Banele Ginindza
CHEVRON South Africa has called for legislation governing the import of clean fuels to be implemented as soon as possible to avoid opening the door for importers, who will flood the industry at the expense of refineries that provide local jobs.
In response to a complaint of anti-competitive behaviour filed with the Competition Commission this week by new entrant Burgan Cape Terminals, Chevron said its concerns over imports transcended the hand-to-hand combat it was engaged in with Burgan.
In a statement yesterday, Chevron’s communications manager Suzanne Pullinger said the firm was disappointed with the narrow interpretation of regulation and the relationship between fuel storage and fuel import protection in this specific case.
“The importation of clean fuels must be limited if South Africa is interested in maintaining its local manufacturing capacity. The current regulations, legislated prior to clean fuels imports, do not deal with the transition period the South African fuels industry is facing,” she said.
Chevron maintained that importing clean fuels prior to investing in local manufacturing was set to affect the viability of all domestic refineries, their employees, the industries that support local manufacturers and most importantly, the security of fuel supply in the future.
But Mzwandile Mseleku, the chief executive of Burgan, said: “Chevron’s argument that the refinery will have to close is a red herring to hide its exclusionary conduct and block competition. Existing South African import regulations ensure local production is prioritised over imports, hence protecting the refinery.”
Burgan said permit guidelines indicated that local manufacturing and security of supply should be taken into consideration during the issuing process. Consequently, petroleum products might only be imported if the refinery was short of product or could not produce a particular type of fuel. Otherwise, all fuel distributors in the Western Cape were reliant on Chevron supply.
Fuel efficient
South Africa’s motor industry has been calling for the introduction of Euro IV standard fuel to enable the launching of more fuel-efficient vehicles with environmentally friendly engines.
However, SA Petroleum Industry Association (Sapia) executive director Fani Tshifularo said last year that some of South Africa’s oil refineries would not meet the government’s deadline of producing Euro IV standard fuel by 2017 and outstanding fuel standards and specification issues meant they would have to extend this deadline by a year or two.
Tshifularo said it would cost R39.9 billion to upgrade South Africa’s oil refineries to produce Euro IV standard fuel.
Chevron said while South African government policy promoted local refining, the decision on Burgan went against the spirit of the National Development Plan to “upgrade fuel refineries to ensure they meet new fuel quality standards and insist on larger strategic fuel stocks to ensure security of supply”.
Pullinger said: “Burgan Cape Terminal has publicly indicated that imports are not central to its business case. Therefore, we are confident in the departments of Industry and Energy to update this policy and oversight, to limit excessive imports of cleaner fuels into the country to avoid putting refineries and jobs unnecessarily at risk.”
Mseleku said: “The reality is that Chevron is trying to maintain control of the Western Cape fuel market, block competitors in supply, wholesale and retail, and is holding the country to ransom with a threat of refinery closure.” – Additional reporting by Roy Cokayne