Tag: fuel

Who has our petrol?

Cash-strapped consumers face another hefty petrol hike as The Department of Energy announced on Monday that a litre of 95 octane petrol will cost R14.01 inland and R13.52 at the coast from Wednesday.

And if that is not enough, the Central Energy Fund board chairperson has said that the fund is still busy calculating how much SA lost when 10.3 million barrels from its strategic fuel reserve were sold off in 2015.

The Central Energy Fund (CEF) can not yet say what price SA paid for the controversial sale of 10.3 million barrels of the country’s strategic oil reserves, or who now owns the stock, according to the chairperson of its board Luvo Makasi.

The secret sale by the Strategic Fuel Fund (SFF) – which is a subsidiary of the CEF – took place in December 2015, at a time when oil prices were at a historical low point.

Speaking to Power98.7 radio host Onkgopotse JJ Tabane on Monday evening, Makasi said that the CEF was still investigating the sale.

Bloomberg reported last month that law firm Allen & Overy led an investigation into the sale, which included a recommendation that a financial analysis of the sale be conducted.

But the fact that the analysis was completed by embattled auditor KPMG SA has caused delays in making the report public.

READ: Energy Minister wants assurance on KPMG analysis of oil sale
Minister of Finance Malusi Gigaba last month advised all government departments and entities to review all work done by KPMG to ensure their audit processes had not been compromised.

First rotation, then sale

In March 2016, three months after the sale took place, then-energy minister Tina Joemat-Pettersson claimed in her annual budget vote speech that the fuel had not been sold, but rotated.

“In 2015, we issued a ministerial directive for the rotation of strategic stocks by the Strategic Fuel Fund and this has resulted in the increased revenue base for SFF, whilst at the same time maintaining stocks within our storage tanks for security of supply,” she said at the time.

READ: AG to probe R5bn ‘secret’ oil deal
But earlier this year new Minister of Energy Mmamoloko Kubayi admitted the strategic fuel stock had in fact been sold off.

During Monday’s interview, Makasi also acknowledged the stock had been sold and not rotated.

But he said the CEF board was only involved in the transaction “at the end”, adding the board only got wind of the sale when a “a good amount landed in our (bank) account”.

A loss

Makasi acknowledged the fuel had been sold in a “depressed market” at a time when international fuel prices were low.

“If you look at where the market was at the time the product was sold, you would then have to make an assumption that there would have been a loss.

“But what we are busy with now, is we are trying to quantify what was the actual loss to the state,” he said.

He promised the CEF would “come back to the public” with the full details of what the loss amounted to.

Asked if anyone would be held responsible for the secret sale – which took place without the knowledge of National Treasury – Makasi reiterated that the scale of the losses first had to be established.

READ: MPs demand answers on ‘illegal’ fuel stock sale
“Where there is a loss, the Public Finance Management Act puts a positive implication on the board of CEF and all its subsidiaries to investigate those instances,” he said.

“So there will be consequences. And when those losses are established, there will be consequences on all those involved in the process.”

Makasi appeared to imply that the CEF was also still investigating who bought the oil.

“The stock never left our tanks,” he said. “But the question of ownership therefore, that is what we are busy now debating.

“There was an element of sensation around. (But) was there cause for concern? Yes there was.”

By Jan Cronje for Fin24

Petrol price shock for motorists

Fuel prices are to rise sharply this week, mainly as a result of climbing oil prices and a slightly weaker local currency against the dollar.

The latest information from the Department of Energy on Tuesday (29 August) indicated that the price of gasoline 93 (ULP & LRP) in Gauteng is likely to increase by 57.8 cents per litre next week – Wednesday, 6 September 2017.

The price of diesel with a 0.005% sulphur content meanwhile, is expected to increase by 45.2 cents per litre, said independent economist Fanie Brink.

The economist pointed out that the price of Brent crude oil increased to an average of $51.70 a barrel over the past month compared to an average of $49.50 a barrel in July.

“This increase resulted in sharp rises in the average international price of gasoline by 54 cents per litre and an increase in the diesel price by 41.4 cents per litre,” he said.

The average R/$ exchange rate traded around R13.16 last month and was slightly weaker at R13.22 which resulted in a further increase of 3.8 cents per litre in both the gasoline and the diesel prices, Brink said.

South Africa’s economic woes are expected to continue into the last quarter of the year, according to CEO of Debt Rescue, Niel Roets, who said that all indications are that the rand will continue to weaken in the coming months, which will further increase the fuel price as well as the cost of all imported goods.

“Food inflation is also outstripping general inflation running at about 6.9%. Despite the bumper maize harvest, prices of all grains are actually expected to rise in the short-term because the new harvest prices will only feed through into the economy by next year,” Roets said.

“This (September) fuel price increase is going to hit consumers like a ton of bricks. If current trends continue we could see more of the same in October.”

Here’s what you can expect to pay in September:

Petrol (93) – R13.40
Petrol (95) – R13.63
Diesel – R11.72

Source: BusinessTech

SA’s aging fuel refineries holding us back

BMI Research says SA will become increasingly dependent on imported fuels, as ageing refineries cannot supply the fuels modern cars need.

Allowing the government to set the petrol price once a month is keeping SA’s cars and fuels stuck in the past, BMI Research warned in a note released on Tuesday morning.

SA had to indefinitely delay its plan to introduce Euro V fuel standards in July because the profitability of local refineries is too low for them to recoup the investment required to upgrade their plants.

Since modern cars are increasingly designed to run on the cleaner fuels that SA’s ageing refineries cannot produce, the country’s dependence on imported petrol and diesel will grow.

“Increases to the new vehicle emissions tax last year will promote the sales of more modern and efficient vehicles. However, domestic refining capacity will be unable to meet the demand for higher-quality fuel,” the report said.

“As a result, SA will face a higher import burden for higher-quality fuel. This poses additional headwinds to domestic refiners due to the increasing competitiveness of fuel imports.

“A build-out in global products capacity has lowered the cost of imports, with production centres in Asia and Europe already upgraded to higher standards.”

BMI said one “flash of positivity” was Sinopec’s purchase of Chevron’s 110,000-barrels-a-day Cape Town refinery.

“The more risk-tolerant Sinopec already possesses experience in upgrading refineries to higher fuel standards in China and, whilst the potential investment in a higher-quality product slate is unlikely with Chevron as operator, Sinopec may view the upgrade as a longer-term opportunity within the country,” BMI said.

“However, upgrading existing capacity will nonetheless be expensive, with Chevron previously estimating the cost of upgrading the Cape Town refinery to be around $1bn.”

Source: Business Day

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