NEWS

PetroSA Is In An Unprecedented Bid For Business Rescue

But the state-owned entity has refused to confirm or deny reports about its request to be placed under administration.

04/05/2017 08:32 SAST | Updated 04/05/2017 08:32 SAST
Mike Hutchings / Reuters
The Chevron Oil Refinery is seen in Cape Town, South Africa, June 30, 2016. REUTERS/Mike Hutchings

Troubled state-owned enterprise and oil company PetroSA has declined to comment on reports that it has asked to be placed under business rescue.

Business Day reported on Thursday that a senior government official confirmed PetroSA's "severe" financial situation, and that it had approached its holding company, the Central Energy Fund to place it under business rescue.

But the CEF reportedly refused, reportedly because it would be seen as a cop-out for those responsible for PetroSA's situation.

According to Business Day, it would be unprecedented for an SOE to be placed under business rescue, as SOE's have traditionally been bailed out by Treasury loan guarantees to ensure that they continue as going concerns.

The paper reported that PetroSA had a projected loss of R2.2 billion for the year to March 2017, and a net operating loss of R14,6 billlion in 2014/2015.

But executives at the SOE reportedly continued to get large performance bonuses, in spite of PetroSA's financial woes.

The CEF and PetroSA declined to comment when approached by Business Day.

A spokesperson, Jacky Mashapu, said: "At an appropriate time we shall make our position known."

According to Eye Witness News, new energy minister Mmamoloko Jubayi told Parliament this week that she was concerned about PetroSA, labelling it a "problem child". She also vowed to query the payment of bonuses totalling R17,3 million to executives.

It's R14,5 billion loss in 2014/15 was in part due to a project called Ikhwezi, EWN reported.

It reportedly involves drilling wells offshore.