I will today be writing to the Minister of Energy, Dipuo Peters, to advise her on how government could prevent further fuel shortages. As with a large number of crises of this nature, it was reasonably foreseeable and therefore preventable.

The Democratic Alliance (DA) has been informed that the primary reason for nationwide fuel shortages is attributable to fuel suppliers not maintaining a consumer buffer supply stock.

Government must take responsibility for its failure to table proposed legislation which would ensure that 28 days of crude and 21 days of fuel supply were ensured through onshore, state-managed storage facilities.

Fuel shortages entail significant costs for ordinary consumers and businesses. Government must make every effort to prevent Eskom-type blackouts of our fuel supply.

In the absence of legislation, fuel stocks remain regulated by nothing more than an informal ‘gentlemen’s agreement’ whereby fuel companies maintain a 2-week stock. However, the incentives for companies to adhere even to this agreement are non-existent.

The DA recommends that the Minister consider the following steps:

·          Legislate immediately that a 28-day stock of crude oil, and 21-day stock of refined fuel, be kept on South African soil at all times. The legislation should avoid the temptation to charge a storage levy on the back of legislated minimum storage requirements.

·          Together with the Fuel Retailers’ Association (SAFRA), government should provide a regulatory framework which reduces transaction costs for fuel companies and incentivises them to contribute to security of supply.

·          Create a regulatory mechanism, overseen by an independent body that ensures a minimum level of capacity-functionality at all of South Africa’s refineries. This body should have similar powers to NERSA.

These steps carry benefits that far outweigh the costs. Fuel shortages and price hikes have a devastating effect similar to that of electricity blackouts.

Nationwide fuel shortages are becoming a preventable norm in South Africa. Government needs to be more proactive than it has been if we are to deal with this problem once and for all.
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