The Democratic Union says it is urgently seeking answers from the national government on the state of South Africa’s fuel reserves following a crippling strike in Transnet this week. before. As the strike ended, the party said ports and transport networks had experienced major disruption and fuel industry players warned the country was dangerously close to a supply crisis. fuel due to the lack of availability of refined fuel reserves.
Transnet workers returned to work on Friday, October 21, but the group warned it would take weeks to process the immediate backlog, with analysts predicting activity would not return to normal until early 2023.
South Africa is struggling with a fuel crisis even before the strike begins, with airports warning about jet fuel allocations and the power company Eskom have sounded the alarm about its ability to supply enough diesel for its generators.
Much of the country’s imported fuel goes through the port of Durban, which Kevin Baart, head of strategic and regulatory projects at the South African Petroleum Industry Association (Sapia), says is close to full capacity. , after several refineries closed. country and its growing reliance on imports.
He told News24 that pipeline networks would struggle to cope with increased imports, “jeopardizing fuel supplies to South Africa’s domestic economic hubs”.
Of the six refineries operating in 2019, South Africa has two, with the third, the Astron Energy refinery, expected to be operational by the end of the year.
The DA notes that South Africa has struggled with fuel supply problems for nearly two decades, with the last major crisis occurring in 2005.
Moerane’s Inquiry into the Crisis fuel incident in South Africa in November/December 2005, the ANC Government failed to implement its strategic recommendation on refined fuel reserves, putting the country at risk of severe fuel shortages. in the event of a severe disruption of the fuel supply chain,” he said.
The party said a 2006 committee found the country did not hold strategic stocks of refined products and recommended that the government review its policy on strategic fuel reserves.
“Through public/private partnerships, the committee recommends that oil companies and synthetic fuel plants be required to maintain commercially prudent levels of refined product inventories. regime. 16 years later, it’s still not done,” he said.
Disruption to refined liquid fuel supplies – due to inadequate port infrastructure, ongoing industrial activity and a shortage of refining capacity – will have far-reaching consequences for economy and social order, he said.
“The immediate impact will be supply chain disruptions, which will significantly limit the productivity of the economy. Consumers could face a food supply crisis as food wholesalers and distributors struggle to get food stocked to where they need it.
Diesel concerns
The freight industry in South Africa has warned of tightening operations due to growing demand for diesel at home and abroad, especially as countries Europe must turn to other fuel sources to welcome winter. .
Diesel prices are surging in Europe and the United States, triggering a fresh round of inflationary pressures ahead of a winter that is expected to see major supply disruptions, Bloomberg reported.
This is the biggest price increase in several months, heralding a winter where Europe in particular will face supply shocks as it tries to cut out fuels produced in Russia. Industrial consumers who substitute oil for natural gas – whose prices have skyrocketed since the start of the war in Ukraine – are also increasing demand.
“Rising diesel prices are likely to generate even stronger inflationary pressures, especially if current prices continue to spike, adding significant downside risks to demand and increasing the likelihood there is a global recession,” he announced.
Domestic diesel prices are expected to rise to R1.61 in November.
The Road Transport Association says the situation has worsened for many carriers, who are no longer can bear the additional costs.
“Diesel is the fuel used by most transport companies in South Africa; that’s the power that drives our supply chain,” said Gavin Kelly of the association.
“Every time it increases in price, it increases the cost of transporting goods across South Africa. We are very aware that diesel prices are determined by external factors; however, the reality is that whenever prices rise, carriers have to pass on that cost, which they cannot absorb.
