BACKGROUND

1. BACKGROUND CEF (Pty) Ltd was established in terms of the CEF Act (No 38 of 1977) This Act established 3 entities: • CEF (Pty) Ltd • Central Energy Fund and • Equalisation Fund Levies were collected from motorists and paid into the two Funds Monies were used to: • Invest in major capital projects and • Smooth out the petrol price

2. PURPOSE CEF manages defined energy interests for the South African Government and acts as a catalyst for the development of new energy entities.

3. MANDATE CEF was restructured and received a revised mandatein 2001that focused on 3 areas: • Progress renewable energy projects and undertake projects to provide energy to outlying areas. • Assist in a Low Smoke Fuels Project. • Corporate Governance of the CEF Group. • PetroSA was being formed.

4. MANDATE (contd) During December 2003, CEF received an additional mandate: • CEF is to establish an Energy Development Corporation, initially as a division of CEF. • CEF shall fund the activities of EDC to allow them to develop and grow. During October 2004, CEF received another mandate: • To establish a national energy research, development and innovation body (NERI).

5. CEF GROUP STRUCTURE CEF (Pty) Ltd incorp. EDC CEO and Chairperson A Mjekula Central Energy Fund 100% SFF ASSOCIATION CEO – P Coetzee Chairperson – A Mjekula 100% PETROSA CEO – S Mkhize Chairperson – P Molefe 100% Petroleum Agency SA CEO – J Holliday Chairperson – J Rocha 100% iGAS COO – M de Pontes Chairperson – Z Rustomjee 100% OPCSA CEO – P Coetzee Chairperson – A Mjekula 100% NERI 49% Bannietor Mining 30% Süd-Chemie Zeolites

6. FOCUS OF CEF GROUP • Renewable energy • Low smoke fuels • Alternative energy • Oil trading and tank terminal management • Exploration, oil and gas production • Petroleum products • Promoting and marketing offshore and onshore exploration • Gas infrastructure development • Oil pollution prevention and control • Research and development

7. CEF COMMERCIAL PROJECTS Renewable/Alternative Energy (Investment 2005 – 2008) R’m - Low smoke fuel 57 - Solar water heaters 35 - Wind farm 168 - Biogas 27 - Biofuel 164 - Sugar Bagasse 60 - Bethlehem Hydro 8 - Paper & Pulp 15 - Solar Cookers 6 TOTAL 540

8. PetroSA

9. INTRODUCTION TO PETROSA • National upstream and downstream petroleum corporation • International player with African focus • Established 2002 through merger of State oil E&P company (Soekor) 1969 and GTL company (Mossgas) 1987 • Current business • Exploration, oil and gas production • GTL manufacturing - SA • Oil and chemicals trading • Oil terminal and storage

10. MAJOR CHALLENGES • Major cash flow stream of PetroSA under threat as FA/EM gas supply to Manufacturing plant depleted by 2007. • Secure long-term feedstock supply to Manufacturing plant on a commercially viable basis. • Uncertainty exists as to total investment required to secure feedstock for Manufacturing plant. • Expand E& P asset base aggressively. • Due to capital intensive industry and long business cycles, prioritise and pursue projects of critical importance to secure future of PetroSA within available financial means.

11. MAJOR CHALLENGES (CONTINUED) • Financing of projects by utilising strength of balance sheet limited due to short period of secured cash flow generation from current operations. • Lack of acceptable dividend policy to enable pursuance of objectives. • Exchange control regulations not conducive for investment in upstream activities. • Streamlining of internal business processes.

12. WAY FORWARD • Finalise evaluations as to optimal feedstock solution for Manufacturing plant and associated investment required as matter of urgency. • Pursue aggressive growth in E & P asset base, organically and non-organically. • Streamline exchange control and investment approvals in terms of PFMA. • Negotiate and finalise off take agreements with industry. • Agree formal dividend policy with Shareholder. • Evaluate internal processes and procedures to ensure appropriateness and efficient support to core businesses.

13. FINANCIAL PERFORMANCE TO SEPTEMBER 2004

14. Net sales revenue-R2 866m Price Hedging Costs-(R153m) Change in stocks – R13m Other income–R32m Revaluation of Loans – (R184)m Revaluation of CFC’s–R14m Income Statement for the period ending September 2004

15. Summary Gross Revenue Analysisfor the period ending 30 September 2004

16. iGAS

17. iGAS iGas was created by a Cabinet decision and CEF was directed by the Minister of Minerals and Energy to form a company which has the following mandate: • iGas will act as the official State agency for the development of the hydrocarbon gas industry in Southern Africa. • iGas will promote the diversification of energy usage into hydrocarbon gas.

18. iGAS Guiding Principles • iGas will be guided by normal commercial criteria. • Investment decisions cannot rely on state funding or state guarantees other than that from CEF. • iGas may enter into joint ventures from time to time.

19. iGas Projects • Rompco • Company owning the natural Gas pipeline from Mozambique to South Africa. This pipeline of 865km extends from the Temane/Pande gas fields in Mozambique to Secunda in South Africa. Investment Required: Equity: R534 million Guarantees: R550 million The equity will be funded 40% from CEF cash and 60% from loan funding.

20. iGas Projects (contd) • Integrated Liquified Natural Gas(LNG) to Power Project in the Eastern Cape. iGas Investment Required: Approximately: R500 million

21. Petroleum Agency SA

22. HISTORY • Formed as Petroleum licensing Unit division of Soekor 1996. • Established as subsidiary of CEF by Ministerial Directive in 1999. • Appointed as “designated agency” in terms of MPRDA, June 04.

23. ROLE • Promote offshore and onshore oil and gas exploration and production. • Maintain and add value to the national data base. • Receive applications and make recommendations for award of rights and permits. • Monitor all exploration activities. • Review and monitor upstream petroleum related environmental issues.

24. WHY • SA imports >200 000bbls crude /day = R20 billion / year outflow. • Indigenous production will result in significant saving of foreign exchange. • Forecast worldwide shortage of crude = higher crude prices. • A degree of self sufficiency = greater SA Inc growth potential. • Real potential for significant local crude production.

25. PROGRESS • In operation today: • 8 offshore exploration licenses • 3 technical co-operation agreements • Significant upgrading of deepwater oil potential.

26. Main areas of activities

27. SPECIAL PROJECTS • Extended Continental Shelf Claim • World Petroleum Congress • Upstream Training Trust

28. OIL POLLUTION CONTROL SOUTH AFRICA

29. OPCSA BACKGROUND • OPCSA was registered as a section 21 company during 1992 and managed as a department of SFF Association with the function to provide pollution prevention, control and clean-up services within Saldanha Bay harbour facilities. • SFF was at the time engaged in extensive oil trading activities that necessitated pollution control and prevention measures.

30. OPCSA OVERVIEW Ministerial Directive : • To expand the pollution control activities to all ports in South Africa. • Expansion must be done on a cost recovery basis.

31. OPCSA BACKGROUND • From October 2002, OPCSA has operated independently of SFF and has its own Board of Directors. • OPCSA Head Office is based in Bellville. • Itprovides management, insurance and administrative services to the company. • All the non-core activities, such as Human Resources, Finance, Internal Audit and IT is currently outsourced to CEF.

32. VISION To be the partner of choice in the provision of oil pollution prevention and control services in South Africa, Africa and the Middle East.

33. MISSION To provide a cost effective oil pollution prevention and control service in South Africa, Africa and the Middle East that will address all the requirements of all the stakeholders relating to environmental legislation.

34. SHORT TERM OBJECTIVES(Current financial year) • To enter into viable and sustainable agreements with PetroSA and NPA in Saldanha and Mossel Bay. • To conduct a country wide market survey of oil pollution and prevention services. • To develop a marketing strategy that will address the needs identified. • To enter into an agreement with DEAT whereby OPCSA will perform all pollution prevention and control services on DEAT’s behalf. • Investigate possibility to become a (Pty) Ltd Company.

35. MEDIUM TERM OBJECTIVES(2-3 years) • To develop the Mossel Bay base into a regional response basis. • To enter into agreements with all the oil companies operating out of Durban to provide a service in the harbour and at the SBM. • To develop the Durban base into a regional response basis. • To enter into agreements with African oil producing countries whereby OPCSA will perform all pollution prevention and control services on their behalf.

36. LONG TERM OBJECTIVES(3+ years) • To enter into agreements with Middle East oil producing countries whereby OPCSA will perform all pollution prevention and control services on their behalf. • Form international alliances with other players in the field. • Provide training on a regional basis to outside companies.

37. OPCSA OVERVIEW Current Status SALDANHA • Agreement in place with Caltex. • Ad-hoc agreement with PetroSA . • Potential Income of R6,62 million based on providing pollution control services. • The costs of maintaining the Saldanha operation and Bellville head office amounts to R10,84 million.

38. SFF Ogies Facility • Oil used to be stored in 8 mine containers. • OPCSA manages the environmental pollution risk of the facility on behalf of SFF. • Operational Expenses R3.34 million per year. • All Expenses recovered from SFF in terms of a management agreement.

39. SFF Ogies Facility • SFF owns coal mining rights in the Ogies area. • OPCSA responsible to commercialize the coal. • Two contracts have been entered into that will earn SFF ± R170 million over the next 5-8 years. • A coal dump of ± 550 000 tons to be put out to tender soon.

40. MAJOR CHALLENGES FACING THE GROUP • Mossel Bay Refinery feedstock beyond 2008 • Energy Development Corporation • Sustainability • Major expansion in the short term will require CEF to gear its balance sheet optimally • Capital allocation • Winding down of SFF • Hydrocarbon exploration and exploitation • Skills building and retention • Defining the holding company role • Cost cutting

41. THE WAY FORWARD CEF IS ENTERING A PERIOD OF MAJOR EXPANSION • New projects and investments will be identified. • Systems put into place to facilitate best choice of projects for the group. • Funds will be at a premium. • Alternative sources of funding must be sought. • Location and type of funding must be looked at to ensure the best returns on a group basis. • Balance between commercial and developmental projects.

42. RISKS CEF • Loss of capital and dividend income from investment in subsidiaries • Dividend policy • EDC • Availability of financial resources • Lack of commercially viable investments/projects

43. RISKS (contd) PETROSA • Depletion of Gas Reserves in the South Coast • Ageing plant • Refusal by the Oil majors to lift PetroSA product • Loss of technical skills/expertise • Reduction of cash reserves due to reduction in production • Inability to raise financing due to limited life or uncertainty about the future

44. RISKS (contd) OPSCA • Delegation of authority from DEAT and DOT • Acceptance by oil industry • Commercialisation PETROLEUM AGENCY SA • Lack of Hydrocarbon discovery • Loss of exploration data SFF • Environmental risk iGas • Funding of large commercial projects