A strong push for transformation by the South African Airways (SAA) Board to involve smaller players in the jet fuel procurement space was a bad idea. This is according to the Head of Fuel management at SAA Mark Vaughan, the second witness to take the stand at the Commission of Inquiry in State Capture, underway in Parktown, Johannesburg.
In 2016, the SAA Board wanted to get more black business involved in the jet fuel procurement space. However, buying fuel from the smaller players cost more than procuring 100% directly from oil major producing companies with refineries like BP and Shell.
The Board set aside 15% jet fuel procurement from emerging businesses. The decision allowed oil major companies to give SAA 85% of jet fuel and 15% was reserved for smaller companies.
“Would it not be cheaper for SAA to get 100% of the fuel from the majors?” asked Advocate Kate Hofmeyr who led the evidence.
“Of course, most definitely chair, because the small companies will be purchasing that fuel from the oil majors and I believe the prices that SAA gets from the oil majors, the oil majors would not be able to give any further discount to a small-owned entity and they would have to put a mark to cover their costs and to make profit.”
Alleged corruption and fraud at SAA and SA express have been at the centre of the commission’s hearings for the past two weeks.
On Monday, the Commission heard how companies operating as cash delivery entities facilitated money laundering.
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