AG raises alarm over future of PetroSA, Necsa

Wednesday, February 13, 2019

There is material uncertainty whether PetroSA, Necsa and Pelchem, can continue to operate, the Auditor General (AG) of South Africa said on Tuesday.

The AG was briefing the Portfolio Committee on Energy on the Department of Energy and its entities’ audit outcomes for 2017/18.

“One key concern identified by the AG within PetroSA is debtor’s collection periods, which have increased, putting a strain on cash flows. Another concern is the continued weak crude oil prices during the current year.

“Regarding Necsa, the AG said its liabilities exceed its assets, and adverse liquidity ratios with cash flows have been forecast for the next financial year.

“Meanwhile, Pelchem continues to make losses, has adverse solvency and liquidity ratios and is significantly dependent on Necsa,” the portfolio committee said in a statement.

The Department of Energy received a qualified audit opinion, as the department did not include all irregular expenditure in the notes of the financial statements.

Committee chairperson Fikile Majola said the issues identified by the AG should be addressed before Parliament rises.

“What is evident is that the outcomes of the audit opinion reflect deeper problems in the operations of the entities and in their business models,” Majola said.

Members of the committee have requested the AG to provide a summary of key elements the committee should concern itself with relating to the entities.

The committee will meet with the department on 26 February. -