By PAUL VECCHIATTO

South Africa needs to restructure a project to build what may be the sub-Saharan region’s refinery because the finances of the state-owned oil company in charge of the plan are weak, according to the government.

The 300,000 bpd Mthombo “refinery is needed and the location is right, but the project needs to be restructured by the government” because PetroSA doesn’t have the balance sheet to support it, the energy department's deputy director-general Tseliso Maqubela told lawmakers in Cape Town on Tuesday.

Mthombo, which would be South Africa’s largest refinery, would raise South Africa’s total processing capacity of 703,000 bpd by 43%. PetroSA’s loss widened to about 15 billion rand last year after the biggest impairment yet recorded by a government company. 

Its chairwoman Nonhlanhla Jiyane quit in July, a month after CEO Nosizwe Nokwe-Macamo and chief financial officer Lindiwe Mthimunye-Bakoro were suspended because of the company’s poor performance.

PetroSA is planning the facility in Port Elizabeth with China Petroleum & Chemical Corp. as diesel and gasoline imports rose on the back of economic expansion, with demand exceeding local refinery output for the first time in 2007.

South Africa’s fuel stocks have ranged from about 10,1 million bbl to 10.5 million bbl, enough for 20 days, Strategic Fuel Fund chief operating officer Mfano Nkutha told lawmakers.