Cape Town – The Democratic Alliance (DA) will be taking legal action against Energy Minister Tina Joemat-Pettersson and Strategic Fuel Fund chief executive Sibusiso Gamede regarding the fund's "secret" sale of oil, which it believes is linked to the local government elections, it said on Friday.
“The DA is awaiting response from the auditor general (AG) regarding the full list of names involved in the illegal sale of fuel reserves by … Joemat-Pettersson and … Gamede who contravened section 54(2d) of the Public Finance Management Act (PFMA) by not consulting Treasury on the transaction,” Pieter van Dalen, DA MP and energy shadow minister, said in a statement on Friday.
“We can confirm that we will be taking legal action against all counterparts involved including the minister and the SFF CEO in this illegal sell-off of critical state apparatus,” he said.
“Upon receiving the AG’s response to our initial request for a probe into this, we will further approach the public protector, if need be.”
Link to local elections
The DA linked the sale to the upcoming local elections.
“Even more problematic is the glaring evidence that this sale was done so rapidly and without any consideration of Treasury in order to benefit the coffers of the ANC (African National Congress) ahead of the local government elections,” said Van Dalen.
SFF director Tseliso Maqubela told Reuters on Thursday that it sold the 10 million barrels of crude in December at $28 a barrel to a unit of Glencore, Vitol and Taleveras. "The condition of the sale was that the oil (will) not be exported and so the government considered it to be part of its strategic reserve stockpile."
Van Dalen, citing the Business Day, said the sale has been connected with Thebe Investment Corporation, "the ANC linked investment arm”.
“Vitol is the company that has allegedly bought the fuel stock. In the meantime, Burgan Cape Terminals has just been awarded a 20-year lease by Transnet in Cape Town Harbour for the development of the fuel storage and distribution facility.
"Companies will ‘rent’ space from Burgan for storage of their fuel product. Vitol is partnering Burgan in the deal to build storage tanks along with Thebe Investments. The fuel was sold privately to a company that is partnering with an ANC affiliated corporation.
"The dots are connecting," he said.
CEF defends sale
The CEF on Thursday defended the sale, saying SA still has access to 90 days of crude oil reserves, which is 30 days more than the required volumes.
“After the December 2015 rotation, the country now has access to 90 days reserves which is 30 days more than the required volumes. This allows for South Africa to be able to absorb any market variations and provides a buffer for three months in the case of any eventuality," the CEF board said in a statement on Thursday.
The Business Day reported on Thursday that SFF had sold R5bn or 10 million barrels of crude, “close to its entire stockpile, in a closed tender at rock-bottom prices without obtaining permission from the Treasury”.
“Strategic stockpiles are a country’s reinsurance policy in the event of a sudden supply crisis. The fund is required to hold stock for 20 days cover. It now has 300 000 barrels, less than a day of cover,” the Business Day story, titled “Strategic fuel stock sold off secretly”, explained.
While Gamede told the newspaper that he expects fuel prices to dip below $28 per barrel, Van Dalen said this is an “irrational and non-evidenced statement as current prices are at $50 per barrel and with continued under supply at the moment, this price is destined to rise, according to market analysts”.
“This means that tax payers will bear the brunt of the losses that will follow this illegal sale of 10 million barrels of fuel belonging to the SFF.”