TUESDAY, 10.30AM
The system of government subsidies to Mossgas and SA oil companies needs a fundamental review, according to auditor-general Henri Kluever in a special report tabled in Parliament on Monday.
Kluever described as possibily unreasonable the huge payments made to Mossgas from the Equalisation Fund, financed by levies on retail fuel sales, which enabled Mossgas to provide cheap fuel to oil companies.
At the heart of the “unreasonableness” lies a 1993 Cabinet decision that local oil companies would pay Mossgas the in-bond-landed-cost (IBLC) for its product. However, the oil companies refused to pay IBLC and opted instead to pay the lower Africa Netback (ANB) price. It was agreed that the difference between IBLC and ANB would be poaid to Mossgas from the motorist-funded Equalisation Fund, so long as the local oil industry was a net exporter of Mossgas-type product.
However, it was also agreed that as soon as the local industry became a net importer it would pay Mossgas the IBLC.
According to Wally van Heerden, co-author of the auditor-general’s report, the local oil industry might have been a net importer of Mossgas-type product for some time now, but the Equalisation Fund continues to pay Mossgas subsidies as if the industry was still an exporter.
It follows, said Van Heerden, that SA oil companies might owe Mossgas, and indirectly SA’s motorists, hundreds of million of rands. However, added Van Heerden: “The exact amount owed to Mossgas could not be calculated because the oil comnpanies refused to open their books to the auditor-general.”