Recently, South African cabinet has approved to merge PetroSA, iGas and the Strategic Fuel Fund to establish a single national oil company. Currently, the country has more than 740 state-owned enterprises.
It is reported that the government is planning to consolidate or rationalise those enterprises. The cabinet said in a statement, “This gives effect to the announcement made by President Cyril Ramaphosa in his state of the Nation Address on 13 February 2020, to repurpose and rationalise a number of state-owned enterprises to support growth and development.”
It appears that the country’s state-owned enterprises is putting pressure on public finances and most of them are facing bankruptcy or mired in debt.
PetroSA runs the Mossel Bay gas-to-liquid refinery. The rationalisation plan will take place in three phases, media reports said. The first phase will focus on improving efficiency to enhance cost reductions and integrated common systems. The second phase will seek to improve scale and market share, while the third phase will operationalise a viable national oil company.
This national oil company will be a game-changer for both South Africa and the continent at large. In fact, a restructuring company will be appointed to investigate the new national oil company to be established in South Africa.