ONO submission: SA National Petroleum Company (SANPC) Bill

Introduction and Standing

…This submission is made from that vantage point of communities and organisations whose constitutional rights, livelihoods, and ecological commons are directly implicated by the Bill’s practical consequences. Our overriding concern can be stated simply: the Bill creates a powerful new state instrument for expanding petroleum exploration and production, without correspondingly robust safeguards for governance integrity, fiscal prudence, climate coherence, environmental justice, or the meaningful participation of the communities who will bear the first and most direct consequences of its activities. The Bill proceeds on assumptions about the continued expansion of oil and gas that are increasingly at odds with contemporary climate science, South Africa’s domestic climate obligations, and the rapidly evolving global energy transition. It creates an institutional framework for long-term investment in petroleum development without requiring decision-making to be aligned with the best available scientific evidence on climate risk or with the imperative of avoiding further fossil fuel lock-in.

We set out our concerns below under twelve thematic headings, each concluding with specific questions we respectfully request the Committee to put to the Department of Mineral and Petroleum Resources (“the Department”) during its deliberations, and to require to be answered on the record as part of the legislative process.

2. Governance, Accountability and Political Independence

The Bill vests substantial powers in the Minister as shareholder representative, including the appointment of the Board and oversight of strategic direction. South Africa’s recent history with state-owned entities–most exhaustively documented in the Judicial Commission of Inquiry into Allegations of State Capture–demonstrates with great specificity how politically influenced board appointments, procurement processes, and strategic investment decisions become the principal vector through which public institutions are captured for private or factional benefit.

We do not believe the Bill, as currently framed, contains safeguards adequate to this risk. A requirement that the Minister follow “a fair and competitive selection” process for Board appointments is necessary but plainly insufficient on its own; it does not specify independent vetting criteria, fit-and-proper standards enforceable by a body other than the Minister, conflict-of-interest disclosure obligations, or a mechanism by which Parliament–rather than the Executive alone–can scrutinise and, where warranted, veto appointments.

2.1 State ownership is not, in itself, a safeguard

We raise this point because state ownership is sometimes presented, including in some public commentary on the Bill, as though it were self-evidently a corrective to the failures of private extractive capital. We do not accept that inference. The central question is not who owns the petroleum value chain, but what specific accountability architecture governs the exercise of that ownership, and whether ordinary South Africans–and especially the coastal communities most exposed to SANPC’s upstream activities–have any meaningful democratic purchase on its decisions. On the evidence of the Bill as introduced, that purchase does not yet exist.

2.2 Questions for the Committee:

• Q1. What governance analysis informed the decision to consolidate strategic petroleum functions within a single state-owned company governed by a ministerially appointed Board?
  
• Q2. Why does the Bill concentrate extensive discretionary authority over petroleum investment, commercial decision-making and strategic asset management in a single institution without creating correspondingly stronger mechanisms for independent oversight?
  
• Q3. What specific safeguards–beyond a general requirement of “fair and competitive selection”–exist in the Bill to prevent political interference in Board appointments, procurement decisions, and strategic investment decisions?
  
• Q4. Which specific recommendations of the Judicial Commission of Inquiry into Allegations of State Capture have been incorporated into SANPC’s governance framework, and which have not, and why?
  
• Q5. What mechanisms allow ordinary South Africans, workers, and affected coastal communities–as distinct from the Minister and the Board–to exercise meaningful oversight of SANPC’s strategic direction?

3.Fiscal Sustainability and the Protection of Public Capital

The Bill establishes the South African National Petroleum Company (SANPC) through the consolidation of PetroSA, the South African Gas Development Company (iGas), and the Strategic Fuel Fund. While administrative consolidation may improve organisational efficiency, it does not resolve the underlying financial weaknesses of the entities being merged. PetroSA alone has accumulated billions of rand in operating losses, impairments and legacy liabilities over the past decade, raising important questions about the financial condition of the assets and obligations that SANPC will inherit.

The more fundamental question before Parliament is whether the information before it is sufficient to satisfy the standards of accountable, transparent and efficient public administration required by section 195 of the Constitution and the financial governance principles reflected in the Public Finance Management Act 1 of 1999. Without independent financial analysis and full disclosure of long-term fiscal risk, Parliament cannot meaningfully discharge its constitutional oversight responsibilities.

The Bill proceeds on the assumption that expanding state participation in the petroleum sector is financially desirable, yet Parliament has not been presented with the financial analysis necessary to independently assess that proposition.

3.1 No demonstrated economic case for SANPC

The Bill authorises a state-owned company to undertake substantial long-term petroleum investments without requiring Parliament to consider whether those investments represent the most efficient use of scarce public capital. There is no indication that the Department has undertaken an independent financial due diligence or asset valuation of the entities being consolidated, nor that it has completed a comprehensive cost-benefit analysis of SANPC itself.

Equally absent is any evidence that projected investment in petroleum exploration, production and associated infrastructure has been assessed against alternative public investments capable of advancing South Africa’s energy security and economic development, including renewable electricity generation, transmission infrastructure, energy storage and demand-side management.

These omissions are particularly significant given independent financial commentary suggesting that South Africa’s offshore petroleum economics are marginal. Commercial breakeven prices for new domestic production have been estimated at approximately US$70 per barrel, ^[1] while international oil prices have frequently traded below that threshold in recent years.^[2] At the same time, declining domestic refining capacity, uncertain feedstock availability and substantial capital requirements for refinery upgrades further weaken the economic rationale for major new public investment in the petroleum sector.

Absent transparent economic analysis, Parliament cannot determine whether SANPC represents a financially rational investment or whether comparable public expenditure could produce greater economic and social returns through lower-risk energy alternatives. In the absence of independent financial due diligence, comparative cost-benefit analysis and transparent disclosure of long-term liabilities, it is difficult to see how Parliament can satisfy itself that the establishment of SANPC accords with the PFMA’s principles of economy, efficiency and responsible stewardship of public resources.

3.2 Parliament has not been shown the State’s full fiscal exposure

The Bill is similarly silent on the full extent of the State’s financial exposure arising from SANPC’s proposed activities. While establishing the company creates the institutional vehicle for expanded petroleum investment, it does not explain how the significant enabling infrastructure required to support that investment—including pipeline networks, storage facilities, refinery upgrades and the proposed conversion of coal-fired power stations to gas—will be financed.

These questions are particularly important given the existing financial pressures facing public institutions such as Eskom and other state-owned enterprises. Without a transparent financing model, Parliament cannot determine whether future capital requirements will ultimately be borne by the fiscus or transferred to taxpayers through guarantees, bailouts or other forms of public financial support.

Nor has Parliament been presented with scenario modelling demonstrating SANPC’s projected fiscal exposure under differing assumptions regarding oil prices, exploration success, delayed production, accelerated energy transition, or declining global petroleum demand. Such analysis is essential to informed legislative oversight.

3.3 Principal categories of public financial risk

The establishment of SANPC gives rise to several distinct categories of financial liability that extend well beyond the ordinary commercial risks associated with petroleum operations.

• 3.3.1. Inherited liabilities. SANPC will assume the assets and liabilities of existing state-owned entities, including PetroSA’s legacy financial obligations. Consolidation may improve administrative coordination but does not extinguish existing debts, impairments or contingent liabilities. Parliament should therefore be satisfied that the financial condition of all transferred assets and liabilities has been independently assessed and transparently disclosed.
• 3.3.2. Exploration failure. Petroleum exploration is characterised by exceptionally high commercial uncertainty. Most exploration licences do not result in economically recoverable reserves, yet substantial expenditure is incurred irrespective of outcome. If SANPC assumes a greater upstream role, Parliament should understand how unsuccessful exploration costs will be funded and whether those losses ultimately fall upon the public purse.
• 3.3.3. Stranded assets. Petroleum infrastructure is designed to operate over several decades. However, changing market conditions, technological developments, climate policy and declining global demand may render assets uneconomic long before the end of their anticipated operating life. The Bill contains no requirement that SANPC assess or publicly disclose stranded-asset risk before committing public capital to long-lived petroleum infrastructure.
• 3.3.4. Environmental liabilities. Petroleum operations create financial obligations extending beyond commercial production, including environmental remediation, contaminated-site rehabilitation, spill response and compensation for environmental damage. Where financial provisioning proves inadequate, these obligations may ultimately become liabilities borne by the State.
• 3.3.5. Decommissioning obligations. International experience demonstrates that plugging wells, removing offshore infrastructure, restoring affected environments and undertaking post-closure monitoring can amount to billions of rand over the life of petroleum developments. The Bill contains no clear framework for ensuring that adequate financial provisioning is maintained throughout the operational life of projects to meet these long-term obligations.

Taken together, inherited liabilities, unsuccessful exploration, stranded assets, environmental rehabilitation and decommissioning obligations create the possibility that commercial petroleum risks may ultimately be socialised through the public purse. Parliament should therefore require considerably greater transparency regarding SANPC’s long-term financial exposure before approving the proposed institutional framework.

3.4 Fiduciary governance requires life-cycle financial accountability 

The Bill should also be assessed against contemporary principles of fiduciary governance applicable to state-owned enterprises managing significant public assets. Effective governance requires more than sound operational management. Consistent with the governance framework established by the PFMA, the Board of a major state-owned enterprise entrusted with significant public assets should be subject to clear statutory duties to identify, quantify, disclose and manage material financial risks over the full life cycle of petroleum projects.

These risks include climate-transition risk, stranded assets, contingent liabilities, decommissioning obligations, environmental remediation costs and long-term post-closure monitoring. International experience with comparable national oil companies demonstrates that failure to incorporate these obligations into investment decision-making can expose the State to significant long-term financial liabilities that only become apparent after substantial public capital has already been committed.

The Bill presently contains no explicit obligation requiring SANPC’s Board to undertake such life-cycle financial assessment nor to publicly disclose the assumptions underpinning major investment decisions. Parliament should therefore consider whether additional statutory safeguards are necessary to ensure that future petroleum investments are subject to transparent financial governance and full public accountability.

3.5 Questions for the Committee

• Q6. What independent financial due diligence, asset valuation and assessment of contingent liabilities has the Department undertaken in relation to the consolidation of PetroSA, iGas and the Strategic Fuel Fund into SANPC? 
  Will that information be made available to Parliament?
  
• Q7. Has the Department undertaken a PFMA-compliant comprehensive economic and cost-benefit analysis demonstrating that establishing SANPC represents a more efficient use of public resources than equivalent investment in renewable energy generation, electricity storage, grid expansion and related infrastructure? 
  If so, will that analysis be tabled before Parliament?
  
• Q8. What is the Department’s projected fiscal exposure arising from SANPC’s activities over the next five to ten years under both a central, low-oil-price, delayed-production, and accelerated energy-transition scenarios?
  
• Q9. What is the projected public cost of the enabling infrastructure required for SANPC’s mandate—including pipelines, storage facilities, refinery upgrades, and the proposed conversion of coal-fired power stations to gas—and how are these investments intended to be financed?
  
• Q10. Has a stranded-asset risk assessment been conducted for SANPC’s planned upstream and midstream investments, modelling scenarios in which global oil and gas demand declines materially faster than current planning assumes?
  
• Q11. Does the Bill impose any explicit obligation on the Board to identify, disclose, and manage climate-related financial risk, contingent liabilities, decommissioning liabilities, and long-term environmental obligations as part of its fiduciary duties, consistent with internationally recognised financial disclosure frameworks? 
  If not, why was such obligations omitted?
  
• Q12. Will taxpayers ultimately bear financial responsibility for losses arising from unsuccessful exploration, prematurely stranded infrastructure, environmental rehabilitation or decommissioning costs?
  If so, through what statutory mechanism and subject to what financial limits?
  
• Q13. Has the Department assessed the potential economic impacts on coastal communities, fisheries, tourism, and related sectors arising from spills, leaks, or other petroleum-related incidents?
  What compensation mechanisms would apply should such losses occur?
  
• Q14. Will Parliament receive annual reports on SANPC’s financial performance that go beyond standard SOE reporting requirements, including detailed disclosure of exploration write-offs, impairments, contingent liabilities, decommissioning provisions, environmental rehabilitation funds, and the financial assumptions underpinning major capital investments?

4. Strategic Fuel Security and Energy Security Claims

The Committee should distinguish between petroleum security and energy security. Expanding state participation in the petroleum sector does not necessarily improve overall energy security if equivalent or greater resilience could be achieved through investment in renewable generation, storage, grid modernisation, energy efficiency or demand management.

4.1 Defining and Measuring Energy Security

One of the principal justifications advanced for the establishment of SANPC is the enhancement of South Africa’s energy and fuel security. We accept that ensuring secure and reliable energy supplies is a legitimate constitutional and economic objective.

However, energy security encompasses considerably more than ownership of petroleum assets or the maintenance of strategic fuel reserves. It also depends upon the diversity and reliability of supply, resilience to geopolitical disruption, affordability, infrastructure availability, operational flexibility and the ability to withstand prolonged market volatility.

The Bill does not define how these outcomes will be measured, nor does it establish objective benchmarks against which Parliament can assess whether SANPC is in fact improving South Africa’s long-term energy security.

4.2. Questions for the Committee

• Q15. What minimum strategic fuel reserve targets will SANPC be required to maintain, expressed in days of national consumption cover, and on what evidence were these targets determined?
  
• Q16. How will Parliament independently verify that strategic fuel reserves remain physically available, operationally accessible and capable of being deployed during a disruption/ emergency, rather than existing only as accounting assets?
  
• Q17. What assessment has Government undertaken of the long-term impact of international oil and gas price volatility on SANPC’s ability to provide secure and affordable energy supplies?
  
• Q18. What contingency planning has been undertaken for prolonged supply disruptions arising from armed conflict, sanctions, shipping interruptions, cyber-attacks or failures of critical energy infrastructure?
  
• Q19. To what extent does SANPC’s long-term business model depend upon imported petroleum products, imported liquefied natural gas or foreign upstream production, and how does this affect South Africa’s strategic energy independence?
  
• Q20. Given South Africa’s increasing reliance on gas from northern Mozambique, what assessment has Government undertaken of the security risks associated with continued political instability, infrastructure disruption and cross-border supply interruptions?
  
• Q21. Have scenario analyses been undertaken to assess the consequences of significant delays to domestic gas production, including Brulpadda and Luiperd, and what alternative energy pathways have been identified should these developments not proceed on schedule?
  
• Q22. Has Government modelled whether equivalent investment in electricity transmission, renewable energy generation, storage and demand-side management would provide greater improvements in South Africa’s energy security than equivalent investment in petroleum infrastructure?

5. Performance Targets, Accountability and Measurable Performance Indicators

The Bill establishes SANPC with broad objectives that include strengthening South Africa’s energy security, increasing state participation in the petroleum value chain and operating on commercially sustainable principles. While such objectives are common in enabling legislation, the Bill contains no measurable statutory performance indicators against which Parliament can evaluate whether these objectives are being achieved.

Without clearly defined benchmarks, parliamentary oversight risks becoming dependent on SANPC’s own reporting rather than independent evidence. Given the scale of the anticipated public investment, financial exposure and strategic importance of the company, Parliament should require objective, transparent and independently verifiable performance measures that distinguish between commercial growth and genuine public benefit.

5.1 Questions for the Committee:

• Q23. What objective, measurable and independently verifiable indicators will Parliament use to determine, over five-, ten- and twenty-year reporting periods, whether SANPC has materially improved South Africa’s energy security, as distinct from merely expanding its asset base, revenues or commercial footprint?
  
• Q24. What statutory key performance indicators (KPIs) will SANPC be required to meet, and will these be incorporated into the Bill or accompanying regulations rather than being determined solely through internal corporate planning?
  
• Q25. Which independent institution will be responsible for auditing SANPC’s performance against these indicators, and how will Parliament ensure that oversight is not dependent solely on reports produced by the Department or SANPC’s Board?
  
• Q26. What measurable public-interest outcomes—including reductions in energy costs, improvements in security of supply, job creation, emissions performance, fiscal returns, and local economic development—will Parliament require SANPC to demonstrate over five- and ten-year reporting periods before its strategy can be regarded as successful?

5.2 Commercial and Technical Performance Indicators

Commercial viability should not be assumed. Parliament should require independent verification of the principal assumptions on which SANPC’s long-term business model depends before significant public resources are committed.

Such verification should include reserve certainty, projected domestic demand, throughput requirements, financial assumptions and market forecasts, all of which should be subject to independent technical and financial review.

5.3.Questions for the Committee

• Q27. What independently verified evidence demonstrates that recoverable petroleum reserves are sufficient to support the infrastructure and investment assumptions contained in SANPC’s long-term planning?
  
• Q28. Has an independent assessment been undertaken to verify projected domestic demand for natural gas, including expected demand from Eskom, industry and other major consumers?
  
• Q29. What minimum throughput levels are required for proposed gas infrastructure to remain commercially viable, and what evidence demonstrates that these levels can realistically be achieved?
  
• Q30. Will the financial, geological and market assumptions underpinning SANPC’s business model be subjected to regular independent audit and public reporting?

5.4. Market and Commercial Risks

Significant uncertainty remains regarding the commercial foundations of South Africa’s proposed gas economy. Reserve estimates remain uncertain, long-term domestic demand has not been conclusively demonstrated, and several anticipated sources of supply remain commercially or geopolitically uncertain.

As SANPC will inherit PetroSA’s assets, liabilities and commercial functions, Parliament should satisfy itself that historic operational and financial weaknesses have been adequately addressed before consolidation.

The Portfolio Committee on Mineral Resources and Energy’s Oversight Visit to PetroSA (2 December 2020) identified significant structural concerns, including the commercial viability of the gas-to-liquids operating model, high fixed operating costs, declining cash flows, operational inefficiencies and uncertainty regarding future feedstock. Parliament should be satisfied that these legacy risks have been resolved rather than transferred to SANPC.

Parliament should require clarification regarding:

• 5.4.1. whether the Brulpadda and Luiperd discoveries are likely to reach commercial production within projected timeframes;
• 5.4.2. the implications of continuing instability affecting gas production and transport infrastructure in northern Mozambique;
• 5.4.3. the extent to which South Africa’s Gas Master Plan depends upon future supplies that remain uncertain;
• 5.4.4. confirmation of committed public and private sector off-take agreements;
• 5.4.5. Eskom’s anticipated future demand, procurement strategy and financial capacity to purchase gas at projected prices; and
• 5.4.6. water requirements for upstream petroleum production and processing, including identification of water sources and cumulative impacts in water-constrained regions.

Without independent verification of these assumptions, there is a material risk that SANPC could invest in infrastructure that is underutilised, commercially uncompetitive or ultimately becomes a stranded public asset.

5.5 Questions for the Committee

• Q31. What evidence demonstrates that the operational, governance and financial challenges previously identified at PetroSA have been satisfactorily addressed, and will not simply be transferred into SANPC?
  
• Q32. What governance reforms have been implemented to ensure stable executive leadership and institutional continuity?
  
• Q33. What evidence demonstrates that SANPC has secured sufficient market confidence to attract investment and commercially viable off-take agreements?
  
• Q34. What proportion of SANPC’s assets are at risk of becoming stranded under South Africa’s Climate Change Act and international decarbonisation commitments?
  
• Q35. What assumptions have been made regarding future carbon pricing, methane regulation and declining global demand for fossil fuels and export market demand?
  
• Q36.What measurable public benefits will justify the fiscal risks assumed by taxpayers?

6. Public Participation and Strategic Planning

The Committee should also consider whether the strategic planning underpinning SANPC has been informed by sufficiently inclusive public participation. For example, the Strategic Environmental Assessment undertaken for the proposed national gas pipeline network involved consultation in only a limited number of locations, raising questions regarding whether potentially affected communities throughout South Africa had meaningful opportunities to participate in decisions that may shape the country’s future energy infrastructure.

6.1. Questions for the Committee:

• Q37. Does the Committee consider that the public participation undertaken for strategic planning associated with the national gas programme has been sufficiently inclusive, and if not, what further consultation should occur before major public investment decisions are taken?

7. Competition and Market Distortion

SANPC is empowered to participate in exploration, production, refining, storage, marketing, aggregation, and trading–effectively across the full petroleum value chain, in direct competition with private operators in several of these segments. Where a state entity participates commercially in a market while operating within a regulatory framework administered by the same executive authority, the risk of preferential treatment, whether real or perceived, becomes a matter of institutional design rather than isolated administrative conduct.

This risk is particularly significant where access to strategic infrastructure, licensing decisions, state financing or procurement processes may materially influence commercial competitiveness. Even in the absence of actual preferential treatment, Parliament should ensure that the governance framework provides sufficient safeguards to maintain public confidence in the integrity and neutrality of the market.

7.1. Questions for the Committee:

• Q38. What legal and institutional separation exists, or will be created, between SANPC’s commercial activities and the State’s regulatory, licensing and constitutional functions to ensure that, where SANPC holds a commercial interest in a petroleum project, regulatory decisions remain independent and free from actual or perceived conflicts of interest or preferential treatment?
  
• Q39. How will government ensure that SANPC competes with private operators, including international majors and other market participants, on equal commercial terms?
  
• Q40. What safeguards prevent SANPC from receiving privileged access to pipeline capacity, port infrastructure, regulatory approval timelines, public financing, or other state-controlled strategic assets relative to private competitors?
  
• Q41. Has the potential impact of SANPC on competition within South Africa’s petroleum sector been independently assessed, and if so, will that assessment be made publicly available?

8. Transparency of Strategic Partnerships

The Bill empowers SANPC to enter into concession agreements with foreign governments and strategic partners, and to acquire interests across the value chain. 

International experience demonstrates that large petroleum transactions involving state-owned enterprises require particularly robust transparency and oversight mechanisms. Their technical complexity, commercial confidentiality and long-term fiscal implications can make it difficult for Parliament and the public to determine whether agreements represent value for money and serve the national interest.

We note that concession agreements signed by SANPC with other states may extend beyond ordinary commercial contracting and may have strategic, fiscal, and foreign-policy consequences for South Africa’s position in global energy markets. 

We are concerned that the Bill does not appear to require enhanced parliamentary oversight for agreements of this character.

8.1. Questions for the Committee:

• Q42. Will all major joint ventures, farm-outs, and concession agreements entered into by SANPC be publicly disclosed, including counterparties, financial terms, and carried-interest arrangements, on a regular and itemised basis?
  
• Q43. What parliamentary oversight mechanism applies specifically to concession agreements or strategic partnerships entered into with foreign governments or state-linked entities, above a specified financial threshold?
  
• Q44. Does the Bill require SANPC to publish a public, itemised register of all concession agreements, carried-interest holdings, and offtake guarantees on an annual basis? If not, why has such a transparency mechanism not been included, given that it would directly address well-recognised governance risks associated with state-owned petroleum enterprises?

9. Climate Alignment, Carbon Lock-In, and Stranded Assets

The Bill establishes a state-owned company whose primary purpose is to expand and strengthen South Africa’s participation in the petroleum sector. This objective appears to sit in tension with South Africa’s obligations under the Paris Agreement, the United Nations Framework Convention on Climate Change, the Climate Change Act, and the objectives of the Just Energy Transition Partnership (JETP).

9.1 Carbon lock-in

Oil and gas infrastructure—including exploration, production facilities, pipelines, terminals and gas-fired power stations—is typically designed to operate for several decades. Once substantial public capital has been committed, strong financial and institutional pressures arise to continue operating these assets in order to recover sunk costs, even where doing so becomes inconsistent with evolving climate commitments. 

The JET Investment Plan itself recognises this risk by modelling both an unrestricted gas pathway (G0) and a restricted pathway (G1), under which no new gas-fired generation capacity is added before 2031. The Bill does not indicate which of these scenarios SANPC is intended to support.

9.2 Stranded assets and fiscal risk

Global energy markets are undergoing rapid structural change as renewable energy, storage technologies and electric mobility continue to expand. As climate policies strengthen and demand patterns evolve, oil and gas assets face an increasing risk of becoming stranded before the end of their anticipated economic life. Where these assets are owned by the State rather than private investors, the associated financial risks are ultimately borne by the public.

9.3 Climate costs omitted from the economic rationale

The Bill provides no indication that the economic case for expanding South Africa’s petroleum sector incorporates the costs of climate change already being experienced through more frequent droughts, floods, extreme heat, water stress and agricultural disruption. Nor does it require SANPC to disclose its greenhouse gas emissions, climate-related financial risks, or transition planning.

9.4 Questions for the Committee

• Q45. How does the establishment of SANPC align with South Africa’s obligations under the Paris Agreement, the Climate Change Act, its Nationally Determined Contribution and the country’s legislated Peak-Plateau-Decline emissions trajectory?
  
• Q46. Has Government assessed whether SANPC’s planned exploration, production and associated infrastructure could lock South Africa into fossil fuel dependence beyond the period consistent with its national carbon budget, emissions reduction commitments and net-zero by 2050 objective?
  
• Q47. Which JET Investment Plan gas scenario—the unrestricted pathway (G0) or the restricted pathway (G1)—is SANPC intended to support, and has this alignment been formally assessed?
  
• Q48. Has a climate impact assessment been conducted for the Bill itself, and were the projected economic costs of climate change incorporated into the cost-benefit analysis supporting the establishment of SANPC?
  
• Q49. Why does the Bill not require SANPC to publish annual greenhouse gas emissions inventories, climate risk disclosures consistent with recognised international reporting frameworks, and a publicly available transition strategy?
  
• Q50. How does Government expect SANPC to remain commercially viable over the expected life of its investments given global commitments to net-zero emissions by 2050, increasing electrification of transport, and declining long-term demand projections for oil and gas?
  
• Q51. Given the long lead times before domestic gas production is expected, including optimistic projections for Brulpadda, what is the strategic rationale for pursuing gas as a transitional fuel rather than accelerating investment in renewable energy and grid infrastructure?
  
• Q52. Has Government modelled an alternative pathway in which the planned gas allocation within the Integrated Resource Plan is instead met through renewable energy, storage and grid expansion, and compared the economic, employment, emissions and GDP outcomes of these scenarios, including those associated with compliance with the Paris Agreement?
  
• Q53. Has Government undertaken a comprehensive life-cycle greenhouse gas assessment of the proposed gas developments—including methane leakage across the value chain—to demonstrate that they deliver a genuine emissions reduction relative to existing coal-fired generation, and were methodologies such as Greenhouse Gas Return on Investment (GROI) considered alongside conventional Energy Return on Investment (EROI)?
  
• Q54. Has Government assessed the physical climate risks to SANPC’s planned infrastructure—including sea-level rise, coastal erosion, flooding, drought and extreme weather—and how have these risks been incorporated into project planning, financial modelling, climate-risk disclosure and long-term asset management?
  
• Q55. Will Government commit to periodically updating methane leakage assumptions, life-cycle emissions assessments assessments, stranded asset analyses and climate-risk assessments as scientific evidence and climate policy evolve throughout SANPC’s operational lifetime?

10. Constitutional Obligations, Environmental Justice, and Participatory Governance

Section 24 of the Constitution guarantees everyone the right to an environment that is not harmful to their health or well-being, and requires the State to protect the environment, through reasonable legislative and other measures, for the benefit of present and future generations. 

We submit that the Bill creates a state-owned enterprise dedicated to expanding petroleum participation without imposing equivalent, legally binding obligations regarding emissions reduction, climate-risk management, biodiversity protection or environmental justice,  while also providing no explicit mechanism to demonstrate alignment with South Africa’s climate commitments. Parliament should require the Department to explain, on the record, how this asymmetry is consistent with section 24.

Environmental justice requires more than the equitable distribution of environmental harms and benefits. It also requires procedural fairness, meaningful participation in environmental decision-making, recognition of different knowledge systems, and equitable access to environmental information and remedies. These principles are reflected in section 24 of the Constitution, the National Environmental Management Act, and South Africa’s broader constitutional commitment to participatory democracy

10.1. Gendered and care-economy dimensions

Climate impacts associated with continued fossil-fuel development–drought, flooding, water stress–do not fall evenly across South African society. They fall disproportionately on those–overwhelmingly poor, rural, and working-class women–who carry primary responsibility for securing water, food, and household energy, and who absorb the unpaid care burden when pollution or climate disruption increases illness or food insecurity. 

The Bill, as introduced, contains no mechanism for the meaningful participation of women, and particularly rural women in directly affected coastal and exploration-adjacent communities, in SANPC’s decision-making, nor any requirement for gender-balanced representation on its Board or executive structures.

10.2. Participation, consent and whose knowledge counts

The Bill’s institutional design privileges technical, commercial, and managerial expertise in SANPC’s governance and project-approval processes. It gives little formal recognition to the ecological knowledge held by coastal, small-scale fishers, Indigenous and customary-rights holders, and rural communities regarding the land, water, and marine systems within which exploration, drilling, pipeline, and storage activities will occur.

This raises broader questions of procedural environmental justice. Communities that may bear the environmental, cultural and livelihood impacts of petroleum development should be engaged sufficiently early to enable meaningful influence over strategic decisions, rather than only at the project-authorisation stage after major policy choices have already been made.

While South African law does not universally require Free, Prior and Informed Consent (FPIC) for all petroleum developments, Parliament should consider whether projects affecting Indigenous peoples, customary-rights holders and communities whose cultural and spiritual relationships with land and the ocean are directly implicated should incorporate FPIC principles, or demonstrably equivalent standards of meaningful, informed and participatory decision-making.

10.3. Strategic planning and biodiversity

The Committee should also consider whether strategic environmental planning has been sufficiently robust to support the expansion of the petroleum sector. The Strategic Environmental Assessment (SEA) undertaken for aspects of South Africa’s gas infrastructure has been criticised for its limited geographic scope of public participation and its inability to substitute for detailed, site-specific environmental assessment.

Similarly, the Bill contains no explicit recognition of biodiversity corridors, ecological connectivity or cumulative ecosystem impacts. Given South Africa’s internationally significant marine and terrestrial biodiversity, Parliament should consider whether SANPC should be required to demonstrate that its activities avoid or minimise fragmentation of critical biodiversity corridors and are consistent with national biodiversity conservation objectives.

10.4 Extraction, development and the question of whose model

The Committee should consider whether the Bill’s underlying development model differs substantively from earlier extractive arrangements or principally in the identity of the entity that owns and directs the extraction. 

State ownership of a petroleum company is not, without more, evidence that the communities and ecologies bearing the costs of extraction will be treated differently than they were under privately-owned extractive regimes. The relevant question is not only who owns the resource, but whether the underlying relationships of decision-making power, consultation, and benefit-distribution have actually been transformed.

10.5. Questions for the Committee:

• Q56. How does the creation of SANPC, and the expansion of petroleum participation it enables, satisfy the State’s section 24 constitutional duty to protect the environment for present and future generations, given the absence of equivalent statutory obligations on emissions reduction and climate-risk management?
  
• Q57. Has the Department assessed how climate change resulting from continued fossil-fuel development disproportionately affects women, particularly poor, rural, and working-class women, including through increased unpaid care burdens arising from water scarcity, food insecurity, or pollution-related illness?
  
• Q58. Why does the Bill not require gender-balanced representation on SANPC’s Board and executive structures, and what mechanism, if any, ensures meaningful participation by women in directly affected communities in SANPC’s project-approval processes?
  
• Q59. How will Indigenous knowledge, local ecological knowledge and the environmental stewardship practices of coastal, rural and customary-rights communities be formally incorporated into SANPC’s strategic planning and project-approval processes, rather than being treated solely as inputs to consultation?
  
• Q60. What measures will ensure that communities directly affected by petroleum development are engaged sufficiently early to enable meaningful participation in strategic decision-making, and under what circumstances does Government consider principles of Free, Prior and Informed Consent (FPIC), or equivalent standards of informed community consent, to be applicable?
  
• Q61. How has the Department addressed the limitations previously identified in the Strategic Environmental Assessment process, particularly regarding the scope of public participation and the assessment of cumulative environmental impacts?
  
• Q62. How will SANPC ensure that exploration, pipeline development and associated infrastructure avoid or minimise impacts on nationally important biodiversity corridors, ecological connectivity and other areas of high conservation value?
  
• Q63. On what basis does Government consider that transferring ownership of extractive activity from private corporations to a state-owned corporation fundamentally transforms the underlying model of resource extraction, rather than primarily changing ownership and control? 
  
• Q64. What evidence demonstrates that expanded state-led petroleum extraction will contribute to equitable and sustainable development, while advancing constitutional commitments to environmental protection, social justice and intergenerational equity?

11. Legislative Response to the Wild Coast Judgment 

In Sustaining the Wild Coast and Others v Minister of Mineral Resources and Energy and Others (2022), the Eastern Cape High Court set aside the offshore exploration right on the basis that consultation with affected coastal and customary communities had been legally inadequate and that relevant constitutional and environmental considerations had not been properly addressed.

The judgment demonstrated that compliance with statutory consultation procedures does not necessarily satisfy the constitutional requirements of meaningful public participation and lawful administrative decision-making.

As SANPC will participate directly in petroleum exploration and production, including through state participation in offshore exploration rights, Parliament should consider whether the Bill adequately reflects the constitutional principles articulated by the Court.

The Bill appears to rely upon the existing regulatory framework under NEMA and the Mineral and Petroleum Resources Development Act without expressly addressing the procedural deficiencies identified by the Court or providing additional safeguards for constitutionally compliant public participation.

Where SANPC holds a carried or direct commercial interest in an exploration right, the State may simultaneously become both a commercial participant and the authority responsible for ensuring lawful, fair and constitutionally compliant decision-making. Parliament should therefore consider whether additional institutional safeguards are required to manage this potential conflict between commercial and constitutional responsibilities.

11.1 Questions for the Committee:

• Q65. How has the Bill been amended to reflect the constitutional principles established in the 2022 Wild Coast judgment, and where are those changes reflected in the text?
  
• Q66. Does the Bill contain any clause requiring SANPC, as a state organ participating directly in offshore exploration and production, to comply with the public participation and consultation standard articulated by the Eastern Cape High Court in the 2022 Wild Coast judgment, or does it rely solely on the existing NEMA and MPRDA processes that the Court found inadequate in that matter?

12. Just Transition, Energy Democracy, and the Direction of Public Investment

South Africa has committed itself, through the Just Energy Transition Partnership and its own Just Energy Transition Investment Plan, to a transition away from fossil-fuel dependence that is explicitly framed as needing to be both rapid and just. 

The central policy question for Parliament is therefore whether the institutional architecture created by the Bill advances or delays South Africa’s long-term transition to a low-carbon, socially just and democratically governed energy system.

12.1 Energy democracy and public ownership

The Just Transition also concerns who owns energy infrastructure, who participates in energy decision-making, who benefits from public investment, and whether communities are empowered to generate and manage energy locally. Energy democracy therefore requires consideration not only of public ownership, but also of decentralised generation, municipal participation, community ownership, worker participation and equitable access to affordable energy.

Renewable electricity systems are, by their physical and economic characteristics, generally more compatible with decentralised ownership and generation—including municipalities, cooperatives, public utilities, independent power producers and community-owned projects—than large-scale petroleum infrastructure, which typically concentrates capital, infrastructure ownership and long-term decision-making within a relatively small number of institutions.

This institutional distinction is significant because decisions taken today about public investment shape governance arrangements, employment pathways and patterns of ownership for decades.

12.2. Institutional lock-in and opportunity cost

The establishment of SANPC represents not only an investment in petroleum assets, but also an investment in institutional capacity, specialised expertise, governance structures and long-term capital allocation. Once established, these institutional commitments may create incentives to sustain petroleum production in order to justify continuing public investment, regardless of changes in technology, energy markets or climate policy.

Parliament should therefore consider the lost opportunity in directing scarce public capital, institutional capacity and policy attention toward expanding petroleum production rather than alternative investments that may provide greater employment, improved energy security, lower emissions and broader public participation.

The Committee should also consider comparative evidence regarding employment creation. Numerous international and South African studies indicate that renewable energy, electricity transmission, energy efficiency and building retrofits generally create substantially more employment per unit of investment than oil and gas development. Parliament should therefore require comparative employment modelling before committing substantial public resources to long-lived petroleum infrastructure.

12.3. Questions for the Committee

• Q67. Is SANPC intended to facilitate South Africa’s transition beyond fossil fuels, or to prolong fossil-fuel dependence under a new institutional form, and which specific clauses of the Bill support the Department’s answer?
  
• Q68. Why does the Bill not require SANPC to develop and publish a statutory transition strategy setting out how its mandate, assets and investment portfolio will evolve as South Africa progresses towards a low-carbon economy?
  
• Q69. What assessment has been undertaken of the opportunity cost of directing public capital, institutional capacity and policy attention towards SANPC, relative to equivalent investment in renewable energy generation, electricity transmission, storage, public transport electrification and energy efficiency?
  
• Q70. Under what economic, environmental or climate-policy conditions would Government determine that SANPC should cease expanding petroleum exploration and production?
  
• Q71. What measurable indicators or statutory triggers would require SANPC to begin reducing its petroleum portfolio in line with South Africa’s climate commitments and changing energy markets?
  
• Q72. How will Parliament ensure that SANPC’s institutional structure does not create long-term incentives to maintain petroleum production solely to sustain the company’s assets, revenues or organisational mandate, rather than because continued production remains in the national interest?
  
• Q73. If, in ten or twenty years’ time, renewable energy, storage and electrification demonstrably provide South Africa with greater energy security, lower costs, higher employment and lower emissions than petroleum, what statutory mechanism will enable SANPC’s mandate to change accordingly?

13. Closing Statement

We recognise that the stated objective of strengthening South Africa’s energy security and consolidating fragmented state petroleum assets may, in principle, be a legitimate legislative purpose. 

The question before Parliament is ultimately whether the Bill provides a sufficiently accountable, evidence-based and future-oriented framework to justify creating a National Petroleum Company. 

We respectfully urge the Committee to treat this as the central test of the Bill, and to amend it accordingly before it is reported to the House.

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^[1] Mills, E., 2022. South Africa sees offshore sector viable at $70/bl. The Argus.

^[2] van Rensburg, D., 2015. Our refineries must be upgraded to produce cleaner fuel-Who will pay? City Press.