Update

MOSSEL BAY NEWS -  The South African Revenue Service's (Sars) move to attach PetroSA's Mossel Bay refinery over a multi-billion-rand tax debt threatens to accelerate a major economic contraction across the Garden Route.

This is according to Dr Dennis Farrell, the managing advisor of the Business Café in George.

Farrell said PetroSA's remaining workforce, contractors and secondary businesses contribute significantly to local rates, service charges and commercial activity, and that a shutdown or liquidation scenario is likely to fast-track declines on property valuations, business viability and household incomes.

On 2 December, Parliament's Portfolio Committee on Mineral and Petroleum Resources heard from the PetroSA executives that Sars representatives had visited the refinery on 25 November to discuss plans for it to honour its R4.5b debt.

The briefing was live-streamed on the Parliament of the Republic of South Africa's YouTube channel.

A letter from Sars was sent to PetroSA following its visit to the refinery, stating that in absence of payment, Sars would attach the refinery to recover the amount.

The refinery in Mossel Bay. Photo: Chelsea Pieterse

PetroSA executives said, however, the refinery's book value is R340m, an amount that falls far below the R4.5b owed to Sars.

The portfolio committee heard that the amount owed to Sars derives from the clearing and movement of product when it is sold in Mossel Bay. PetroSA claims while it has declared this, the payments have not gone through.

PetroSA added that about 70% of its operating cost is dedicated to the care and maintenance of assets that are currently not operating. The executives also said beyond the debt to Sars, PetroSA also owes some of its product suppliers.

The committee also heard that the com-pany's liabilities totalled R20b and that its total assets are valued at R13b.

Nombulelo Tyandela, PetroSA's CFO, told the committee that Sars had also informed her that if the refinery's assets are attached, PetroSA will still be allowed to operate, but the product cannot be transferred to anyone.

Local economic shock expected

Speaking about the refinery's possible seizure, Farrell said the effect on Mossel Bay would be the immediate risk of a direct decline in municipal revenue.

"This decline comes at a time when Mossel Bay has already taken on increased debt obligations for infrastructure, water security and capital projects," said Farrell. 

"Reduced revenue combined with rising borrowing costs will force the municipality to rely more heavily on ratepayers to stabilise the budget, through future tariff increases, accelerated debt recovery and tightened credit control."

He said for residents, this would mean higher service charges, stricter cut-off policies, and reduced affordability - especially as local employment opportunities decline.

"Vulnerable households may fall into arrears, increasing indigent pressure and shifting more of the financial burden onto paying ratepayers."

Farrell added that if the refinery's at-tachment leads to long-term disruption of operations, it would result in material delays in IDP execution, underfunded infrastructure commitments, weakened spatial development prospects and regional socio-economic strain.

PetroSA's Xolelwa Ntlango told the committee that the refinery is not in operation due to low feedstock, adding that the longer it remains inoperative, the more the cost to reinstate it grows. She said PetroSA could not reinstate the refinery on its own, and when it does start operating again, it would have to be in a phased approach.

Ntlango said the timeline to have the refinery partly reinstated would extend into 2027.

Farrell said although there will be short-term pain and stress, he believes the solution, whether fantasy or fact, will be for politicians to stand back, to allow the private sector to re-engage with TotalEnergies and others partners and with the Mozambique Government - to expedite gas transfer by sea to Mossel Bay to save PetroSA.

At this stage, the Mossel Bay Municipality has no comment on the statements made. 

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