The chairman of Central Energy Fund, Luvo Makasi. Picture: THE TIMES
The chairman of Central Energy Fund, Luvo Makasi. Picture: THE TIMES

The board of the Central Energy Fund (CEF) decided at a meeting last week to institute a wide-reaching forensic investigation into all major contracts at ailing oil company PetroSA.

CEF chairman Luvo Makasi said that new Energy Minister David Mahlobo had not yet been updated. He said that such discussions were confidential and the media would be updated in due course.

Mahlobo replaced Mmamoloko Kubayi after last week’s cabinet reshuffle.

Business Day understands that the rationale for the probe arose from information provided by a whistle-blower.

The whistle-blower indicated that there were long-term contracts and projects that continued to "milk" PetroSA despite its poor financial position, a highly placed source said.

Project Ikhwezi, the botched gas drilling that resulted in a R14.6bn loss in 2015, is among those to be investigated.

Other projects expected to be probed are the South Coast Gas Development project, an agreement between PetroSA and Pioneer Natural Resources in the US to develop gas fields off Mossel Bay; and a transaction in which the state-owned company acquired a stake in Ghana’s Jubilee oil field.

It has been alleged that PetroSA pays heavily to maintain these projects and that both transactions were above market price.

There were also allegations that there was a conflict of interest in decisions taken by the previous PetroSA board, which was removed by Makasi.

This related to the appointment of a law firm in which one of the previous board members was also serving as a director.

In June, a interim PetroSA board was appointed after the resignations and removal of directors.

Eight of the board members resigned after Makasi instructed them to resign with immediate effect or submit oral representations at the annual general meeting as to why they should stay.

Two of the directors — William Steenkamp and Owan Tobias — refused to resign and were later removed.

The two men approached the High Court in Pretoria to have their removal overturned, but lost the case.

They are appealing.

quintalg@businesslive.co.za

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