Update: 22 November, 10am
The Fuels Industry Association of South Africa has responded to mounting concerns regarding Jet A-1 supply constraints at Cape Town International Airport (CTIA), seeking to clarify the underlying issues in light of recent media reports.
In a statement released by the Association, it highlighted that aviation kerosene, such as Jet A-1, shares a chemical similarity with unmarked illuminating kerosene, which theoretically allows it to be used as a diesel blender.
This recognition has long been acknowledged in government policy, aiming to prevent diesel adulteration that not only defrauds the fiscus but also undermines compliant operators and damages engines.
To tackle this issue, unmarked illuminating kerosene is subjected to the same tax rate as diesel, ensuring duty harmonisation between the two products.
The Association explained that illuminating kerosene intended for household use is marked with an invisible tracer known as Authentix A-1, which can be detected during testing should it be mixed with diesel.
In contrast, aviation kerosene used in aircraft fuel is exempt from such duties and levies. However, domestic Jet A-1 does incur Value-Added Tax (VAT), whereas its international counterpart is zero-rated.
This carefully designed duty structure aims to safeguard the diesel tax base and uphold environmental and fiscal integrity.
The Association stressed that this does not indicate any non-compliance or outstanding duties within the industry. Their members collectively contribute over R140 billion yearly to the South African Revenue Service (SARS) through Customs and Excise duties, fuel levies, the Road Accident Fund levy, and VAT.
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Importantly, the current challenges regarding Jet A-1 supply at CTIA are attributed not to duties or levies owed to the government, nor any sabotage of supply security, but rather to unrealistic registration requirements that clash with long-standing industry norms. This administrative issue has been known to authorities, demonstrating the need for urgent clarification and intervention.
The root of the vulnerability lies in a significant regulatory gap within the Customs and Excise Act.
While there are rules governing the registration and movement of aviation kerosene to and from warehouses, there is a lack of clear guidelines for independent storage operators looking to be authorised to store duty-free aviation kerosene. As a result, these independent storage providers have faced considerable challenges in obtaining the necessary registration despite being crucial to the supply chain.
This regulatory ambiguity presents two major ramifications:
- It jeopardises existing Jet A-1 infrastructure in Cape Town, Durban, and East London, hindering new investments in additional aviation kerosene storage at critical locations like CTIA.
- It exposes industry players to unnecessary compliance risks, including administrative penalties and threats of forfeiture, ultimately creating uncertainty for firms that offer essential storage capacity for aviation kerosene.
The Association warns that this predicament poses undue risks to the importation and availability of aviation kerosene. Companies may hesitate to engage in storage or import activities while the registration process remains unclear and potentially punitive.
In concluding its statement, the Association called this a solvable administrative issue, urging for immediate coordinated action from SARS to restore normal operations swiftly.
Cape Town International Airport is grappling with a potential jet-fuel shortage, triggered by an ongoing South African Revenue Service (SARS) audit.
According to the Fuels Industry Association of South Africa (FIASA), this audit has delayed the distribution of aviation fuel in the city, putting flight operations at risk, reports Travel News.
As a temporary fix, airlines have arranged to source fuel from Johannesburg’s OR Tambo International Airport starting from 19 November, though this depends on advance planning and coordination with ACSA.
Lufthansa Group has already issued a travel advisory: due to uncertainty in Cape Town’s fuel situation, the airline (and its Edelweiss partner) may make last-minute scheduling changes to flights departing between 19 and 24 November.
FIASA attributes the shortage to SARS holding up Jet A-1 fuel stocks at the Burgan Cape Terminals in Cape Town’s harbour. While they support SARS’ regulatory mandate, FIASA warns the delay has escalated into a serious risk, one that could affect tourism, Western Cape’s economy and the reliability of air travel during peak season.
The facility at the Cape terminal holds roughly 20 days’ worth of fuel, an important buffer for aviation operations. Although local refining has been boosted and efforts are underway to simplify import rules, FIASA says these measures aren’t enough to bridge the current gap.
The association is urging SARS, government bodies and industry players to fast-track fuel release and verification, calling for immediate collaboration to restore stability, protect connectivity and safeguard jobs in the Cape.
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Picture: Rocker Sta / Unsplash
