The Democratic Alliance (DA) calls on Minister of Mineral Resources and Energy, Gwede Mantashe, to inform the country of the challenges facing the petroleum sector as our economy gradually re-opens.
According to information received from the South African Petroleum Industry Alliance and others, South Africa faces a shortage of diesel over the next few weeks. The increase in economic activity has absorbed the surplus that was on hand at the start of the lockdown.
Minimal refining capacity is online, and there is very limited imported stock arriving on our shores. As at the end of last week, 3 of South Africa’s 6 refineries had yet to restart operations, 2 were in limited production, and the PetroSA facility had halted production temporarily due to product contamination and pipeline failures. This means that diesel is likely to be rationed for the foreseeable future.
Of particular concern is the fact that South Africa’s strategic fuel reserves are not able to meet demand – due primarily to mismanagement, a lack of clear policy and the political machinations of the ANC government.
Given the lengthy lead time to procure, ship, offload and distribute fuel stock, it makes sense to hold sufficient reserves in the country to offset any potential supply chain interruptions (as has been the case now). The 2013 Draft Strategic Fuel Stocks Policy (which was never adopted) endeavours to ensure the uninterrupted supply of petroleum products throughout the country. At that time, it was estimated that fuel supply shortages would cost South Africa R1 billion per day in lost economic opportunities.
One of the requirements of the policy was that, over and above the stocks held directly by Government, licenced manufacturers and wholesalers of petroleum products would be obliged to hold 14 days of refined products as strategic stocks. But again, that policy was never adopted.
It is time for Minister Mantashe to come clean about the state of South Africa’s fuel supply for the next two weeks, and that he urgently addresses the fact that our strategic fuel reserves are, to all intents and purposes, worthless in this time of crisis. South Africa urgently needs to pay attention to its policy in this regard. We cannot continue to ignore the elephant in the room, in the hope that it will go away.
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