Johannesburg, Thursday, 24 October 2024 – The Fuels Industry Association of South Africa is raising the alarm on the persistent issue of diesel adulteration with illuminating paraffin (IP), a practice that escalated rapidly since 2019. This illegal activity has not only resulted in significant financial losses to the fiscus, estimated now at more R3 billion annually, but has also caused equipment failures and market distortions. ​

In response to this ongoing problem, the Association has put forward a comprehensive proposal to tax marked illuminating paraffin at the same level as diesel. ​By applying the full duties and levies applicable to diesel we believe this measure will eliminate the economic incentive for unscrupulous operators to continue this practice. ​This approach has the potential to bring the illegal adulteration of diesel to a halt.

Our proposal also includes provisions to mitigate the impact on indigent households who rely on paraffin for heating and cooking by recycling the revenue from this taxation back to these households through the South African Social Security Agency grant system.​ This ensures that the most vulnerable members of our society are not adversely affected by the increased cost of paraffin. ​

We are urging the Minister of Finance to seriously consider our proposal. Implementing this taxation policy has the potential to recover billions of rands for the fiscus, funds that are currently being lost due to the illegal blending of IP into diesel. This recovered revenue can be used to support essential public services and infrastructure projects.

The Association believes that this approach will not only curb the illegal adulteration of diesel but also ensure that the state recovers the duties and levies rightly due. It is a practical and effective solution that addresses both the economic and social dimensions of this issue. We call on all stakeholders, including policymakers, industry players, and the public, to support this initiative. Together, we can put an end to this illegal practice and ensure a fair and equitable market for all.

Johannesburg, Thursday, 10 October 2024 – The supply of aviation kerosene is facing a severe threat due to regulatory delays in the licensing of import storage facilities. Without immediate intervention, a fuel shortage could disrupt operations at O.R. Tambo International Airport and other airports, which include King Shaka International
Airport.

The industry’s concerns arise from the fact that under the Customs and Excise Act, 91 of 1964 (the Act), the import of aviation kerosene into dedicated storage facilities is subject to stringent licensing conditions. Following the termination of operations at Durban refineries, the South African Revenue Service (SARS) insisted during 2023 that affected parties should license their facilities in terms of the Act. In the interim, SARS granted temporary, time bound licensing for the importation of aviation kerosene. The affected parties set about applying for the permanent licensing of their facilities which was completed in February of this year. Another time-bound licensing arrangement had to be provided, set to expire later in October. However, more than six months later, SARS has yet to finalize the permanent licensing of these facilities, despite previously indicating that the process could be completed in a much shorter time frame.

Without immediate action to either extend the temporary arrangements or issue permanent licenses, South Africarisks a severe aviation kerosene supply shortage to O.R. Tambo and King Shaka International Airports and other airports directly supplied from Durban. Local companies cannot be expected to import without regulatory approval and the regulatory uncertainty places the planning and the economic supply of aviation kerosene under pressure. This also has ramifications for the airline industry, who will take steps to avoid potential stock outs by cancelling scheduled flights, inconveniencing passengers and causing serious doubt about the local reliability of airline traffic due to the unreliability of aviation kerosene supply.

The industry’s stance is clear, the Act must be urgently revised to align with modern industry practice, taking into account the requirements to protect the fiscus and the significant changes that have happened in the industry over the past few years. Current regulatory constraints, as a consequence of the Act, make it increasingly difficult to sustain local business or allow new entrants into the market. The Fuels Industry Association of South Africa urgently calls on the Minister of Finance to instruct SARS to extend temporary licenses for at least 12 months or until the necessary permanent licensing is finalised to avert a supply crisis.