Four of PetroSA’s six remaining board members resigned on Tuesday, leaving the ailing petroleum fuel parastatal with no quorum. The former eight-member board needs a minimum of three members to make any decision.
The latest exits came after Central Energy Fund (CEF) chairman Luvo Makasi wrote to the board in late April instructing its members to resign with immediate effect, or submit oral representations at the annual general meeting as to why they should stay. The CEF is PetroSA’s holding company.
In May, Business Day was informed that board members Frans Baleni and Tebogo Rakgoale had tendered their resignations. Now interim board chairman Wilfred Ngubane, Thami Hlongwa, Johlene Ntwane and Banothile Makhubela have resigned. This leaves Owen Tobias and William Steenkamp as the only two remaining board members.
The CEF said on Tuesday it would not comment on internal processes at PetroSA until "such time that the CEF feels it is necessary".
Business Day has reported that the board of the troubled oil firm had asked the CEF to place it under business rescue, raising questions over its status as a going concern.
But PetroSA denies this. The company has suffered huge losses over the past three years and has a projected loss of R2.2bn for the year to March 2017. This follows its record R14.6bn net operating loss in the 2014-15 financial year.
In its presentation to the CEF on Tuesday — seen by Business Day — the PetroSA board said there was no risk that the company was no longer a going concern. Some of the board members had resigned before the meeting and some afterwards.
"PetroSA is perceived as being [a company] that is mismanaged by the board, and as a result, at risk of no longer being a going concern. This is not so — the board has adopted an appropriate and realistic STP [short-term programme], the pillars of which are sustainability, growth, finance and transformation."
The board added in its presentation that it had taken several steps to ensure that lessons learned from the failure of Project Ikhwezi were not repeated. This project drilled gas wells offshore to provide feedstock for PetroSA’s Mossel Bay gas-to-liquid refinery‚ which had led to the huge losses after limited gas reserves were discovered.
The board said PetroSA was dedicated to the oversight of all projects to ensure that there were sufficient checks and balances in place. But it seems the CEF’s concerns about the strategic direction, financial standing and management of the oil firm prompted the new resignations.