This is the latest development in the evolution of the SANPC Bill, a draft of which was initially published in the Government Gazette on 13 November 2023, with the public having been invited to submit comments on the draft bill by 15 January 2024. The current iteration of the SANPC Bill, which is to be introduced in the National Assembly, and which was made available on 14 October 2024, can be accessed here.

This alert focuses on some of the important aspects of the SANPC Bill and illustrates the anticipated next steps on its road to enactment.

Objectives of the bill and the SANPC

The main purpose of the SANPC Bill is the establishment of the new South African National Petroleum Company (SANPC) which is to become the State’s energy champion and stakeholder across the energy value chain.

In addition to the overarching goals of supporting economic development and the Just Energy Transition, the role of the SANPC as the State’s energy champion in more practical terms means:

managing the State’s participation in upstream petroleum rights and activities;

being involved broadly in the acquisition, generation, manufacture, marketing and distribution of energy, and

providing for storage and distribution of petroleum products.

Notably, the version of the SANPC Bill to be tabled in Parliament excludes certain objectives, related to the facilitation and provision of energy and petroleum infrastructure and the provision of renewable energy, that were contained in the initial draft published on 13 November 2023. This is likely reflective of the DMRE having taken industry’s submissions on the draft bill into account regarding concerns that the mandate of the SANPC should not overlap with those of other state-owned entities (for example, Eskom’s mandate in regard to the generation of any electricity, including nuclear and renewable energy).

A lease and assign model

One of the most important aspects of the SANPC Bill is that it gives effect to Cabinet’s decision of 10 June 2020 to combine certain functions and consolidate and transfer certain assets of the Petroleum Oil and Gas Corporation of South Africa (PetroSA), South African Gas Development Company (iGas) and Strategic Fuel Fund Association (SFF).

Through Clause 12, the SANPC Bill seeks to implement the consolidation and transfer of assets and rights held by iGas, PetroSA and the SFF (all of which are subsidiaries of the Central Energy Fund) to the SANPC. In addition, the transitional provisions of the SANPC Bill provide broadly that:

• employees of these subsidiaries on the date that the act takes effect must be transferred to the service of the SANPC; and
• all assets, rights, liabilities and obligations which vest in those companies on the date that the act takes effect, pass to the SANPC.

However, while the operational particulars of this consolidation and transfer have yet to be fully disclosed, it was announced in September that in the interim, and in anticipation of the date on which the SANPC Bill will be enacted and take effect, the SANPC is to be incorporated as a subsidiary of the Central Energy Fund. A “lease and assign model” will then be used, so that certain assets of PetroSA, iGas and the SFF will be leased to the SANPC.

The way forward for the SANPC Bill

Given that the SANPC Bill is currently tagged as a Section 75 Bill not affecting the provinces, we can expect it to follow the process illustrated below:

A long road awaits the SANPC Bill, and the CDH Oil and Gas team will keep a keen eye on developments as this important bill makes its way through Parliament.