Secret SA oil sale a bigger rip off than previously thought: report
The ‘secret’ sale of 10 million barrels of South African reserve oil brought in only R3.9 billion – an amount significantly lower than the R5 billion ‘rip off’ previously reported.
This is according to the auditor general, who in his latest 2015/16 report on the Strategic Fuel Fund confirmed that the sale took place illegally.
In late May, it was revealed that the Department of Energy sold off R5 billion worth of South African oil reserves, without getting permission from Treasury.
Minister of Energy, Tina Joemat-Pettersson and Central Energy Fund (CEF) Chief Executive, Sibusiso Gumede moved ahead with the sale without submitting information to Treasury, which is a contravention of the Public Finance Management Act (PMFA).
The minister and the CEF maintained that the move to sell the oil was part of a “rotation of stock”, which does not need permission from the finance minister to execute – however, Toemat-Pettersson has since conceded that there were errors and that an investigation is underway.
Despite the illegality of the sale, a major point of contention was that the stocks were sold at a ‘discount’ – the stock was sold at $28 a barrel when the price of oil rebounded to $49 a barrel soon after.
According to the Auditor General, however, South Africa was ripped off even more, as the sale only totalled R3.9 billion – a whole R1.1 billion less than what the department reported earlier in May.
The move exposed the SFF to a potential R2.5 billion shortfall, should it be pushed to buy new oil to make up for the hole in the reserves, the AG said.
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