South Africa’s Cabinet on Thursday approved the merger of three state-owned oil and gas firms to form a single national oil company, as it tries to cut debt by reducing the number and increase the competitiveness of state-owned firms.

South Africa’s state-owned enterprises (SOEs) are a major drain on public finances with almost all of them either heavily loss-making, bankrupt or stuck in a debt spiral.

President Cyril Ramaphosa has in the past stressed the need to fix the country’s SOEs, including power utility Eskom and South African Airways (SAA).

PetroSA, which runs the Mossel Bay gas-to-liquid refinery and explores for petroleum reserves, gas development company iGas and the Strategic Fuel Fund (SFF) which manages fuel reserves, will be merged to form the National Oil Company, the Cabinet note said.

PetroSA, which had once been a money-spinner, is struggling with dwindling domestic gas stock at its Mossel Bay refinery is counting on a new Total oil and gas discovery offshore.

PetroSA reported a net loss of R2.08 billion and debt of R1.917 billion for the financial year 2018/2019.

A restructuring company will be appointed to investigate the most viable model of the new National Petroleum Company, government said in a statement.