EDITORIAL: No more free rides for boards
The case of the PetroSA board raises the recurring question of how nonexecutive directors are chosen
It is possible that the directors of state-owned oil firm PetroSA had no idea what they were getting into when they were appointed. The entity’s biggest problem – the massive loss in 2014-15 because of a gas-drilling project gone wrong — stems from decisions taken long before their appointments between 2014 and 2016. Project Ikhwezi, as the project was known, has not yet done all its damage to the balance sheet: additional impairments are still coming to light. There is also an unfunded R8.8bn decommissioning liability that becomes due in 2018. It is projected that PetroSA will have made another R2.2bn loss when it reports its results for 2016-17. It’s no wonder then that the PetroSA board has asked its holding company, the Central Energy Fund (CEF), to place it in business rescue. This is exactly what should happen and a proper assessment done of what aspects of the business can be fixed. After that it should be sold. PetroSA, above all other state-owned entities, is unequivocally ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.