The Central Energy Fund (CEF) is positioning itself to acquire fuel infrastructure and other strategic assets from global oil companies scaling down operations in South Africa, as part of its strategy to secure national fuel supply and strengthen its downstream presence.
Acting Group CEO Sifiso Msabala told Parliament that several oil majors, including Shell, have approached the state-owned entity with proposals to offload assets as they retreat from the local market. The CEF aims to prevent a situation where critical fuel infrastructure is neglected, as the state would become the last resort for fuel supply.
“We have a very clear understanding of how the majors have been behaving in wanting to sell in that space. A number of them are offloading their assets. The State cannot be caught in a situation where the assets are not attended to as we will be the last resort for fuel,” Msabala said.
He added that the CEF’s acquisition strategy is both organic and external, with a focus on avoiding premium pricing. Some acquisitions are already in discussions with oil majors who are actively seeking buyers for their assets.
Msabala identified the CEF’s 15% capacity allocation at the Island View Terminal in Durban as a significant challenge unless the entity develops a clear strategy to capacitate PetroSA’s downstream mandate. He noted that PetroSA has faced difficulties getting products to market level due to insufficient market presence, with products sitting in tanks when majors decline to pick them up.
The CEF has completed a study into the structure of South Africa’s fuel distribution network, particularly the Durban corridor, which handles approximately 70% of national volumes. The entity plans to scale up Sapref refinery output from 180,000 barrels per day to 400,000, leveraging available land to develop a higher-capacity facility.
The process of acquiring the refinery began when it was operational but changed after the facility was damaged by floods and taken offline. A bankable feasibility study is underway to determine the new type of refinery needed, with plans to increase the nameplate capacity to operate at a more optimal level.
Progress has also been made on the Komati gas-to-power project, with the CEF unlocking 800 megawatts through the ROMPCO pipeline from Mozambique to Ekurhuleni and securing an additional power purchase agreement for 1,000 megawatts. The entity has also received Board approval for Final Investment Decision on a bioethanol project using sorghum, creating opportunities for blending and advancing clean fuel ambitions.
The CEF’s financial position has improved significantly by March 2025, supported partly by the acquisition of the SNPC refinery, formerly known as Sapref. Between the 2020/21 and 2024/25 financial years, profit and loss performance improved by 2.4%, cash balances grew 8.5%, and net asset value increased 16%. The turnaround from 2023/24 to 2024/25 was particularly stark, with the CEF swinging from a 522-million-rand loss to a 533-million-rand profit, a 194% improvement, while cash balances rose from 13 billion rand to 16 billion rand.
Source: iol.co.za