South Africa Establishes New State-Owned Petroleum Company: SANPC

According to the SANPC, while only iGas and the Strategic Fuel Fund are financially viable for merger, the Trading division and the Ghana asset from PetroSA will also be integrated.

A policy statement by President Cyril Ramaphosa has led to the creation of the South African National Petroleum Company (SANPC), following the merger of the Central Energy Fund (CEF) subsidiaries: iGas, PetroSA, and the Strategic Fuel Fund. This new state-owned enterprise aims to become a key player in the country’s energy sector, focusing on ensuring energy security, fostering innovation, and driving social and economic development.

The SANPC is tasked with overseeing the strategic planning, coordination, and governance of South Africa's petroleum resources, contributing to national economic growth. It has been granted approval to commence operations under the Public Finance Management Act of 1999.

The formation of the SANPC aligns with President Ramaphosa's commitment, outlined in his February 2020 State of the Nation Address, to rationalize state-owned enterprises to enhance growth and development. In June 2020, Cabinet approved the merger of the three CEF subsidiaries to streamline operations and eliminate inefficiencies.

According to the SANPC, while only iGas and the Strategic Fuel Fund are financially viable for merger, the Trading division and the Ghana asset from PetroSA will also be integrated. The remaining PetroSA assets will be categorized as legacy assets requiring further assessment before being transferred to the SANPC.

Initially, the SANPC will operate as a subsidiary of the CEF Group until the National Petroleum Bill is enacted into law. It will employ a Lease and Assign model, allowing it to selectively lease certain assets from the merging entities while isolating PetroSA's legacy challenges.

“This strategic approach will enhance the SANPC’s financial profile and facilitate funding,” the company stated. “By leveraging the combined strengths of the merging subsidiaries, the SANPC is well-positioned to seize a R95 billion market opportunity and become a leader in South Africa’s energy landscape.”

The SANPC is set to drive the development of essential infrastructure, foster strategic partnerships, and support the country’s commitment to sustainable energy solutions, thereby propelling social and economic growth across South Africa.