PetroSA plans to slash more than a third of its workforce, becoming the latest loss-making state-owned enterprise (SOE) to put forward a politically sensitive proposal that has been shot down elsewhere.
The Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union (Ceppwawu) said workers had been issued with notices of a retrenchment process that could affect up to 500 of PetroSA’s 1,424 employees.
PetroSA is among a number of state-owned companies putting job cuts on the agenda, but such proposals have previously been blocked by either the government or pressure from unions. For example, at the SABC, communications minister Stella Ndabeni-Abrahams has repeatedly thwarted the board’s attempts to retrench workers.
PetroSA, whose main business is the extraction and use of offshore natural gas to produce synthetic fuels at the Mossgas facility, did not respond to requests for comment.
Following unsuccessful and costly gas exploration efforts, PetroSA is in deep financial trouble while its refinery grapples with a dwindling gas supply, which was expected to have run out by the end of 2020.
According to Chinaman Melani, Ceppwawu’s regional secretary for the Western Cape, the impact will be devastating because every PetroSA worker supports an average of five dependants and the Mossel Bay economy is highly dependent on the refinery.
Melani said the union had been in talks with PetroSA since the second half of last year over how the entity might be saved and a steering committee was established, though it is yet to meet. He said he was surprised when PetroSA issued the notice on December 10, after the union’s offices had closed.
The retrenchment notices came days after the parliamentary committee on energy published a report after a site visit to Mossel Bay. It flagged that the potential closure of the refinery would result in an estimated annual loss of R1bn for the
local economy.
“PetroSA is bleeding in terms of the shortage of feedstock and also financial difficulties,” Melani said. He noted the timing of the retrenchment process was nonsensical given that PetroSA is in the process of merging with two other SOEs — iGas and the Strategic Fuel Fund — to create one national oil company. “There is confusion. On the one hand you are busy with a merger process, on the other hand you are dealing with a section 189.”
PetroSA has put together a strategy and corporate turnaround plan, which has been approved. The parliamentary committee report said “it is apparent that, as part of the corporate plan, there would be job losses”. It, however, noted that the board of the Central Energy Fund — PetroSA’s holding company — and the department of mineral resources & energy were yet to consider it.
Melani said the turnaround strategy for the company included a 12-point plan, which appears not to have been implemented. “Those are the questions we are going to ask when we deliberate on the section 189,” he said.
Among the products made by PetroSA’s refinery is ultra-clean diesel for the transport sector. Industry experts don’t expect diminished refining capacity in SA would result in a supply crunch, given that fuels are already imported to plug SA’s fuel supply gap.
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