SANPC Chairperson, Mr. Sipho Mkhize
Acting CEF Group CEO, Dr. Tshepo Mokoka
SANPC CEO, Mr. Godfrey Moagi
Members of the Media
Good morning,

Today marks a key milestone in the history of South Africa’s energy landscape. We are making
history by creating South Africa’s national energy champion—a move that is fundamental to the
country’s economic recovery, energy security, and industrial growth.

This is not just a technical or financial transition—it is about ensuring that the SANPC is built on a
foundation of operational efficiency, financial strength, and social responsibility.
It is an achievement that marks a significant and historic leap forward in the operationalisation of the
SANPC as a South African Energy Champion.

This journey to merge three of the CEF Group subsidiaries, iGas, Strategic Fuel Fund and PetroSA
began in February 2020. It was as a result of a policy statement made by President Cyril
Ramaphosa, during his state of the nation address (February 2020) where he emphasized the need
for the stabilization of State-Owned Entities and refocusing them to drive economic growth and
development.

The rationalisation of these subsidiaries into one single South African National Petroleum Company
was on the basis that each company be properly structured so as not to transfer operational and
financial inefficiencies into the new entity.

Key features of the rationalisation plan were anchored on the following three pillars:

a) Improving Operational Efficiencies

✓ As part of improving the operational efficacy within the Group’s value chain and to deliver
shareholder value, the rationalisation process would be geared to minimise duplications
that inhibit it from being a catalyst to reignite the South African economy and create muchneeded jobs.

✓ This process would also result in enhanced cost reductions, integrated common systems,
processes, and improved shared service models to maintain strategic relevance and
sustain a competitive edge in a rapidly changing Oil and Gas industry.

b) Improve Scale & Market Share

✓ The implementation of the rationalisation process would amongst others enable the
Group to effectively leverage on the combined financial resources and operating assets
of the three entities to bring stability and certainty to ensure that the country is ready to
achieve a “just and fair” energy transition.

c) Operationalise a Commercially Viable National Petroleum Company

✓ The operationalisation of a commercially viable South African National Petroleum
Company will be a game-changer not only for South Africa but also for the continent. This
new entity will play a critical role in supporting the government’s broader strategic
initiatives as well as fostering regional integration on matters related to oil and gas.

We heeded the President’s clarion call with energy and enthusiasm. Of course, we did some
groundwork and developed a Business Case for this merger.

A detailed baseline assessment showed that this merger has a potential to improve efficiencies and
strategic investments, by unlocking market opportunities worth R95bn at the time, and thus
yielding R1.5 billion in synergy optimisation.

From these detailed assessments, we concluded that merger by Amalgamation and merger by
Subsidiary was not legally permissible in the short term.

We concluded that the best viable model for this transaction was by Lease and Assignment. The
Lease and Assignment model provides the opportunity to strategically select what is leased and
assigned to the SANPC by ring-fencing or isolating PetroSA’s legacy assets such as the challenged
Gas to Liquid Refinery (GTL), as well as the decommissioning liability.

Today’s groundbreaking milestone to hand over the assets and funding to operationalise what is
now dubbed the emerging South African Energy Champion (SANPC) happens at the backdrop of
the following key achievements which amongst others include but not limited to the following:

a) Transferring of Employees from three merging entities

After a series of consultation between organised labour and non-organised labour
representatives, the finalisation of the consultation process with the main 3 Unions
(Solidarity, NUMSA and CEPPWAWU) culminated in the signing of an historic MOA
agreement in October 2024.

The agreement, in support of the merger of the three entities as approved by Cabinet,
resulted in the transfer of 402 employees and subject to a 12 month ‘cooling off’ period to
avoid any job losses during the transition period.

In line with the Lease & Assign model, people transfer followed the asset transfer principle.

On the 30th of April 2025 we concluded the first phase of employee transfers, by welcoming
402 team members from the Central Energy Fund’s subsidiary companies: iGas, PetroSA,
and the Strategic Fuel Fund (SFF). iGas

All other remaining employees (620 in total) associated with ringfenced assets & operations
within Legacy entity (i.e. PetroSA) would transfer in the second phase of the project once
these assets have been turned around & optimized with the support of SANPC and CEF as
the holding company.

b) Assets Transfers

A range of assets were identified by SANPC and legacy entities for commercialisation and
optimisation through the Lease and Assign model, including the transfer of key contracts to
SANPC.
Contract negotiations between SANPC and legacy entities, which were supported by
external independent experts with legal and assets valuations expertise, were underpinned
by a set of key accounting and legal principles, most notably around (1) fair market value
for the lease and assignment of assets, rights and contracts and (2) transactions
subject to at an arms-length agreements.

After a protracted period of intensive negotiations, the Boards of iGAS, SFF, PetroSA and
SANPC formally approved the Terms Sheets in December 2024, in respect of the following
assets:

❖ SFF Milnerton tank farm.
❖ SFF Saldanha tank farm.
❖ SFF Montague Gardens Depot (BP joint asset).
❖ SFF Avedia Energy, subject to S54 approval.
❖ SFF NMPP Line fill.
❖ SFF South Sudan (SFF), subject to the South Sudan Minister of Petroleum
endorsement.
❖ SFF Cash Transfer.
❖ SFF Strategic Stock, subject to a Ministerial directive.
❖ PetroSA – PSA Ghana, subject to approval of the JV Partners and the Minister of
Petroleum in Ghana.

c) Funding Support

Following a robust engagement amongst the parties (the Boards of iGAS, SFF, PetroSA and
SANPC) it was resolved that a total of R5 billion would be made available in a phased
manner to fund the operationalisation of the SANPC.

d) SANPC’s inheriting the mandate of security of energy supply.

Over the last ten years, the South African economy has seen a significant decline in local
refining capacity. In 2010, local refining capacity accounted for about 80% of finished product
consumed, compared to less than 35% in 2022.

As a state entity charged with the responsibility of securing energy supply to power the South
African economy, we have seriously noted with concern the declining local refining capacity
which resulted in the country becoming a net importer of refined petroleum products
amounting 18,7 billion litres out of 25 billion consumed in the country.

This new emerging trend was not only threatening the country’s economic stability, as well
as the security of supply of petroleum products but it also meant the exportation of jobs that
are so needed in the country given the stubbornly high level of unemployment.

In response to these challenges, Government through CEF acquired the SDSA and bpSA
interests in the SAPREF land and other associated assets, which includes crude and finished
product tanks, process units, pipelines to and from SAPREF to Island View terminal, and the
Single Buoy Mooring for crude imports.

The acquisition of these assets formed the hallmark of CEF’s investment and growth strategy
in the energy value chain geared to lay a solid foundation to address the challenges that lie
ahead in the security of South Africa’s energy future.

Additionally, Section 8(d) of the SANPC Bill stipulates that SANPC is the designated agency
to manage strategic oil reserves and storage of crude oil on behalf of the State in South
Africa.

This is a deliberate intention to ensure that the SANPC becomes a leading player in South
Africa’s energy sector, ensuring energy security, driving new technologies, developing, and
enabling essential infrastructure, fostering strategic partnerships, and propelling social and
economic development.

Plans are afoot to rebuild this asset, now renamed SANPC refinery and increase its
throughput capacity from 180 000bpd to over 600 000 bpd.

e) Turn Around Plan to Reinstate the PetroSA’s GTL Refinery in Mosselbay

The SANPC in collaboration with its shareholder, the Central Energy Fund would support the
turnaround plan of PetroSA through the following constructive risk-based process whilst
recognizing their inherent solvency and liquidity risks, with potential dire consequences.
Therefore, the turnaround of legacy assets focuses on the following aspects:

❖ Trading: SANPC’s commitment to a profit-sharing agreement with PetroSA to
stabilize and support PetroSA in the short term.

❖ Fixed Costs Reduction: Transfer of 217 employees from PetroSA (shared services
and trading) staff to SANPC with financial support from CEF.
❖ Payables: SANPC commits to prioritise and support the settlement of the PetroSA
Trading debt.
❖ Infrastructure Investment: SANPC commits to prioritise infrastructure investment in
Voorbaai (Mosselbay) and SBM import facility to increase import capacity and thus
facilitate the reduction in demurrage costs.
❖ GTL Refinery Start Up: SANPC offers to lead / participate in a priority project to
resuscitate the GTL refinery.

As we consolidate our internal resources and expertise to power South Africa’s energy future and
support key government priorities, the SANPC will be at the centre of the country’s reindustrialization drive. Through planned infrastructure programmes, the SANPC is geared to create
meaningful jobs and future opportunities for all South Africans.

These developments are part of both short- and long-term initiatives under CEF Group’s Adaptive
Strategy and Scaling Up for Growth Strategic Horizon. This approach is rooted in value creation,
operational excellence, and portfolio diversification.

We remain focused on the swift and practical implementation of solutions to turn around ring-fenced
assets and operations. These will be progressively transferred to the SANPC once all commercial
and legal requirements have been resolved.

The emergence of this rising South African Energy champion will be the beacon of hope not only to
South Africa but to the region, as well. This will be a legacy that will transcend all the man-made
borders to positively impact lives of ordinary people in its quest to Power our Tomorrow.
Ends