Load shedding, Water shedding, and Fuel shortage otherwise known as fuel shedding in the South African context. Last week, the Liquified Fuels Wholesalers Association (LWFA) issued a warning that if South Africa didn’t heed the 2006 recommendation of the Moerane Report to maintain 90 days’ worth of strategic stock, there might be a “fuel shortage” in the future.
Peter Morgan, the CEO of the LWFA, stated that it was time for the nation to resolve this issue once and for all in an interview with Business Report last week.
Sixteen years later, the regulator and the major oil companies are still unable to come to an agreement on how much strategic stock they must maintain and how its cost will be covered, according to Morgan.
All of this was done to guarantee that liquid fuels were always offered in sufficient quantities and at reasonable costs.
According to the LFWA, South Africa has no strategic stocks as a result of the recent Transnet wage strike.
He claimed that a discussion about who would pay for the strategic stock, how much it would cost, and where it would be stored was required between the Department of Mineral Resources and Energy (DMRE) and the liquid fuels sector.
According to Morgan, the reason the recommendation wasn’t followed up on was due to a lack of political will.
MOERANE REPORT
According to the Moerane Report, Rod Crompton a visiting professor at Wits , 60% of South Africa’s demand for refined goods was inland rather than on the coast.
Due to this, it would be more logical to keep strategic stocks of refined goods rather than crude oil and to do so somewhere inland as opposed to at the coast.
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Because it was challenging to transport crude oil where it needed to go and because refineries were closing, maintaining strategic stocks of crude oil was challenging.
Two oil refineries in Durban, Sapref, and Genref, recently shut down. The only refinery that can still process crude oil is the Natref facility in Sasolburg. With these closures, a looming fuel shortage becomes a real possibility.
It makes little sense for South Africa to hold a lot of crude oil because it imports about 60% of the refined goods it requires.
Strategic stocks, according to him, are a way to ensure that supplies won’t run out in order to avoid a fuel shortage.
According to Crompton, he is unaware of the location of the actual stock of crude oil, whether it has been returned to the Saldanha Bay storage facility, or whether the SFF is in possession of that crude oil.
Gwede Mantashe, South Africa’s minister of minerals and energy, stated that the country had 10 million barrels of strategic crude oil on hand in April.
According to Crompton, the government sold some strategic crude oil stocks worth R6 billion and used the proceeds to reduce the cost of gasoline and diesel after Russia invaded Ukraine this year, which led to an increase in the price of oil and petroleum products.
The government hasn’t specified how much more crude oil has been reduced as a result, he claimed.
Is there a shortage of fuel in South Africa?
The Chief Executive Officer of PetroSA, Sandisiwe Ncemane, stated that as of right now, the only two refineries that are operational in South Africa are because many of the other refineries have closed down over the years. She states that the fuel refinery shortage places the country at high risk for massive fuel shortage.