The Department of Mineral and Petroleum Resources (DMPR) has confirmed that discussions are under way between PetroSA and the South African Revenue Service (SARS) over a R4.5 billion tax debt that could result in the attachment of PetroSA’s Gas-to-Liquid (GTL) refinery in Mossel Bay.
The confirmation follows disclosures made by PetroSA executives to Parliament in December, during the company’s most recent financial briefing, that SARS had initiated steps to attach the refinery over unresolved customs-duty arrears linked to fuel imports.
In a written response on Friday, the department said PetroSA had formally notified it of the outstanding tax liability but stressed that it was currently observing the situation at arm’s length.
“At this stage, the department does not intend to intervene directly as the issue is being handled by PetroSA’s leadership with support from the CEF Group in accordance with their governance and operational responsibilities,” the DMPR said.
“The department will continue to monitor the situation and remain engaged with both PetroSA and the CEF Group.”
SARS and PetroSA decline public comment
SARS declined to comment on the matter, citing Chapter 6 of the Tax Administration Act of 2011, which prohibits the disclosure of confidential taxpayer information.
PetroSA spokesperson Nonny Mashika similarly said the company would not comment publicly while engagements with SARS were ongoing.
Payment plan discussions under way
Appearing before Parliament late last year, PetroSA Chief Financial Officer Nombulelo Tyandela confirmed that the company was negotiating a payment plan with SARS, noting that part of the tax debt relates to a disputed fuel-supply transaction with Nako Energy.
She acknowledged that SARS had already signalled its intention to hold the GTL refinery as security while discussions continue.
“So we were aware of their intention. We are still in that period of engaging and making sure we go back to SARS,” Tyandela said.
“We indicated that the matter would be taken to the board so that we can finalise a payment plan and regroup to find solutions.”
GTL plant idle, imports sustaining operations
PetroSA’s business is currently sustained through importing finished fuel, storing it at Mossel Bay or alternative facilities, and distributing it to customers in Mossel Bay, Cape Town and limited inland markets.
However, Tyandela told MPs that sales volumes remain below target, with revenue under significant pressure.
“As we rely on imports and selling, the revenue needs to support the upstream base and the GTL plant that is not operational,” she said.
“About 70% of operational costs are currently being spent on care and maintenance of assets just to ensure the bottom line stays positive.”
Liquidity under strain despite cash reserves
Although PetroSA ended March 2025 with R1.6 billion in cash and equivalents at group level and R1.3 billion at company level, Tyandela described the financial position as deeply concerning.
Creditor payments are falling behind, and current liabilities remain unresolved.
The company is also facing a R3 billion shortfall in its legally required rehabilitation fund, which should be maintained at around R10 billion. While the fund has grown from R1.5 billion to R3 billion through money-market investments earning about 8% interest, it remains far below statutory requirements.
Parliament urges government intervention
Chairperson of Parliament’s Portfolio Committee on Mineral and Petroleum Resources, Mikateko Mahlaule, appealed to the department to intervene in the standoff with SARS to stabilise PetroSA.
He said resolving the dispute would help create an enabling environment for the state oil company to focus on its strategic mandate.
PetroSA’s financial position has deteriorated sharply, with current liabilities standing at R9.4 billion at company level and R9.7 billion at group level.
“By October 2025, current liabilities were exceeding assets. We are unable to honour liabilities as they fall due,” Tyandela told MPs.
“Apart from SARS, we owe product suppliers. We depend on traders instead of refiners.”
Uncertain future for Mossel Bay refinery
The potential attachment of the Mossel Bay GTL refinery — a strategic national asset — highlights the depth of PetroSA’s financial crisis and raises fresh questions about the sustainability of the state-owned oil company without urgent structural and fiscal intervention.
