No to CEF request for portion of fuel levy

Run SOE’s profitably, or sell and close down.

13/05/2020 13:44:53

                                                                                                                                                                                                                      No to CEF request for portion of fuel levy


                                                                                                                                                                                                                      The Organisation Undoing Tax Abuse (OUTA) strongly objects to the request earlier this week by the Central Energy Fund (CEF) chairperson, Monde Mnyande, that a portion of the fuel levy as well as pipeline and carbon taxes / levies should be diverted to the CEF. From Mnyande’s presentation to Parliament, it is clear that the CEF is motivating for this revenue to salvage PetroSA and other subsidiaries and build a new business case for this failed state owned entity (SOE).  

                                                                                                                                                                                                                      OUTA finds this request absurd and if indeed granted, it would be yet another waste of taxpayers’ money.  PetroSA is in a mess because its prior leadership allowed the entity to slip into a situation of excessive losses, along with other unnecessary political interference. More absurd is the CEF Chairperson statement that the CEF is not looking for a bailout, but instead wants a continuous stream of tax revenues to fund its restructuring. 
                                                                                                                                                                                                                       
                                                                                                                                                                                                                      “What Mr Mnyande is asking for is in fact a direct bailout, and not merely a once off bailout, but a continuous one of around R20 billion per annum, if it manages to hijack 25% of the fuel levy from the fiscus. Even if South Africa was in a healthy financial state, this request should be frowned upon,” says Wayne Duvenage, OUTA’s CEO. “The CEF is a Schedule 2 SOE, which means it is a business enterprise that is required to generate revenue to fund its own operations. As such, it has less government intervention and oversight of its financial management.  It therefore does not deserve the kind of state funding and bailouts that it now seeks.”

                                                                                                                                                                                                                      OUTA believes that the current economic situation calls for government to bring in key private equity partners into PetroSA and other CEF subsidiaries in order to reduce the state’s hold over and meddling in these entities. A mix of equity partners, professional structures and funding mechanisms should enable this SEO to stand on its own feet and stop future requirements for state funding.
                                                                                                                                                                                                                       
                                                                                                                                                                                                                      “The state is generally not good at introducing robust governance, efficiencies and competitive strategies to enable many of it’s business entities to succeed without taxpayer support,” says Duvenage.  “For this reason, we question their full ownership of PetroSA. It needs to become a minority stakeholder or close it down. South Africans are sick and tired of the state’s continuous waste of citizens’ hard-earned taxes on inefficient and failed SOE’s who struggle to follow sound business practices,” says Duvenage. 



                                                                                                                                                                                                                      OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.