Central Energy Fund has 'good story to tell', posts R354m profit

State-owned national energy utility the Central Energy Fund showed a profit after tax of R354m in the 2017/18 financial year, compared to a net loss of R621m in the 2016/17. 

The energy utility is the parent company of PetroSA and the Strategic Fuel Fund. The CEF on Tuesday briefed the oversight committee on energy on its annual financial report for the 2017/18 year. 

Irregular expenditure totaled R17m for 2017/18, mainly due to salaries and rental costs paid without following company policy and relevant legislation, according to a report submitted to the committee.

Turnaround

The CEF group attributed its turnaround to an improvement in its gross profit margin, cost reductions and higher investment income. Revenues grew 0.47% to R11.7bn, while operational expenditure was 39% higher at R2.6bn.

Capital expenditure declined 54% to R285m, due to fewer capital projects in the pipeline.

CEF interim CEO Sakhiwo Makhanya said the group has a "good story to tell" despite a challenging operating environment.

Lufuno Makhuba, the CEF's Group Chief Financial Officer, said that overall the group received unqualified audit opinions.

Matters relating to fruitless and wasteful expenditure, as well as irregular expenditure, had to do with concerns of supply chain management policy.

Irregular expenditure 

"The payments were done without contracts," Makhuba said, about the R17m in irregular expenditure. The group also incurred fruitless and wasteful expenditure of R15.6m.

The CEF report reiterated that procurement processes were being tightened and its recruitment policy was being revised, while it was implementing recommendation by the auditor general to investigate allegations of wrongdoing. 

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