Top office-bearers of state-owned gas-to-liquid company PetroSA, which has been the main provider of diesel to Eskom, have expressed confidence in the turnaround of the enterprise.
By late January Eskom had spent about R18bn on diesel in the 2022/2023 financial year.
The office-bearers briefed parliament’s mineral resources & energy committee on Tuesday on the performance of the group for 2022/2023. While they did not mention diesel specifically, merely referring to “cargo” imported by PetroSA, spokesperson Marlene Khumalo said in reply to questions that the fuel imported by the company was diesel for Eskom and a few other clients.
Chair Nkululeko Poya told MPs that the group expects PetroSA — a subsidiary of the Central Energy Fund (CEF) — to produce revenues almost double those of the previous year. In the 2021/2022 financial year PetroSA generated revenue of R12bn but suffered a net after-tax loss of R1bn because the revenue was insufficient to cover the high fixed cost of the gas-to-liquid refinery, which is in care and maintenance due to the lack of feedstock.
Poya said “cargo” had been brought in profitably and PetroSA is turning the corner.
“We are happy to report that at the end of this financial year we are expecting the revenues of PetroSA to be more than double the revenues we closed at the end of the previous financial year. What we did was to employ skilled people, but also provided extensive oversight in ensuring that we bring cargo that is profitable and that can be able to assist PetroSA to also be profitable.
“As we speak we are sitting with about two cargos out of Mossel Bay and all of our tanks in Mossel Bay are full. That is a sign that PetroSA is indeed turning the corner and is able to assist the country with the issue of security of supply.
“One of the other risks that we looked at with the war room and the PetroSA board is the issue of the diversification of our revenue. We are happy to inform the committee that our efforts to diversify the PetroSA revenue have yielded results and we now see customers that are taking from us more than two cargos a month, which are over and above Eskom itself in terms of the commercial customers that we have.
“We are comfortable that we are turning the corner,” Poya said, noting that the results for quarter four will be much better than previous quarters.
What had also been important was to establish partnerships as it would be impossible for PetroSA to turn around without having equity and technical partners.
The committee was told by PetroSA acting CEO Sandisiwe Ncemane that the turnaround plan for PetroSA was based on its achieving a 3.5-billion litre sales volume in the financial year to break even. She said some challenges had been experienced in terms of increasing costs of imported product largely attributable to freight and shipping costs. In quarter three there had been an increase in the number of vessels that PetroSA was able to import and it had also began to achieve a positive margin.
“We also saw traction around the sourcing strategies we had adopted, which sought to diversify the supply base that we would be utilising. PetroSA was able to support the provision of diesel to Eskom and we continue to work on that. Of course the volatility remains around the price implications and the need to improve planning and forecasting around demand to ensure that we are optimising both for Eskom as well as ensuring that value is created for PetroSA,” Ncemane said.
MPs were told that the CEF’s negotiations over the acquisition of the Sapref refinery owned by BP and Shell are ongoing. The group continues to experience an ongoing liquidity risk due to PetroSA’s precarious position and dependence on trading, supply and logistics.
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