The South African National Petroleum Company (SANPC) has begun operations under the umbrella of the Central Energy Fund (CEF) Group, a state-owned diversified energy company reporting to the Department of Mineral and Petroleum Resources (DMPR).

This move, which was delayed by a week from the initially scheduled April 1 launch date, follows a merger of existing SOEs and CEF’s subsidiaries – PetroSA, iGas and the Strategic Fuel Fund (SFF) – into a single company to better manage the country’s oil and gas interests.

The SANPC has become a fully-fledged subsidiary of the CEF after an agreement was reached with organised labour and non-unionised employees of the merging entities on issues related to its launch, as reported by Engineering News.

The establishment of the SANPC is part of broader efforts by South Africa to improve governance, efficiency, and strategic planning and coordination in the energy sector.

The process to create a consolidated national oil and gas company was started by President Cyril Ramaphosa during his State of the Nation Address (SONA) in February 2020, when he announced the government’s intention to repurpose and rationalise SOEs to better support the country’s economic growth and development.

In October 2024, South Africa’s Cabinet approved the submission of the South African National Petroleum Company Bill of 2024 to Parliament. The bill formally establishes the SANPC, but until it becomes law, the company will operate under the CEF’s mandate, based on the CEF Act 38 of 1977 and ministerial directives, according to a February 2025 statement by the Portfolio Committee on Mineral and Petroleum Resources.

The SANPC will initially function under a lease and assignment model, leasing select assets from the merging entities while isolating PetroSA’s legacy liabilities and operational challenges at its gas-to-liquid refinery.

“This approach will improve the financial risk profile for SANPC to secure funding as well as provide a legally sound solution to deal with the constraints associated with the non-profit status of [the] SFF. At the same time, work has begun to attend to the legacy assets, which include the reinstatement of the gas-to-liquids (GTL) refinery and the decommissioning liability methodology and provisioning,” the SANPC said in an earlier statement, as reported by South Africa’s government media agency SAnews.

“Once all the matters relating to these legacy assets are resolved, they would be ready for transfer to the SANPC.”

The SANPC expects that these measures will reduce reliance on imported finished products, improving energy security, boosting the country's balance of payments, and retaining vital industry skills locally.

Under the approved plan to start SANPC’s operations, 402 out of 1,022 employees from the merging companies will transfer immediately. The remaining 620 employees, who work with assets kept separate within PetroSA, will join later, once those assets are improved with support from the SANPC and the CEF as the holding company.

According to the SANPC, with the combined strengths of the three entities, a solid financial position, and stakeholder support, the company is well-positioned to leverage these benefits and seize the ZAR95bn (about $5bn) market opportunity.

“The SANPC would be poised to become a leading player in South Africa's energy sector, ensuring energy security, driving new technologies, developing and enabling essential infrastructure, fostering strategic partnerships, and propelling social and economic development,” the SANPC said.