Between December 2015 and January 2016 South Africa’s strategic oil reserves were sold secretly to private companies. The reserves are South Africa's national insurance against catastrophes. The crucial reserves were sold at heavily discounted prices with the option of South Africa buying the oil back at an inflated rate.
The sales were hidden and the buyers chosen without public tenders. In March 2018 the Central Energy Fund went to court to challenge the sales as illegal, in an effort to overturn them. In August 2020, OUTA successfully applying to intervene in the case, supporting the overturning of corrupt sales. In November 2020, the high court overturned the sales due to corruption and failed governance. Sections of that judgment are under appeal.
The sales caused an outcry, as they were secretive, sold virtually the entire reserves without consideration for emergencies, ignored procurement laws, ignored government policy, sold when the market was at an 11-year low, and sold at a significant discount even against those low market prices.
The oil stocks are held and managed by the Strategic Fuel Fund Association (SFF), a non-profit state-owned entity (SOE). The SFF is wholly owned by another SOE, the Central Energy Fund (CEF). Both report to the Minister of Energy, the shareholder on behalf of the government. The reserves are a buffer against emergencies. The SFF manages the reserves and rents out space storage space in its tanks, which covers the costs of managing the reserves.
The sale of the reserves was arranged by the then acting CEO of the SFF, Sibusiso Gamede, with the approval of then Energy Minister Tina Joemat-Pettersson. The SFF and CEF management and boards were not aware of the deals until they were signed.
In November 2020, the Western Cape High Court overturned the sales and, in a complicated arrangement, ordered the SFF to refund certain buyers plus pay some of their additional costs.
In December 2020, the high court granted the CEF and SFF leave to appeal sections of the judgment, including the order to pay additional compensation to CTSA of $22.569m and compensation to Vitol of $105.876m. The order to pay Glencore (an agreement between CEF, SFF and Glencore which was made an order in the November judgment) and the order to repay CTSA was not appealed.