S.African fuel crisis: Oil companies could owe motorists R60m
In the wake of the continuing fuel shortage in South Africa, Minister of Minerals and Energy Lindiwe Hendricks has called for fuel companies operating in South Africa to reimburse motorists for the payments they receive for storing extra stocks of petrol and diesel, meaning the industry could face a collective payment of about R60-million.
Speaking at a press conference at Parliament on Wednesday, Hendricks said it is "important for the industry to find ways to compensate consumers" -- since part of the basic fuel price reimburses petroleum companies for keeping stock up to 25 days.
"Clearly they have not done so, and this money must be refunded," she said.
South African Petroleum Industry Association (Sapia) director Colin McClelland estimates that the industry receives between R700-million and R720-million per year in payments for storage, comprising 2,5 cents per litre of fuel for stock financing and another 1,3 cents per litre for stock tankage. If the government was to decide that motorists should be compensated for one month's worth of storage, this would cost the industry collectively about R60-million.
The mechanism for repayment could simply be to lower the fuel price by an equivalent amount, treating it as an "over-recovery" in terms of the current monthly basic-fuel-price mechanism, McClelland suggested.
However, Hendricks stressed that so far the government has not yet determined how such a reimbursement could be effected or how much this would amount to.
Sapia represents all of the major petroleum companies operating in South Africa, including Shell, British Petroleum, Caltex, Sasol, Engen and Total, as well as state-owned group PetroSA. Representatives from most of the groups attended Wednesday's press conference.
The minister stated she felt "misled" by the energy companies on Monday, early in the fuel shortage crisis, when she was told by them that there was "no shortage" of fuel. Although this was true at the refineries, where production levels were normal, there were significant problems being experienced throughout the logistics and distribution systems -- at depots and retail service stations -- which the industry had not disclosed.
As a result, she had understated the problem to the public on Monday, assuring them there was not a serious shortage.
"I have been meeting with the petroleum companies to see how they can work together to alleviate the plight of consumers and minimise the impact on the economy," Hendricks said. "These companies have unreservedly apologised to both me and the public at large for the inconveniences experienced."
She said she has personally conducted an investigation into the shortages with the full cooperation of the companies, and has concluded that "there is no long-term fuel shortage in the country".
"The industry representatives have assured me that they are doing everything in their power to safely transport the fuel from the refineries and depots to service stations.
"I would strongly caution the public against trying to hoard fuel, as not only is this extremely dangerous and could result in loss of life and other damage, but it will serve no long-term benefit as the supply of fuel to petrol stations gets sorted out."
Speaking for the industry, Phillip Jordan, head of Total SA and current chairperson of Sapia, explained that most of the current shortage problems are due to panic buying of petrol and diesel across the country, resulting in a jump in demand in December to levels 20% above the daily average demand seen in November.
The country's fuel-supply systems -- pipelines, storage depots and road transport -- are struggling to keep up with such high demand, although all of the refineries are currently meeting this demand in terms of production.
"At the beginning of the week, we underestimated the impact of the extremely high demand on the system -- there are clearly logistics constraints from the refineries to depots and end-customers," he elaborated. "The industry is very aware of the constraints and has put in place extraordinary measures in certain areas of the country and at the key points."
He cited extra road transport being used in certain areas to overcome blockages, as well as extraordinary coastal shipping and imports, with oil imports being due in both Cape Town and Port Elizabeth on Thursday.