Opportunity Issue 107

CENTRAL ENERGY FUND The

CENTRAL ENERGY FUND The Central Energy Fund is showing resilience in response to unprecedented challenges The CEF Group is navigating uncertainty and championing sustainable growth. In the face of unprecedented global challenges, the CEF Group, guided by its newly adopted “strategic investor” strategy 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 in the energy landscape. This strategy is geared to position CEF and its subsidiaries to operate as a trilateral force in the energy landscape and uniquely to secure energy solutions for the country.Given the rapidly changing landscape, the organisation recognises the urgency to make swift and informed decisions to help the Group proactively adapt and be innovative in its quest to ensure energy security and contribute to economic growth. “Tasked with driving economic growth, CEF group has embarked on an aggressive acquisition drive focusing on enabling energy infrastructure geared to 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,” says Dr Ishmael Poolo, CEF Group Chief Executive. Key amongst these groundbreaking energy projects include the following: CEF increased its equity in the ACWA Redstone solar plant by 10% 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 nearly 200 000 households. SFF acquired 50% equity in the BP Cape Town Terminal. Through this asset, SFF will also be able to import finished products to mitigate risks associated with product shortage because of the local refining facility being closed. The Cape Town BP terminal has a storage capacity of approximately 86-million litres which includes diesel, petrol, jet fuel and illuminating kerosene. This capacity translates to 1.6 billion-litres per annum and it represents about 30% of the available terminal infrastructure capacity for the high growth of Cape Town’s fuels market. SFF further acquired a 60% equity stake in the assets of Avedia Energy, which includes the Liquefied Petroleum Gas (LPG) terminal in Saldanha on the West Coast. Through this asset SFF will also be poised to promote competitiveness in the downstream LPG market by enabling the importation of cheaper liquefied petroleum gas and storing it for the country’s energy needs as well as mitigating risks associated with product 44 | www.opportunityonline.co.za

CENTRAL ENERGY FUND shortage because of the closure of the local refining plant. This will also allow previously disadvantaged South Africans (HDSAs) who want to participate in the petrochemical sector access to the infrastructure. iGAS, a subsidiary of the Central Energy Fund (CEF), partnered with Companhia Mocambiçana de Gasoduto (CMG), a subsidiary of the Empresa Nacional de Hidrocarbonetos (ENH), in acquiring 30% equity stake in the Republic of Mozambique Pipeline Company (ROMPCO) pipeline from Sasol, pursuant to the exercise of their respective pre-emptive rights. The successful conclusion of the 30% equity stake means that iGAS and CMG are now the majority shareholders, as their equity shares will increase from 25% each to 40%, respectively, with Sasol holding a 20% minority shareholding. This transaction will be fully funded from past and future dividends generated by ROMPCO itself. Prior to the conclusion of this transaction, ROMPCO was a joint venture between Sasol South Africa (50%), Companhia Mocambiçana de Gasoduto (CMG) (25%) and South African Gas Development Company (SOC) Limited (iGAS) (25%), which owns the 865-kilometre gas transmission pipeline from Mozambique to South Africa. The SFF and South Sudan Ministry of Petroleum negotiated terms and conditions which resulted in the signing of an exploration and productionsharing agreement (EPSA) to acquire exploration and production rights in Block B2 South Sudan. SFF has commenced with the exploration activities and a service provider was appointed end of June 2022 to commence with the acquisition of Gravity Magnetic Data in Block B2. The project will also be completing the Scoping of the Environmental and Social Impact Assessment (ESIA) which will be submitted in 2024 for the approval of the Sudanese Government. The project is forecasting to finalise its exploration activities by the drilling of wells in 2026. Positive results PetroSA’s key turnaround initiatives are starting to yield positive results. For the first time since a recorded net loss of R14- billion in 2015, PetroSA is projecting a net profit of R2.4-billion for the period ending March 2024. PetroSA is fast-tracking its “Gas to Power” initiative to provide an early power-generation solution that will leverage the commercialisation of its tail gas for power generation for Eskom or an alternative off-taker. Through this project, PetroSA will plug approximately 180MW into the national grid as a long-term solution to address challenges relating to loadshedding. In June 2023, PetroSA acquired the terminal operatorship to supply jet fuel for George Airport and King Phalo airport. Throughput volumes have increased substantially. In June 2020, Cabinet approved the request by the Department of Mineral Resources and Energy (DMRE), under the stewardship of Minister Mantashe, to merge three subsidiaries of CEF, iGas, SFF and PetroSA to establish the South African National Petroleum Company (SANPC). Subsequently, during the departmental budget vote held in 2023, Minister Mantashe announced that following the tabling of the Upstream Petroleum Resources Development Bill in Parliament, the cabinet approved the merger of IGas, PetroSA and the Strategic Fuel Fund to form the South African National Petroleum Company (SANPC). A detailed baseline assessment identified up to R1.5-billion in cost synergy potential (roughly 8% of total cost today) typically achievable in three to five years because of the merger. Additionally, selectively leveraging the asset base of the entities will position SANPC for significant growth with up to 95-billion in market opportunity identified. Overall, CEF Group recognises its pivotal role in driving economic growth and security of energy supply for South Africa. The Mossgas oil-to-gas refinery is the key asset of PetroSA, the CEF Group subsidiary charged with improving security of the supply of fuel, oil and gas and managing the country’s crude oil reserves. www.opportunityonline.co.za | 45