• The ACTis has raised seven flags for PetroSA. The secretive nature of the oil and gas sector makes PetroSA a prime target for corruption and heightens the risk of procurement and financial mismanagement. This risk is illustrated by the long list of major corruption scandals the entity has faced since its establishment in 2002.
• Leadership instability and contestation are closely linked to irregular contract awards. Obstructing accountability and manipulating public narratives allow irregular contract awards and contract non-performance to persist. Oversight authorities, such as Parliament, struggle to hold PetroSA to account because it refuses to disclose information on appointments or contracts. The lack of financial reporting heightens this concern. One of the few sources of information is the investigative media, which continues to provide valuable insights.
• The extent of PetroSA’s distressed financial situation and how it can be addressed remain unclear. There is a concern that legacy issues will affect the new SANPC. SANPC may inherit irregular contracts, significant liabilities, financial malpractice, and staff allegedly involved in corruption or unethical behaviour. Addressing these issues as the new institution takes shape will be important to prevent fault lines that could lead to corruption and state capture.
• PetroSA has been declared technically insolvent and unable to meet financial obligations. This financial mismanagement has led the South African Revenue Service (SARS) to initiate proceedings to attach PetroSA’s Mossel Bay refinery over an unpaid tax debt of R4.5bn.