic crude oil reserves and will have to incur serious procurement costs to replenish the illegally sold stock amounting to ten-million litres.

“The only solution at this stage is for the Mineral Resources and Energy Minister Gwede Mantashe to intervene. We believe that if we can generate enough public awareness, as was done in 2016, we may move the Minister to act and to save our oil reserves,” says Outa chief legal officer Stefanie Fick

EDITED BY: Chanel de Bruyn Creamer Media Senior Deputy Editor Online
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