The Maritime Business Chamber (MBC) has sounded the alarm that South African Revenue Service’s (Sars) impounding of five vessels providing bunkering services offshore of Gqeberha may lead to ships no longer refuelling at South Africa and an entire industry that is also providing opportunities for small, medium and micro-enterprises (SMME) may be lost.
MBC chairman Nathi Sonti said in a letter to the government on Friday that to support their concern, “as things stand between today 13 September 2023 and 24 September there are about 31 vessels lined up for bunkers that cannot be supplied by a single operator at South African ports for bunkering”.
Despite a meeting with Sars on August 23, Sars had apparently “not noted the impact of its actions which talks to business’ left unsustainable with losses due to vessel detention and the fact that South Africa’s bunkering capability and position may be obliterated to the world”.
He said the Department of Transport (DoT) through the South Africa Maritime Safety Authority (Samsa) had engaged the industry and Sars for an amicable solution.
“Detention of vessels is not in itself unfair, but the aim is to establish a fact. The detention is not meant to be indefinite and has thus become unfair.
“While not responding to the ruling applications, Sars has through its detention of vessels, paralysed the business, and made South Africa unattractive,” he said.
Sars said in a statement, however, it has been conducting investigations around compliance in fuel bunkering, aside from normal tax activities, and the detention of the vessels was part of this probe.
The four bunker tankers and an oil drilling ship are connected to Minerva Bunkering Marine Services and TFG Marine. The bunker tankers are anchored in Algoa Bay, while the drill ship is at Port Nqura.
Sars said the vessels were detained “in the normal course of investigating… Sars is of the view that the detention is lawful and, as the investigation is ongoing, no decision to seize such vessels has been taken”.
Sars Commissioner Edward Kieswetter said in a statement: “Sars is obliged to administer the law fairly, without fear, favour or prejudice and to conduct investigations in a responsible manner in accordance with a fair procedure. Sars has no interest in jeopardising economic growth nor of contributing to the problem of unemployment, poverty and inequality.”
Sonti said shipping was critical for export and import activities.
About 30 000 vessels sail along the coast each year and about 13 000 vessels visit South African ports annually. Bunker replenishment is critical in the operation of ships, and bunkering provided an economic opportunity for SMME suppliers of services to the ships.
In 2016, the first offshore bunkering operations were launched in Nelson Mandela Bay with Aegean Marine Petroleum Network deploying their bunkering vessel MT LEFKAS, as well as registering the tanker which now flies the South African flag to revitalise the bunkering business that had until then seen a long decline due to port capacity and other constraints.
Offshore operations do not put pressure on the limited port infrastructure capacity and also attracts shipping traffic that would ordinarily have bypassed South Africa.
Located within a few miles of heavily trafficked international shipping lanes, the bunkering operation sees about 2 million tons of bunker fuel sold annually. The facility had led to an increase in SMME activity, such as three bunker barge operators employing 151 seafarers, an increase in Off Port Limit Boat Operators from five to nine, among others, said Sonti.
Sonti said the industry had complied and previously subjected themselves to audits by Sars.
Sars told them recently though that “all vessels, including barges, used for these purposes in the territorial waters, should be formally imported in order to conduct such work, except in certain circumstances in respect to foreign going vessels… and that any petroleum products imported and thereafter ‘off-loaded’ within the territorial waters of the country, must be dealt with and declared for customs purposes... any petroleum products to be exported and ‘on-loaded’ in the territorial waters, had to be dealt with and declared for customs purposes”.
“This action resulted to Sars detaining vessels without providing a decision and not considering lodgement of security to minimise disruptions to business, coupled with conflicting written instruction than to that of its actions,” said Sonti.