On 13 November 2023, Department of Mineral Resources and Energy Minister, Gwede Mantashe, announced a draft Bill for public consideration, detailing the establishment of the South African National Petroleum Company (“SANPC”). In his announcement, Mantashe described the proposed legislation as the “State’s energy champion and facilitator of energy infrastructure across the energy value chain”, with the Minerals Minister serving as the sole shareholder.
The SANPC follows in the wake of the Upstream Petroleum Resources Development Bill, currently making its way through the Legislature, which aims to separate petroleum provision from mineral provision in South Africa. Most notably, the SANPC emphasises the pursuit of the “free carry model” from the Upstream Petroleum Resources Development Bill and, while the primary focus will be on oil and gas, the draft Bill allows the SANPC to engage in various forms of energy, including renewables.
The objective of the draft Bill is to form the SANPC, uphold effective governance, and amalgamate and transfer the company’s assets in accordance with pertinent legislation, with the Minister holding the exclusive ownership. This will be achieved through the proposed consolidation of entities linked to the Central Energy Fund (“CEF”), including PetroSA, iGas, and the Strategic Fuel Fund (“SFF”).
The announcement of the draft Bill has been surrounded by controversy, particularly concerning the transfer of power stations from Eskom to CEF, and raises questions about potential overlap with the country’s state-owned electricity provider. This comes after Mantashe’s suggestion that the SANPC might repurpose retiring coal power stations to gas, potentially creating an ‘Eskom 2.0.’
Some notable key points about SANPC and the draft bill include:
- Sole Shareholder: The Minister of Mineral Resources and Energy, currently Gwede Mantashe, will be the sole shareholder of SANPC;
- Objectives of SANPC: The company aims to be the government’s “energy champion” and plans on facilitating roles in various aspects of the energy sector. This includes managing exploration and production rights, developing petroleum resources, providing infrastructure, supplying petroleum downstream, dealing with commercial aspects of petroleum operations, and contributing to renewable energy;
- National Energy Security and Just Energy Transition: SANPC’s objectives include ensuring national energy security and supporting the country’s just energy transition. This aligns with broader energy goals and addresses issues related to Eskom and the wider energy mandate;
- Cooperation with Other Departments: To prevent duplication of functions, the draft bill empowers SANPC to work cooperatively with other government departments and enter agreements to avoid unnecessary redundancy; and
- Continuation of Functions: SANPC will continue the functions of the three state companies it absorbs, focusing primarily on the petroleum industry. This includes managing strategic crude oil stockpiles and commercialsing facilities.
Interested and affected parties are invited to submit written comments on the Bill by no later than 13 December 2023.
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