CAPE TOWN - Energy Minister Mmamaloko Kubayi said on Friday that she would seek approval from Cabinet later to initiate the building of a new oil refinery to reduce South Africa’s reliance on fuel imports.
“I have come to the conclusion that our country, and indeed the sub-region, is ready for a new refinery investment,” Kubayi said in her budget vote speech to Parliament.
“By the time any new refinery is completed, the country will be importing in excess of a third of its fuel requirements. This high dependence on import of finished product by a major economy like ours located at the southern-most tip of the continent is not in the interest of energy security and does not advance local industrialisation.
“I will therefore, in the third quarter of this financial year, be approaching Cabinet for a firm decision in this regard.”
Kubayi said she would prefer the project to venture between the public sector and a private partner involved in crude oil production. However, the majority stake in the refinery must be South African.
The minister conceded that at present there was a glut of refined oil products on the market, but said it was not in South Africa’s interest to be heavily reliant on imports given currency fluctuations. She said issues of national sovereignty also came in to play.
In her maiden budget vote speech, the minister also announced that her department would restructure the Central Energy Fund to improve way in which its subsidiaries are run.
“We will in the coming months be embarking on restructuring of the CEF group and create a model that makes it easy for accountability and ensures the entity operates efficiently and in a professional manner.”
The exercise will see the transfer of African Exploration Mining and Finance Corporation (AEMFC) and the troubled Petroleum Agency of South Africa to the department of mineral resources during the course of the current financial year.
Kubayi said the director-general of the department, Thabane Zulu, would act as the CEO of the Strategic Fuel Fund on a secondment basis.
“This is to ensure that we are able to implement the recommendations in light of the report on the selling of strategic fuel reserves for the country,” she added.
The minister recently confirmed that part of the country’s strategic fuel reserves were sold off on her predecessor’s watch in late 2015. The sale is the subject of an investigation.
Tina Joemat-Pettersson, who was fired in a sweeping Cabinet reshuffle in March, had denied a sale, saying instead that it had been a rotation of stock of the Strategic Fuel Fund.
The sale caused an outcry, partly because the stock was disposed off at the low price of $29 a barrel.
African News Agency