CEF Merges iGas, PetroSA & SFF to Form SANPC, Pumps in R5 Billion Boost

The Central Energy Fund (CEF) has officially handed over leased assets and R5 billion in funding to operationalise the newly launched South African National Petroleum Company (SANPC).

This development marks the final step in the long-awaited merger of three key state-owned energy entities iGas, the Strategic Fuel Fund (SFF), and PetroSA under one umbrella.

The formation of the SANPC, which was first announced in President Cyril Ramaphosa’s 2020 State of the Nation Address, is part of a broader initiative to stabilise and refocus South Africa’s State-Owned Enterprises (SOEs) to drive economic growth and improve service delivery.

CEF Group chairperson Ayanda Noah addressed media in Sandton on Wednesday, highlighting that the rationalisation process was aimed at eliminating duplication, reducing costs, and achieving operational synergies valued between R1.5 billion and R3 billion.

“One of the key elements in forming the SANPC was assessing the size of the opportunity in the oil and gas market, especially considering the volatile geopolitical environment. We needed a formidable company that ensures South Africa’s energy security,” said Noah.

The new company inherits more than just infrastructure and staff.

According to SANPC chairperson Sipho Mkhize, it also inherits a critical role in securing South Africa’s energy future by operating across upstream and downstream markets.

“The company is designed to be agile and efficient, leveraging the combined strengths of its predecessors while actively avoiding the inefficiencies that plagued them,” Mkhize noted.

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A total of 402 employees have already transitioned to SANPC, with essential personnel retained in legacy entities like PetroSA to manage distressed assets such as the Mossel Bay gas-to-liquids (GTL) refinery.

These assets have been ring-fenced, and SANPC will lease them at values based on their discounted cashflows.

However, getting Mossel Bay operational again will require substantial investment beyond current lease payments.

“We’re looking into partnerships to revive Mossel Bay,” confirmed SANPC CEO Godfrey Moagi.

“Sapref, on the other hand, offers a better opportunity for public-private partnerships and is central to our energy security strategy.”

The CEF recently acquired Shell and bpSA’s interests in Sapref, which has now been renamed the SANPC refinery.

Plans are underway to rebuild and expand its capacity from 180 000 barrels per day to 600 000 barrels per day, positioning it as a key player in reducing South Africa’s reliance on imported fuels.

In 2022, the country imported 18.7 billion litres of refined fuel, a sharp increase from 2010, when 80% of fuel was refined locally.

“We are importing poverty,” said Noah. “Refinery closures have cost jobs and weakened our energy independence. Bringing Sapref back online is critical.”

SANPC also plans to lead a priority infrastructure investment in Voorbaai, Mossel Bay, to boost import capacity and reduce demurrage costs.

Simultaneously, it has entered into a profit-sharing agreement with PetroSA to help stabilise the entity in the short term while settling its trading debt.

With a clear mandate and strong backing, the SANPC aims to play a pivotal role in South Africa’s just energy transition ensuring affordable, reliable fuel supply and job creation, all while laying the groundwork for long-term sustainability in the oil and gas sector.