Johannesburg, Thursday, 13 March 2025 – The Fuels Industry Association of South Africa (the Association) expresses deep concern over the Minister of Finance’s failure to address the taxation of illuminating paraffin in his 2025 Budget Speech on 12 March 2025. Despite multiple engagements with National Treasury, including formal proposals submitted in January and February this year, no mention was made of this issue, which continues to cost the fiscus billions of rands annually.

The illegal adulteration of diesel with untaxed paraffin remains a significant compliance challenge in South Africa’s fuels market. Estimates indicate that in 2024 alone, the practice resulted in a revenue loss of approximately R3.5 billion, with cumulative losses since 2021 nearing R13 billion. Yet, the state remains unable to effectively curb the illicit trade.

The Association has been advocating for the taxation of marked illuminating paraffin at the same level as diesel to remove the financial incentive for fuel adulteration. Under our proposal, tax receipts from paraffin sales would be recycled back to SASSA grant recipients, ensuring a cost-neutral outcome for vulnerable consumers. Taxing illuminating paraffin would not only close a major tax loophole but also allow the state to recover lost revenue without placing additional burdens on indigent households.

In a meeting held on 16 January 2024, the Association expressed its concerns, and officials confirmed that they would assess the proposal and revert with feedback. However, despite repeated follow-ups, no formal response has been received.

“The taxation of illuminating paraffin is not just about revenue, it is also about fuel quality, compliance, and ensuring that consumers obtain fit for purpose product. Without urgent intervention, the illegal adulteration of diesel will continue to undermine legitimate businesses, cheat consumers, cause breakdowns and deprive the state of much-needed revenue,” says Avhapfani Tshifularo, Chief Executive, Fuels Industry Association of South Africa. “The Minister’s silence on the matter in yesterday’s Budget Speech represents a missed opportunity.”

The Fuels Industry Association of South Africa calls on the Minister and National Treasury to prioritise this issue and engage with industry stakeholders on a solution that protects both the fiscus and South African consumers.

At the same time, the Association welcomes the Minister’s recognition of the challenges surrounding the movement and storage of fuel products. The fuel industry in South Africa has increasingly shifted from local manufacturing to importing refined petroleum products, including petrol, diesel, illuminating kerosene, and aviation kerosene. Companies importing fuel levy goods have highlighted difficulties in transporting these products, particularly aviation kerosene through the national multi-product pipeline.

The Association supports SARS’ proposed review of fuel industry legislation to align regulations with industry changes and facilitate the movement and storage of fuel products. Addressing these logistical constraints is critical to ensuring fuel security and efficiency within the sector.

“We remain committed to working with the government to implement practical, enforceable solutions that strengthen compliance in the fuels market,” Tshifularo concludes.

Johannesburg, Thursday, 16 January 2025 – The Fuels Industry Association of South Africa, in collaboration with its stakeholders, including Transnet and the Airports Company South Africa (ACSA), is actively implementing measures to mitigate potential supply disruptions of jet fuel and other petroleum products to O.R. Tambo International Airport (ORTIA) and to the general market.

This follows report of a fire at the Natref refinery on 04 January 2025, which necessitated the shutdown of the Crude Distillation Unit (CDU) and other key processing units. We have been informed that repairs and assessments are ongoing, and the CDU restart date is estimated to be 21 February 2025.

Current jet fuel stocks at ORTIA are sufficient to meet demand until 24 January 2025. However, tightness in supply remains a concern, and if planned mitigation measures are not fully implemented, airline delivery disruptions may occur from 01 February 2025.

To address these challenges, the Association and its members have implemented several mitigation measures. These include the injection of 26,000m³ of jet fuel from Durban, with the first 9,500m³ scheduled to arrive on 21 January 2025 if all goes according to plan. We are also set to increase rail deliveries from Durban and Matola in Mozambique, with additional capacity allocated to ensure sufficient supply. Additionally, Transnet Freight Rail (TFR) has loaded 109 jet fuel tankers for ORTIA this week ending 19 January 2025.

The Fuels Industry Association of South Africa’s Chief Executive, Avhapfani Tshifularo, stated, “We are facing a challenging situation, but we wish to assure stakeholders that the Fuels Industry Association and its members are committed to maintaining fuel availability and minimising disruptions. We are working tirelessly to coordinate efforts and implement robust measures to ensure continuous operations at O.R Tambo International Airport and across the country.”

The jet fuel suppliers have also engaged airlines to reduce demand wherever possible to help manage stock levels during this critical period.

The safety of operations and the availability of fuel remain the Associations top priorities. Further updates will be provided as the situation evolves.

Fuels Industry Association of South Africa Standardises Cylinder Deposit Fees to Streamline Industry Practices

Johannesburg, Thursday, 31 October 2024 – The Fuels Industry Association of South Africa is pleased to announce a significant step forward in the standardisation of cylinder deposit fees across the liquefied petroleum gas (LPG) sector. Following an approach to the Competition Commission, the Association has secured approval to implement uniform deposit fees for LPG cylinders, marking a milestone that will benefit both the industry and consumers.

South Africa’s LPG sector currently uses a hybrid cylinder model whereby in some instances, consumers purchase the cylinders themselves and refill them as needed through authorised refillers. In other cases, consumers pay a once-off deposit on a cylinder and then exchange the empty cylinder for a refilled one, paying only for the LPG. This exchange model can continue indefinitely, with the LPG wholesaler responsible for maintaining the cylinder’s integrity.

The LPG industry has long advocated for uniform and cost-reflective cylinder deposit fees to facilitate the exchange model, and this decision by the Competition Commission allows the industry to take a vital step forward. By using an independent third party to collate data on cylinder procurement costs, a fair deposit fee for each class of cylinder was determined and approved by the Competition Commission. This approach is expected to streamline the exchange process and establish a fair, more cost reflective deposit. It encourages investments in new cylinders by all marketers, supporting a more efficient cylinder exchange program that promotes investment and much needed industry growth.

The table below provides the deposit fees per class of cylinder, as approved by the Competition Commission:

“This landmark approval underscores the Association’s commitment to transparency and efficiency within the LPG sector, aligning with the Fuels Industry Association’s mission to foster a balanced and consumer-friendly marketplace,” said Avhapfani Tshifularo, the Executive Director of the Fuels Industry Association of South Africa.
“While the new standardised fees may result in increased deposit fees for new LPG consumers based on cylinder size, by introducing standardised deposit fees for each cylinder size category, we hope that this will reduce barriers to cylinder exchanges and ensure a more seamless experience for consumers across South Africa,” he concluded.
The Association encourages all stakeholders to prepare for a sector-wide adoption of the standardised deposit fees by 18 November 2024, as part of its ongoing commitment to optimising services and reinforcing industry growth.

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.

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.