Amid the merger of the Central Energy Fund’s subsidiaries, — PetroSA, iGas and the Strategic Fuel Fund — the gas development company has seen an exodus of board members who accuse the CEF of meddling and the mineral resources and energy minister of overreach and interference in iGas.
The process to merge the three subsidiaries began this month to form one national petrochemicals company, Newco, and is expected to be completed within 12 months. The aim is to stabilise the national oil company, PetroSA, and possibly buy some privately owned petrochemicals assets. Sasol, the energy and chemical company, has embarked on a divestment programme to repay its debt of R180-billion.
Correspondence between the former iGas board members and the CEF indicates that the gas company has been in the throes of an operational crisis for the past year.
In August, representatives from the mineral resources and energy department and the CEF flagged only PetroSA as being plagued by governance and financial problems.
PetroSA has lost more than R20-billion in the past six years and has not had a permanent chief executive for five years. Both iGas and the Strategic Fuel Fund were financially stable, according to the CEF.
The chairperson of the portfolio committee of minerals and energy (PCMRE), Sahlulele Luzipo, said the committee supports the CEF’s efforts to merge the three subsidiaries.
“If there are issues to be concerned regarding challenges at iGas, relating to governance, certainly the PCMRE will have to attend to this and determine how this will impact the formation of the integrated petroleum company,” he said.
iGas owns 25% of Rompco, the Republic of Mozambique Pipeline Company, which transfers gas from Sasol’s Pande and Temane gas fields in southern Mozambique to South Africa.
Sibongile Luthuli, a former iGas board member, has accused the mineral resources and energy minister, Gwede Mantashe, of overreach and undue interference in the company. In her resignation letter, seen by the Mail & Guardian, she also accuses the CEF of not adhering to good governance practices and not providing sufficient support to the iGas board.
Luthuli resigned in July after she and another board member, Crystal Abdoll, were asked by the former CEF chairperson, Monde Mnyande, who died in August, to provide the Central Energy Fund with reasons as they should not be removed from the board.
In the letter sent to iGas board members just days after the merger was announced in June, Mnyande accused the board of failing to mitigate operational risks and build the capacity of the company, rendering it unable to pursue its objectives, and of not developing a corporate plan for iGas. He also stated that the board was “dysfunctional and incoherent” and that there was a breach of trust between board members.
In October last year, the CEF appointed four new members to iGas’s board. Within 10 months, Mantashe had either withdrawn the board members or they had resigned.
“It is ludicrous to assume that we failed to provide strategic direction and execution of the company mandate within such a limited period,” said Luthuli.
She said the CEF did not provide any feedback on quarterly reports submitted to it by the iGas board during its 10-month tenure. During this time, the CEF did not indicate its dissatisfaction with the work of the iGas board.
Luthuli said that in her resignation she refutes Mnyande’s allegations that the iGas board lacked “agility” in executing the company’s mandate and its failure to provide strategic direction.
She said the services provided by the CEF to the iGas board can be characterised by “tardiness” and of “poor quality”.
Luthuli resigned from the iGas board 12 days after a special board meeting was held in July. It resolved to remove the acting chief executive, Mohsin Seedat, and replace him with the CEF chief executive, Ishmael Poolo. It also decided to establish a new iGas management structure. When the board met Mantashe on June 1, Luthuli said the minister accused the iGas board of being “incoherent, dysfunctional, in a mode of resistance and not aligned to what the shareholder wants to achieve”.
This happened after the board resolved to remove its former chairperson, Linda Lentle, “on the basis of gross dereliction in the performance of her fiduciary duties”, Luthuli said.
The minister was apparently not pleased with the decision to remove Lentle and withdrew two representatives of the minerals and energy department from the board.
Mantashe’s office declined to comment, saying it is not in a position to discuss matters emanating from ministerial meetings.
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian