State-owned oil entity PetroSA has admitted to Parliament that it is technically insolvent and facing a severe liquidity crunch, marked by deteriorating solvency ratios, a mounting tax debt, and a fresh provisional liquidation application filed in the Western Cape High Court.
Addressing the Portfolio Committee on Mineral and Petroleum Resources this week as part of the Central Energy Fund (CEF) presentation on its five-year financial performance, governance outcomes, operational progress and strategic priorities, acting PetroSA CEO Nombulelo Tyandela confirmed that the state-owned enterprise was struggling to maintain going-concern status.
“We are now facing liquidation challenges, which is an acute crisis. The engagement and support we are getting from the shareholder and the alignment we have, that support is quite imminent so that we can be able to preserve this entity and retain the going concern we need to retain all the time,” she said.
Tyandela said PetroSA’s financial position had been worsened by its reliance on imported finished products, which generate lower margins, while the company continues to carry the costs of preserving its Gas-to-Liquids Refinery (GTLR) in Mossel Bay.
The refinery has been under preservation since 2020 as PetroSA has faced challenges to bring it back online.
“In spite of all the efforts we have made, we are reporting that we are technically insolvent. The margins we are earning on a regular basis do not necessarily cover all the costs that we are incurring to maintain, retain and take care of the assets that we are holding as an entity,” Tyandela said.
“Revenue levels have declined significantly over the years, mainly due to GTLR being offline; however, market dynamics did affect us as the entity.”
Part of the turnaround strategy is ensuring that the Mossel Bay refinery is online by November 2027.
PetroSA is also seeking to diversify its product offering, including through the introduction of jet fuel and lubricants. The company has secured contracts to supply jet fuel to SAA and FlySafair.
In the liquidation case, Nako Energy is seeking payment of about R600 million, which it claims arose from an agreement reached in March 2025 and remains unpaid. PetroSA has appointed attorneys to defend the application.
Tyandela also informed the committee that the legal action from Nako came after Swiss fuel trader Gunvor had indicated an intention to institute liquidation proceedings against PetroSA in May.
However, the R796m Gunvor debt was settled in full in August 2026, excluding interest. Of this, R639m was funded through a shareholder loan, while the remaining R157m was paid by PetroSA from its available cash resources.
Tyandela said PetroSA had been engaging with creditors to avoid further legal action.
“We have been engaging with our creditors so that we do not have to find ourselves in a situation where we have to defend our position. But while those engagements were being maintained, we found out Nako Energy has pursued the court process,” she said.
She said the dispute followed discussions between the two companies over outstanding debt.
“This is at the back end of both entities going to a round table and aligning on this matter. PetroSA also signed an acknowledgement of debt that was owed, (and) Nako signed that acknowledgement of debt that it owed an amount reaching R830m,” Tyandela said.
She declined to disclose to the committee the exact figure PetroSA believed it currently owed to Nako, citing that the matter was now sub judice.
According to a statement from the CEF on the presentation made to Parliament, the outstanding SARS tax debt amounts to approximately R3.6bn, with approximately R1.5bn in interest and penalties. The CEF statement said a payment proposal had been made to SARS.
The statement also said PetroSA is implementing a turnaround programme focused on cost containment, negotiated payment plans, portfolio diversification, stakeholder engagement, revenue diversification, market-share growth, finalisation of the GTL reinstatement assessment and partnership with South African National Petroleum Company (SANPC).
UMkhonto weSizwe Party (MKP) Member of Parliament (MP), Mzwanele Manyi, questioned why PetroSA executives were unwilling to provide details about the Nako debt dispute, arguing that the matter was already before the courts.
“I do not understand this thing of sub judice when affidavits are public documents. The arguments made by Nako are also in court in the form of an affidavit. Is the board saying that it is better we just wait for their affidavit?
“I believe the only reason we don’t have it is because the date they have set is still coming and we have to wait,” he said.
DA MP James Lorimer questioned the optimism expressed in PetroSA’s presentation, given the company’s recent financial difficulties.
“I find it quite odd because the company has been faced with liquidation twice in the last five months, and it’s a threat taken so seriously that all staff have been communicated with about the threat. It seems the optimism about the future prospects is unwarranted,” he said.
Lorimer said PetroSA’s decisions had left the entity in its current predicament.
“We have seen PetroSA make a series of bad decisions in the last couple of years, for example, its choice of partners in reconditioning the gas plant at Mossel Bay and going on to its dealings with Nako. I think there is cause to doubt that the optimism being displayed is warranted,” he said.
ntsikelelo.qoyo@nationalmg.co.za