Cape Town - South Africa's biofuels funding incentive is being revamped over concerns that it is unaffordable after a halving of global crude oil prices over the past year, officials said on Tuesday.
A net importer of crude, Africa's most advanced economy wants biofuels initially to meet 2 percent, or around 400 million litres, of the country's annual fuel consumption to wean itself off oil imports and improve the trade balance.
However, regulatory uncertainty centred on financial support incentives to manufacturers has choked investment since the approval of a national biofuels strategy in 2007.
“There is a fiscal risk posed by the subsidy under the circumstances of a declining crude oil price,” said Ompi Aphane, deputy director general of energy policy and planning.
“The extent of the subsidy increases tremendously because of the low prevailing price, because the model works much better at very high crude prices,” he told Reuters.