The high court in the Western Cape will on Monday hear an application by the Strategic Fuel Fund (SSF) to overturn its decision to sell 10-million barrels of SA’s strategic crude oil reserve stock four years ago.
In a controversial transaction executed in secrecy in December 2015 and January 2016, the SFF sold, without any tender processes, the country's reserve crude for just under R5bn to nine companies, including multinational energy companies Vitol Energy SA, Venus Rays Trading and Taleveras Oil SA, the Sunday Times reported.
It said the crude — a reserve maintained in case of emergencies brought about by disruption in global oil markets — was sold at a discounted price of $28 per barrel. At the time, the market rate was about $38. It was sold under the pretext that it was stock rotation.
The deal, according to the paper, was put on ice in mid-2016 after it was discovered that officials had acted without authorisation and that the sale was ridden with irregularities.
Documents seen by the Sunday Times show the SFF is preparing out-of-court settlements, to be made orders of court, that will see the company pay more than R400m to oil traders to compensate them for interest and hedging losses they suffered as a result of the deal's collapse.
When the deal was halted, the SFF kept the funds paid by the oil traders in a trust account, and the oil stocks remained at the company’s storage facilities in Saldanha Bay, Western Cape, with the oil traders paying storage fees.
SFF CEO Godfrey Moagi was quoted as saying: “Our position is that we refund people their monies and we get to keep the asset. What we are fighting for is the title of the oil. We want the title back. In simple terms, we are saying take your money and we keep our stock. The oil belongs to SA and we want to protect what belongs to SA.”
Moagi said that as well as cancelling and setting aside the contracts, the Central Energy Fund (CEF), under which the SFF falls, and the department of minerals & energy wanted the court to determine a suitable remedy.
CEF corporate affairs manager Jacky Mashapu told Business Day on Sunday: “Look, our position is very clear as articulated by Moagi: we want to refund these companies their monies and keep the title of the oil.”
State attorney Lionel Egypt said: “The matter will be heard in court [on Monday]. I can’t say more than that.”
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