South Africa might face a fuel shortage with the possibility of ‘fuel shedding in the future’ if the Moerane Report recommendation of 2006 to keep 90 days strategic stock (a form of insurance against an interruption in supply) was not implemented.
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In an interview with Business Report, the CEO of Liquid Fuels Wholesales Association (LFWA), Peter Morgan, stressed that the country needs to address this matter soonest to avoid the possibility of fuel shedding in the future.
Morgan said, “Sixteen years later we still don’t have [an] agreement between the regulator and the oil majors on how much strategic stock we need to keep and how the cost of this strategic stock (will) be covered.”
It is a classic case of the Ant and the Grasshopper – it’s all about being prepared and planning for the future so we don’t find ourselves in the grasshopper’s position.
There were zero strategic stocks in the country during the recent Transnet wage strike, which lasted more than a week, but the country managed to avoid a crisis due to imports arriving ‘just in time’ through our import terminals.
Morgan added, “We do know the oil majors use any stocks they have for their needs first – so it is the independent wholesalers who are always being rationed. The oil majors operate in the urban areas, while independent wholesalers operate in the non-urban areas, therefore this means the security of supply to non-urban areas is of concern.”
Morgan doesn’t believe that the Moerane Report recommendation was implemented, and suggests that the Department of Mineral Resources and Energy (DMRE) and the liquid fuels industry sit down together to agree on a strategic stock plan before South Africans are faced with yet another resource shortage.
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