Displaying items by tag: Petroleum industry

Participants in the petroleum industry value chain, represented by the South African Petroleum Industry Association (SAPIA), are currently granted exemption from the Competition Act largely on the basis of ensuring security of supply of petroleum products. This exemption was invoked in 2002 for 18 months to ensure fuel supply security after the termination of the Main Supply Agreement whereby oil companies in South Africa were obliged to uplift and market a substantial proportion of Sasol’s fuel production from its plants at Sasolburg and Secunda. The Designation and Exemption was not renewed. However, after severe supply shortages were experienced in 2005, the Moerane Commission of Inquiry recommended its reinstatement. Following the 2010 World Cup, SAPIA applied for, and was granted, exemption between 3 October 2011 and 31 December 2015 with some conditions being attached after 2011. Since 2015, the exemption has since been extended some 21 times.

The continuous exemption of the fuel industry value chain over a period of more than two decades constitutes a risk to the integrity of Competition Policy. The Department of Trade, Industry and Competition (the dtic) and the Competition Commission are currently evaluating the merits of SAPIA’s 2020 application in this context.

This paper draws on a confidential report of an investigation commissioned by the dtic to assess the merits of SAPIA’s application for further Designation of the South African petroleum industry. It examines the technical and infrastructural root causes of supply security risks and identifies measures that would contribute to reducing such risks, thereby eliminating the need for a general exemption of the fuel industry from the Competition Act.