CEF - Energy solutions to power all and drive sustainable growth

DESPITE unprecedented global challenges, the Central Energy Fund (CEF) group is guided by its newly adopted “strategic investor” strategy and continues to steer its course with resilience and determination.

The repositioning of the group marks a strategic milestone that aligns with the evolving energy landscape and its growth agenda. This strategy is geared to position the CEF and its subsidiaries to operate as a multilateral force in the energy landscape, while uniquely securing energy solutions for South Africa.

The CEF is a state-owned entity incorporated to control entities within the energy sector with commercial, strategic, regulatory and developmental roles. There are five operating subsidiaries – the Petroleum Oil and Gas Corporation of South Africa (PetroSA), South African Gas Development Company (iGas), Petroleum Agency SA (PASA), Strategic Fuel Fund Association (SFF) and the African Exploration Mining and Finance Corporation (AEMFC). Among other corporate functions, the CEF also manages the equalisation fund on behalf of the government.

Given the rapidly changing energy landscape, the entity recognises the urgency to make swift and informed decisions to help the group proactively adapt, be innovative in its quest to ensure energy security and contribute to economic growth.

“Tasked with driving economic growth, the group has embarked on an aggressive acquisition strategy that focuses on growing the organisation’s energy projects pipeline. This will position the group as a credible energy investment company that will continue to invest in profitable growth opportunities across the energy value chain in southern Africa to fulfil its mandate,” said Dr Ishmael Poolo, CEF group CEO.

Recent key groundbreaking energy projects include:

1. CEF increased its equity in the ACWA Redstone solar plant from 15% to 25%.

Located in the Northern Cape province, the 100MW solar plant is a first of its kind in Africa and is equipped with a 12-hour thermal storage system that will deliver clean and reliable electricity to about 200 000 households.

2. SFF acquired 50% equity in the BP Cape Town Terminal.

Through this asset, the SFF will also be able to import finished products to mitigate risks associated with product shortages due to lack of local refining capacity.

• The Cape Town BP terminal has a storage capacity of around 86 million litres that includes diesel, petrol, jet fuel and illuminating kerosene.

• This capacity translates to 1.6 billion litres per annum. It represents about 30% of the available terminal infrastructure capacity for the high growth of Cape Town’s fuel market.

3. The acquisition of a further 60% equity stake in the assets of Avedia Energy by SFF.

This includes the liquefied petroleum gas (LPG) terminal in Saldanha, Western Cape.

• Through this asset, SFF is poised to promote competitiveness in the downstream LPG market by enabling the importation of cheaper LPG and storing it for the country’s energy needs, and by mitigating risks associated with product shortage.

• Previously disadvantaged South Africans who want to participate in the petro-chemical business will now be able to use the infrastructure.

4. iGas and Companhia Mocambiçana de Gasoduto (CMG) acquired a 30% equity stake in the ROMPCO pipeline from Sasol.

• The acquisition of the 30% equity stake means iGas and CMG are now the majority shareholders, with equity shares increasing from 25% each to 40%. Sasol holds the remaining 20%.

5. The SFF and South Sudan Ministry of Petroleum signed an exploration and production sharing agreement for rights in Block B2 South Sudan.

• SFF has commenced with the exploration activities. A service provider was appointed last year to commence with the acquisition of gravity magnetic data in Block B2.
• The environmental and social impact assessment (ESIA) will be completed and submitted in 2024 for the approval of the Sudanese government.
• The project is set to finalise its exploration activities, by the drilling of wells, in 2026.

6. PetroSA’s key turnaround initiatives are starting to yield positive results.

• For the first time since recording a net loss of R14bn in 2015, PetroSA is projecting a net profit of R2.4bn by March 2024.
• PetroSA is fast-tracking its “gas to power” initiative to provide an early power generation solution, which will leverage the commercialisation of its tail gas for power generation for Eskom or an alternative off taker.
• Through this project, PetroSA will plug about 180 megawatts of power into the national grid. This will be a long-term solution to address challenges relating to load shedding.
• In June 2023, PetroSa acquired the terminal operatorship to supply jet fuel for George Airport and King Phalo Airport.
• Throughput volumes that have been pushed from June to July 2023 for King Phalo and George are Jet A1 – 2702.996m³ and AVGAS – 51.257m³, respectively.

To improve group efficiency, in June 2020, Cabinet approved the request by the Department of Mineral Resources and Energy, under the stewardship of Gwede Mantashe, to merge three subsidiaries of CEF. The subsidiaries were iGas, SFF and PetroSA to establish the South African National Petroleum Company (SANPC).

A detailed baseline assessment on the implementation of SANPC identified around R1.5bn in cost synergy potential (roughly 8% of total cost today), typically achievable in three to five years. Therefore, selectively leveraging the asset base of the entities will position SANPC for significant growth, with about R95bn in market opportunity identified.

Overall, the CEF group recognises its pivotal role in driving economic growth and security of energy supply for South Africa.

For more information, visit www.cefgroup.co.za