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Fuel sector set for a shake-up

BUSINESS LIVE / 27 NOVEMBER 2017 - 11:45 / LINDA ENSOR

Energy Minister David Mahlobo says his department is conducting an audit that will serve as a baseline for the intervention required to transform the petroleum retail sector.

Intervention to transform the petroleum retail sector is on the cards, according to Energy Minister David Mahlobo.

Energy Minister David Mahlobo. Picture: TREVOR SAMSON

He said the Energy Department was conducting an audit that would serve as a baseline for the intervention required to transform the sector.

"The department will use the Petroleum Products Act and the Liquid Fuels Charter more stringently to ensure that transformation is effected," Mahlobo said in a written reply to a parliamentary question by National Freedom Party (NFP) MP Prof Nhlanhlakayise Khubisa.

The department is also aligning the charter to the broad-based black economic empowerment policy framework. It expects that a draft petroleum and liquid fuels code (including the petroleum retail subsector), along with its scorecard, will be gazetted for public comment by the end of the year.

"We also need to indicate that the department continues to have bilateral engagements with oil companies to fast-track transformation of company-owned [retail] sites," Mahlobo said.

In terms of the Liquid Fuels Charter, historically disadvantaged South Africans must own or control 25% of entities in the industry that hold operating assets.

"We must acknowledge with concern that the implementation of the Liquid Fuel Charter’s entire scope of application as agreed upon in 2000 did not achieve substantial increased black participation at all levels of the population across the value chain.

"Whilst acknowledging the achievement of black ownership at 25% with unencumbered ownership for Total SA, Sasol and Shell downstream across the value chain, petroleum retail and site ownership remain substantially unchanged and below the 25% target," Mahlobo said.

He added that it was "clearly unacceptable" that the representation of women was below 400 out of about 4,600 service stations — less than 10%.

"One of the critical challenges is the access to commercially viable fuel sites by new entrants, which have perpetually remained in the same hands over a period of time. The same is true for refineries that still remain under the majority ownership of international oil companies."

The minister said site and retail franchise agreements that expired were prioritised for black South Africans, with preference being given to women, the youth and people with disabilities.

"We further believe that the immediate focus should be the facilitation of BEE companies by the department to enable them to import sizeable quantities of West African crude oil, which accounts for 50% of crude oil imports into the country."

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LINK - https://www.businesslive.co.za/bd/national/2017-11-27-fuel-sector-set-for-a-shake-up/

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