South Africa's strategic fuel stock sold off in secret
The Strategic Fuel Fund (SFF), the guardian of SA’s strategic crude oil stocks, has sold 10-million barrels of crude — close to its entire stockpile — in a closed tender at rock-bottom prices without obtaining permission from the Treasury.
Strategic stockpiles are a country’s reinsurance policy in the event of a sudden supply crisis. The fund is required to hold stock for 20 days cover. It now has 300,000 barrels, less than a day of cover.
The sale took place with the permission of Energy Minister Tina Joemat-Pettersson, but without that of Finance Minister Pravin Gordhan, whose concurrence is needed under the Central Energy Fund Act.
A state-owned entity is also required to obtain Treasury approval for the sale of any significant state asset, according to the Public Finance Management Act (PFMA).
All transactions must be transparent and competitive in accordance with the act. The Treasury was not informed of the sale and yesterday was tight-lipped on the transaction.
CE of the fund Sibusiso Gamede and Joemat-Pettersson contend that the transaction was "a rotation" of stocks rather than a sale. Gamede says that a stock "rotation" does not require Treasury permission and has been done once before, in 1999.
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