A Cape High Court case set for Friday is a key move in a chess game that will decide the fate of SA’s strategic crude oil reserves worth over R9.38bn billion
The Organisation Undoing Tax Abuse (OUTA) is calling on Minister of Mineral Resources, Gwede Mantashe to intervene urgently in a matter set before the Cape High Court this Friday, which may have a significant impact on the fate of SA’s strategic crude oil reserves amounting to a current value of R9.38bn.
Between December 2015 and January 2016, South Africa’s strategic oil reserves were sold illegally to several companies without due process and with a blatant disregard for any required approval of the boards of directors of both the Central Energy Fund (CEF) and the Strategic Fuel Fund (SFF). The decision to sell off our oil reserves was also done without notifying the Minister of Finance, which is a statutory requirement.
This unlawful transaction has placed South Africa at risk as the country could find itself in a dire situation if faced with unforeseen emergencies. South Africa’s strategic oil reserves allow the country the liberty of being self-reliant, and in the case of an emergency, South Africa would be able to meet its daily national petroleum products demand of 704 000 barrels per day.
Surprisingly, these crucial strategic reserves were sold at a ridiculously low price of $31 per barrel under false pretences that the Government will have an option to buy it back at an inflated rate. In today’s terms, Brent Crude Oil is trading at $64 per barrel. Another factor is that the sale took place outside an approved Strategic Stocks Rotation Policy to protect the country from any negative exposure.
Nicknamed “Oilgate” the media and public applied pressure on the CEF to prevent the deal from taking place. Now, almost three years later, one of the affected companies, Glencore, has approached the court for an order that SFF/ CEF is not entitled to file supplementary affidavits. This case is to be heard on Friday 28 June. If the court finds in favour of Glencore, very important information may not be placed before the court, which may result in the main application being dismissed. This will mean the original contracts will proceed, and South Africa will lose its strategic crude oil reserves and will have to incur serious procurement costs to replenish the illegally sold stock amounting to 10 million litres.
“The only solution at this stage is for the Minister to intervene. We believe that if we can generate enough public awareness as was done in 2016, we may move the Minister to act and to save our oil reserves,” says Stefanie Fick, OUTA’s Chief Legal Officer.
