South Africa could potentially be facing fuel shortages within the next few weeks as a result of the supply disruptions caused by the recent port strikes.
Last week, BusinessTech reported that the strikes at the state-owned rail, port, and pipeline company Transnet, which effectively shut down the country’s ports, were creating a backlog that would soon affect the availability and supply of various items.
While the strikes have since ended, the latest report from major fuel industry players is that the country is perilously close to a fuel supply crisis due to the unavailability of refined fuel stock.
Transnet’s workers have been back on the job as of Friday 21 October, but the state-owned company has warned that it would take up to nine weeks to address the backlogs created by the protests, with analysts projecting that operations would only return to normal in early 2023.
During the strikes, several industry experts warned that the port disruptions would exacerbate South Africa’s already fragile supply chain.
Jacob van Rensburg, research head of the South African Association of Freight Forwarders (SAAFF), told BusinessLive in an interview that if the strikes continued for much longer, motorists would start to have problems at petrol stations, and that groceries at popular retailers such as Woolworths, Pick n Pay, and Checkers would start to “diminish rapidly.”
Additional warnings were issued by the petroleum and energy sectors, as Eskom said its heavy reliance on diesel would ultimately be affected if the strikes led to further disruptions of fuel imports.
Following Eskom’s words, the state-owned power utility announced this Sunday that the country would once again be pushed to stage four load shedding owing to its emergency diesel reserves being nearly depleted, continuing what has been the worst stretch of load shedding in South Africa’s history.
The bulk of South Africa’s fuel imports enters through Durban’s port, which is already at near capacity following the closure of several refineries and the country’s increasing reliance on imports, according to Kevin Baart, head of strategic projects and regulation at the South African Petroleum Industry Association (Sapia).
Baart told News24 that South Africa’s fuel pipeline network would struggle to cope with increased imports and that this would “jeopardise fuel supply to the inland economic hubs of South Africa.”
What this means for fuel prices
South Africa has become increasingly reliant on imported fuel as a consequence of local producers such as Sasol struggling to keep up with demand, following several shutdowns of refineries earlier this year.
Furthermore, the country only has two operating fuel refineries, down from six in 2019, though a third plant – Astron Energy – is expected to be online by the end of the year.
Diesel is also becoming a highly sought-after global commodity with prices continuing to rise, owing to Russia’s invasion of Ukraine earlier this year and because Europe is now facing its own energy crisis as it heads into winter, which could make it even harder for South Africa to obtain the imported fuel it is highly dependent on.
While petrol users have seen a brief respite these past two months, the most recent projections suggest that fuel prices will once again increase in November.
The latest fuel projections for November, as provided by the Central Energy Fund, are expected to be as follows:
- Petrol 93 – Increase of 48 cents per litre
- Petrol 95 – Increase of 48 cents per litre
- Diesel 0.05% – Increase of R1.61 cents per litre
- Diesel 0.005% – Increase of R1.64 cents per litre
- Illuminating paraffin – Increase of 78 cents per litre
As global supply continues to be strained and local demand continue rising, prices are anticipated to stay high or even increase further in the coming months as the aftermath of the Transnet strikes are cleaned up.
Although the government is currently investigating measures to reduce petrol prices, the even greater concern now is whether there will even be fuel at the pump for locals to put in their tanks.
Keyword: South Africa is facing imminent fuel shortages