Broke PetroSA's board has been dissolved

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The Central Energy Fund has resolved to dissolve the PetroSA board.
The Central Energy Fund has resolved to dissolve the PetroSA board.
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The board of PetroSA, the embattled government-owned fuel company, has been dissolved by the Central Energy Fund (CEF). 

The CEF, which is the main shareholder of PetroSA, says Mineral Resources and Energy Minister Gwede Mantashe still needs to approve the decision.   

According to a PetroSA internal communique from its group CEO Pregasen Naidoo, which Fin24 has seen, the state oil company was informed by the CEF on Tuesday of a resolution to dissolve its board. Non-executive directors were told of this resolution on Monday.

"PetroSA management, on 25 May 2021, was informed by our direct shareholder, the CEF, that they had resolved to dissolve the PetroSA Board and that such was communicated to the PetroSA Board during a meeting, held on 24 May 2021, between our direct shareholder and the PetroSA Board, effective immediately.

"The relevant governance and due processes and in progress to be concluded and further announcements thereof are expected," said Naidoo.

The communique did not indicate why the CEF elected to dissolve the PetroSA board.

Business Day reported that the board discussed business rescue or the liquidation of the cash-strapped company before it was dissolved. 

PetroSA has been facing financial difficulties over a number of years, amid the depletion of offshore gas fields. The company last reported a profit in 2013, Bloomberg previously reported.

Naidoo said PetroSA would continue with the board-approved strategy and corporate plan, which is also subject to shareholder support and approval. 

The CEF wants to establish a new national petroleum company, which will include merged PetroSA units. The National Union of Metalworkers of SA said earlier this year that PetroSA plans to fire 40% of staff as part of these plans.

"The interventions being pursued and codified in the plan are being progressed with support from CEF. It must be highlighted that while these interventions are being progressed, they are not panacea for PetroSA's short-term financial and operational challenges," Naidoo said.

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