Tag Archive | Chris Cooper

Central Energy Fund slowly gets its house in order

Central Energy Fund reported to the portfolio committee on energy that for 2011/2 it had importantly re-structured some of its investments and had now reached the halfway stage of what it felt essentially that an energy development company should look like.

Chris Cooper, Corporate Planner, CEF, told parliamentarians that the somewhat torrid times of the part were now behind them, have divested themselves of SANEIRI, the research body which had now become SANEDI, and they seemed to be withstanding the venture losses by PetroSA.

CEO Busi Mabuza had been advised medically not to travel and was not present. Parliamentarians asked directly if the lack of a fully substantiated and active CEO and leadership in other areas was affecting CEF operations and CEF directors replied that with team effort matters were improving, as reports showed.

Cooper said that in the CEF stable was now a stable SFF, which was dealing well with the handling strategic fuel stocks despite a downturn in storage rentals. There was Africa Exploration Mining and Finance, which was exploring for new finds of fuel feedstock and which would shortly leave CEF, going to the department of mineral resources. Also PASA, or the Petroleum Agency of SA, handling data, licences and monitoring as a petroleum agency was successfully selling its exploration data.

I-Gas which had a major interest in the ROMPCO gas pipeline from the Mozambique gas fields to Mossel Bay and SASDA which was as a developmental supplier of goods to the whole group, supplied separate reports but in an overall sense, Cooper added, and whilst small players at this stage, both companies had made important contributions.

MPs continually emphasized the need for developmental evaluations on gas off the Mozambique coast and Cooper replied that in terms of financial restraints as much was being done as possible, particularly with regard to the Ikhwezi project handled by PetroSA.    He said a pipeline was already being laid from a platform to onshore at Mossel Bay.

Cooper said that by next year, CEF would see its final shape whereby the group would existing on two legs only, splitting its interests between hydrocarbons and renewable energy development. `

He noted with some cynicism that when CEF had started, it had been almost “fashionable” in the energy environment to look at and investigate the many sources of renewable energy and much time had been expended, even wasted, but CEF had done its job by sorting out, with experimentation, research and piloting and limited capital projects using what funds were allocated, what was practical and right for South Africa.

The picture, he said, was becoming clearer, particularly if shale gas was added to the possible inputs to the final formula. The Petroleum Agency of SA (PASA), a subsidiary of CEF, was involved in the investigations into hydraulic fracturing.

Quite clearly, he said, forms of solar engineering had to be undertaken in the battle to supply electricity to the poor; the need for further feedstock in crude was an ongoing issue in a country where South Africa were takers not makers; and the potential of gas supplies for energy generation, and even vehicle production, had to be followed up on.

Cooper referred to a number of undertakings in the carbon capture area and said that working was continuing mainly based on grants from overseas and which technology was being conducted onshore to save on costs and retain better control on drilling. The future potential was to undertake carbon capture in a practical senses at sea for obvious reasons.

Revenue increased 35% to R15m (2010 : R11m 2011) mainly due to higher crude oil prices and an increase in crude and finished products. Operating expenses were down 10% while profit after tax increased 39% to R1, 85m (2011: R 1,3m) largely due to cost containment measures as well as the deferral of certain projects which required more feasibility studies.

The group maintained its strong net cash position at R19m (2011: R17, 5m).  The group’s financial position remains solid it was reported, with total assets amounting to R35, 3m.

Technical write-offs, in the area of PetroSA, which would be separately reported on, parliamentarians were told. The issue of reduced tank storage rentals at SFF was also a problem.

The group had received an unqualified opinion on its financial statements for 2011/2012 but DPME had reported separately and internally on the poor human resource programme which was acknowledged and being rectified; some irregular expenditure where the proper PMFA procedures had not been followed and faulty environmental procedures occurring during PetroSA operations, which had been corrected.

New board member, Rizia Jowoodeen, clarified MPs questioning on grades of crude that CEF was dealing with at one given time, particularly with regard to Venezuelan, Egyptian, Equatorial African and other adventures and said that this was a transparent issue and all worked through SAPIA to establish the correct levels of octane based on existing refinery capabilities but that South Africa had to look around and thinking had to engage alternatives to light crudes.

On strategic crude stock retention, Jowoodeen said that department of energy controlled this but there seemed a move coming to increase such figures. He said the difficulty experienced by CEF that there was no wording in the Public Finance Management Act to cover the task of venture capital undertakings.

However, risk management was a very real issue at CEF, he said, but essentially they were a developmental body and the journey to a good energy mix and energy security in the long term for SA was never going to be an easy one financially.

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