BUSINESS NEWS
Country's fuel crisis 'has peaked'
Posted Thu, 15 Dec 2005
The crisis around the fuel shortage has peaked and the situation
should be well on the way to normalisation by next week, according
to the petroleum industry.
Briefing the media at Parliament on Wednesday, SA Petroleum
Industry Association (Sapia) chairperson Philip Jordan said: "Plans
are in place, which leads us all to believe that we are over the
peak of the problem and now coming down the other side of the
mountain towards a normal situation."
However, it was important that the current spate of panic buying
by the public ends to help the situation normalise, he said.
Turning to the reasons for the shortage, Jordan agreed with
Minerals and Energy Minister Lindiwe Hendricks that the industry
had concurred with the department a long time ago (2001) on what
had to be done in terms of clean fuels from January 1.
It should be appreciated that these were big investment projects
in the refineries with long lead times, which had been
planned some
time ago.
However, some of the shutdowns lasted longer than planned,
resulting in the contingency stocks being used up, and "that's
where we found ourselves in a short-stock situation".
"What we have is a situation where from a production point of
view the country's refineries are working well," he said.
All refineries were working at 100 percent production levels,
bar the PetroSA plant at Mossel Bay, which was at 90 percent and
would be at 100 percent by the end of the month.
"But there are clearly logistics constraints... getting the
product from the refineries out into the depots and to end
customers.
"And that is where, at the beginning of the week, we
underestimated the impact of extremely high demand compared to the
logistic capability of the system."
Demand so far this month, had been running at about 20 percent
more on a daily average basis compared to November.
"Clearly, the news has got
out that maybe certain products are
in short supply. There has been a serious amount of panic buying on
the part of motorists and other consumers."
This had exacerbated the problem and needed to come to an end
for the situation to normalise, Jordan said.
Hendricks said she had invoked statutory powers to obtain
information on the exact status of fuel supplies held in the
country by petroleum companies to fully understand the nature of
the shortage so that state infrastructure and logistics could be
used if necessary to resolve the backlog.
She also raised the possibility of further regulation of the
industry in the interests of public concern.
An investigation, to be led by a senior counsel, was being set
up to probe what went wrong, if it could have been avoided, and how
a similar situation could be avoided in future.
"We need to find out what needs to be in place for all of us not
to face the same situation again. So if
the (investigation) advises
that we need to regulate in one way or the other, then obviously
we'll have to follow that.
"But we think for now we want something that will inform us of
what went wrong."
Hendricks said this had been discussed with the industry, which
had offered its full co-operation in the investigation.
To compensate consumers for the shortage, the industry would
have to refund the 2.5 cents a litre fee consumers paid them to
keep 25 days' stock in reserve.
"Clearly they have not done so and this money must be refunded,"
Hendricks said.
The details of how this would be done still had to be resolved.
Sapa
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