The SAPIA Conference 2024 covered a range of vital themes and topics for the South African energy sector. With insightful discussions from speakers from government and industry experts who make up the energy value chain, attendees gained valuable insights and knowledge-sharing opportunities that helped them stay ahead of the curve in their respective fields.

This premium event, designed by professionals operating at the forefront of the energy landscape in South Africa, provided insight and a unique perspective into the challenges faced by the industry as it transitions into the future. The conference offered attendees the opportunity to network with industry peers and leaders and was aimed at mid to senior level executives.

Johannesburg, Monday, 04 March 2024 – The South African Petroleum Industry Association (SAPIA), extends its warmest congratulations to Advocate Michelle Phillips on her recent appointment as the Group Chief Executive Officer (CEO) of Transnet.

SAPIA has worked very closely with Advocate Phillips during her term as Chief Executive of Transnet Pipelines. Together, we have achieved significant progress in combating illegal tapping of pipelines with the intent to steal fuel. Despite the challenges posed by the COVID-19 pandemic to our industry and specifically to movement between countries – which affected security of supply – Michelle’s leadership enabled the petroleum industry to recover earlier than other industries. Notably, the commissioning of jet-A1 tanks at TPL’s Heidelberg terminal played a crucial role in preventing a major stockout at OR Tambo International Airport, thanks to her decisive leadership.

SAPIA recognises that Transnet plays a pivotal role in the South African economy. Phillips’ appointment comes at a time where – as an industry association representing the collective interest of the South African petroleum industry – the Association is making necessary strides to ensure the security of supply within the Island View Precinct (IVP), seen as a strategic hub for the supply and distribution of petroleum products and chemicals in South Africa.  IVP handles most of the country’s imports of these commodities – serving the major demand markets, which is the country’s economic backbone. The security of tenure at Island View is critical to ensure this security of supply.

SAPIA has been advocating for a fair and transparent process for leases at port facilities, as this will ensure that its members can continue to operate safely and sustainably at all ports in the country. We believe that a clear and consistent leasing framework will provide certainty and stability for members and other port users, as well as attract investment and create jobs in the port sector.

Under Michelle Phillips’ leadership, we believe that the Transnet will continue to thrive and contribute significantly to the nation’s growth.

We look forward to witnessing the positive impact of her tenure as Transnet’s GCEO and wish her every success in this critical role.

17 January 2024, Johannesburg – The South African Petroleum Industry Association (SAPIA) has announced the appointment of Seelan Naidoo as the new Chairperson of the Board of Governors. Naidoo will serve in this role from January 2024 – December 2025. He succeeds Hloniphizwe Mtolo whose two-year tenure ended in December 2023.

Naidoo is the Managing Director and Chief Executive Officer of Engen Petroleum Limited, which has business operations in South Africa as well as six other Sub-Saharan and Indian Ocean markets. He has over three decades of experience within the petroleum industry that spans across refining, sales and marketing, and distribution portfolios. Naidoo previously held the position of General Manager for Engen’s Retail business, after having spent many years as Regional Manager: East Africa, which encompassed seven countries operating in diverse markets with varying regulatory frameworks.

As he steps into his new responsibility, he will lead SAPIA in its drive to meet its key priorities, including the transition to cleaner fuels, facilitate fuel security of supply and championing the Health, Safety and Environment across the industry. Naidoo will provide strategic leadership on the industry’s position on energy transition, and spearhead engagement with legislators and regulators on developing policies that support environmental sustainability. This, while ensuring industry remains economically viable.

The newly appointed Chairperson, who is passionate about people development, will champion the industry transformation efforts to ensure that the industry meets its objectives in support of the country’s drive for inclusive economic participation. Along with economic transformation, he will also promote technical skills development that will ensure a secure talent pipeline for the industry for years to come.

Naidoo says he is honoured to have been appointed to this role during the year SAPIA celebrates its 30-year anniversary. “I look forward to working with SAPIA members to champion the needs of our industry as we chart the way forward. As the industry landscape continues to change, SAPIA’s role is critical in ensuring a sustainable future for all stakeholders and the future of the country,” he adds.

The petroleum industry is a key player in the energy sector, which faces some challenges, and Naidoo believes SAPIA has a critical role to play in supporting the country’s efforts for energy security.

“As we welcome the appointment of the new Chairperson, we would also like to take a moment to thank the outgoing Chairperson for the dedication and hard work,” says Avhapfani Tshifularo, Executive Director of SAPIA. Mtolo’s contributions have been invaluable in successfully driving the industry’s strategic agenda, and we wish him all the best in his future endeavours.

“We are confident that Naidoo will continue to build on the successes of the past and lead the organisation to even greater heights. We look forward to collaborating with the new Chairperson and the Board of Governors to achieve our shared goals,” he concluded.

16 October 2023, Johannesburg –The South African Petroleum Industry Association (SAPIA), the association representing the collective interest of the South African petroleum industry, welcomes the appointment of the inaugural board of directors of Transnet National Port Authority (TNPA).

The South African petroleum industry is a key contributor to the country’s economy and energy security. SAPIA members operate in a highly regulated environment, subject to various legislative and policy frameworks that govern their activities. To that end, SAPIA recognises the vital role that the ports play in ensuring the security of supply, as they are the main gateway for the import of petroleum products and export of other commodities – they need to be efficient, reliable, and competitive to meet the demands of the market.

12 October 2023, Johannesburg – As part of the unwavering dedication of the South African petroleum industry to address climate change, the South African Petroleum Industry Association (SAPIA) is proud to back the government-enforced Clean Fuels 2 initiative for its potential to decrease detrimental tailpipe emissions. The Clean Fuels 2 program, mandated by the Department of Mineral Resources and Energy (DMRE) starting 1 July 2027, directs consumer sales of petrol and diesel with a maximum of 10 ppm sulphur content and imposes stricter limits on some compounds present in petrol, such as benzene, aromatics, and olefins. According to Avhapfani Tshifularo, Executive Director of the SAPIA, “The initiative is crucial for several factors like reducing tailpipe emissions and playing a role in combating climate change.”

25 July 2022, Johannesburg – In response to the gazette published by the Department of Mineral

Resources and Energy (DMRE) of the intention to introduce a price cap or a maximum price for petrol 93 octane, the South African Petroleum Industry Association (SAPIA) says that while the current system to determine fuel prices and adjustments is not flawless, it is a fair and transparent process which is documented, subject to constant review and auditable. Any changes to the present regulatory system should be conducted in a spirit of transparency and on condition that relevant consultations with industry is observed, taking into account the interests of all role players.

5 July 2022, Johannesburg – The South African Petroleum Industry Association (SAPIA) responds to the proposed Fuel Price Deregulation Bill submitted to Parliament. 

Says Avhapfani Tshifularo, Executive Director of SAPIA, “Markets worldwide are experiencing unprecedented high fuel prices brought by the opening up of economies after the pandemic and exacerbated by invasion by Russia into Ukraine. The local fuel price consists of both internal and external factors, the latter of which are linked to the international markets. These constantly move and account for most of the monthly movements in prices and are outside the control of the industry.” 

The Monthly Pricing System, whereby the controlled prices are changed on the first Wednesday of each month, takes account of movements in these external factors. When the various internal factors are adjusted – usually once a year – these movements are also included in the relevant monthly price changes. In a particular region, countries would see similar landed costs for petroleum products with final pump price differences between these countries largely as a result of different taxes.    

“In South Africa, the internal rand-based factors which are in the control of government, remain fixed for a 12-month period. This means that the monthly fuel prices adjustments are a direct result of the external factors which is impacted by the international markets”, says Tshifularo.

While the current system to determine fuel price adjustments is not flawless, it is a fair and transparent process, documented, subject to constant review and auditable. Any changes to the present regulatory system should be conducted in a spirit of transparency and on condition that relevant consultations with industry is observed, taking into account the interests of all role players.

30 June 2022, Johannesburg – In the lead up to the June fuel price adjustment, the South African Petroleum Industry Association (SAPIA) hosted a media round table to explain the mechanics of how fuel prices are determined and what influences the cost at the pump for consumers. The fuel price and its structure has been the topic of public conversation in recent months.  

In April Ministers Enoch Godongwana and Gwede Mantashe announced in a joint statement, the short-term relief measures to address fuel price increases. These measures provided immediate relief to consumers impacted by the rising prices of fuel.

The “two-phase approach” included this temporary reduction in the general fuel levy for April and May and was funded by the liquidation of a portion of the strategic crude oil reserves. SAPIA has been engaging in discussion with the government on the second phase. 

The fuel price in South Africa is regulated by the government and fuel price adjustments are effective on the first Wednesday of the month. The calculation of the new price is done by the Central Energy Fund (CEF) on behalf of the DMRE. 

The calculation of the fuel price in South Africa

The petrol pump price is composed of a number of price elements which include international and domestic factors. The pump price is built off the Basic Fuel price (BFP) which mimics the costs of the importation of a substantial amount of petroleum products into South African.   From this, various duties, levies and allowable margins are added to reach the final pump price for petrol.   Although the diesel retail price is not regulated a wholesale list price (comprising the diesel BFP and various duties and levies) is provided. 

The BFP formula which was implemented in 2003, provides the connection to world markets such that South African prices for liquid fuels are not arbitrarily determined but reflect real world international prices outside local duties, levies and margins. 

The BFP determination starts from the use of spot prices quoted on international markets from certain references as follows; 

• For petrol: 50% Mediterranean/50% Singapore.

For diesel and paraffin: 50% Mediterranean/50% Arabian Gulf.

The cost of shipping and related costs of importing the products into South Africa are then added.  These converted to South African Rands to provide the BFP. 

The pricing system

There are a number of factors that influence the price of controlled petroleum products:

• The external dollar factors which vary from day to day o the dollar price of the product on world markets which is influenced by supply and demand dynamics for liquid fuels – petrol, diesel, jet fuel and LPG. Note products are not directly priced off crude oil although the price of crude oil influences these products
  • The prevailing R/$ exchange rate o The cost of shipping from the deemed supply centres to South Africa.
• The internal, Rand factors which are relatively constant but change on an annual basis o Duties and levies administered by National Treasury o Magisterial Zone Differentials or the cost of transport to supply various magisterial districts from supply points administered by the DMRE
  • Allowable margins on petrol storage, distribution, retail etc managed by the DMRE

The external factors move constantly and account for most of the monthly movements in prices and are outside the control of the industry. The Monthly Pricing System, whereby the controlled prices are changed on the first Wednesday of each month, takes account of movements in these factors. When the various internal factors are adjusted – usually once a year – these movements are also included in the relevant monthly price changes.

Movements in the Rand-based elements which are the internal factors, are subject to government control. The overriding rationale of the control of prices and margins should be to ensure that the various stakeholders in the industry earn fair returns. The returns should be sufficient to encourage investment in the industry, while not being such as to represent over-reward.

While the system to determine fuel price adjustments is not flawless, it is a fair and transparent process, documented, subject to constant review and auditable. SAPIA supports the DMRE in using the current pricing mechanisms and will continue to engage and provide input into any review of this pricing system.

04 May 2022, Johannesburg – The Ports Regulator of South Africa has unanimously decided to stop the eviction and termination of operator licenses at the Dom Pedro facility following hearings that were held on 5 and 6 April 2022.

These hearings came following an appeal lodged by members of the South African

Petroleum Industry Association (SAPIA) to the Ports Regulator against the decision by the Transnet National Ports Authority (TNPA) to require SAPIA members to vacate Dom Pedro at the Port of Gqeberha by the end of April 2022.

SAPIA is not opposed to the decision to relocate the liquid fuels bulk facility from Dom Pedro to a suitable new facility in the region but has maintained that the underlying agreements with the TNPA in respect of the Dom Pedro facility, remain in force until a suitable alternative facility has been commissioned.  

The hearing panel was of the view that the decision by the TNPA to terminate without adequate plans in place for an alternative bulk liquid fuel handling and storage facility, diminishes rather than enhances the objectives of the National Ports Act. 

SAPIA members hold long standing lease agreements with the TNPA in respect of the land and infrastructure currently situated at the liquid fuels bulk storage facility at Dom Pedro. The facility provides critical fuel supply to the Nelson Mandela Bay region and there was no dispute about this fact. 

The impact of an eviction and termination of operational licenses would have:

• affected the jobs and livelihoods of people who work at the Dom Pedro facility;
• affected the security of supply of liquid fuels to the Nelson Mandela Bay region and other regions that are supplied by Dom Pedro;
• significantly increased the cost of doing business in the Nelson Mandela Bay region since petroleum products would have needed to be sourced at extra expense from elsewhere to service customers;
• affected consumers who would have been forced to absorb these costs in the form of fuel price increases in the region; and
• required the sourcing of petroleum products from new supply points that would have entailed significant increased risks associated with the lengthening of supply chains and associated costs.

One of the objects of the National Ports Act includes the development of an effective and productive South African ports industry that is capable of contributing to the economic growth and development in the country.

SAPIA welcomes this decision by the Ports Regulator as this will provide sufficient time for its members to plan a seamless transition of their operations at Dom Pedro, to the new facility at the Coega Special Economic Zone.