Page 4 - DMEA Week 28 2020

DMEA COMMENTARY DMEA
Knock-on effects
Problems in South Africa’s re ning sector have led to fuel shortages in neighbouring Botswana
BOTSWANA
WHAT:
Gaborone has started rationing fuel in an attempt to balance supply and demand.
WHY:
Fuel shipments are now being affected by a truck drivers’ strike in South Africa.
WHAT NEXT:
The country is not likely to nd quick relief, owing to extra transport expenses and problems replenishing fuel stocks.
PROBLEMS in South Africa’s re ning sector are disrupting fuel supplies in neighbouring Botswana.
e latter country began experiencing short- ages last month, a er the South African com- panies that have traditionally been the main suppliers of petroleum products to state-owned Botswana Oil Ltd (BOL) slowed the pace of deliveries. Botswana does not currently produce or re ne crude oil, so it depends on imports.
e slowdown in South African shipments was the result of several factors. One of these was an overall slowdown in South Africa’s re ning sector. All four of the country’s oil-processing plants were partially or completely idle during the spring.
Engen’s refinery in Durban opted to halt operations on March 27, citing expectations of a decline in fuel demand because of the corona- virus (COVID-19) pandemic, and did not come back online until mid-May. e country’s largest re nery – Sapref, owned by BP (UK) and Royal Dutch Shell (UK/Netherlands) – followed a sim- ilar course. Sasol’s Natref went dark in April and then started the process of coming back online in June.
Finally, the Caltex plant in Cape Town is due to resume operations in July. is facility had shut down in February for a scheduled turna- round but was not able to restart in late April as planned, owing to the lockdown.
Slowing down
Under these circumstances, South African refiners could not even produce enough fuel to meet local demand. As such, they could not maintain exports to Botswana at previous levels. e latter country usually consumes 3mn litres per day (lpd) of petroleum products and sources about 90% of the total from South Africa, with the remaining 10% coming from neighbouring
Namibia and Mozambique.
Mmetla Masire, the permanent secretary of
Botswana’s Ministry of Mineral Resources, told News24 at the weekend that South African fuel shipments were down by more than 65%. “We are now receiving about a third of our normal supply,” he said.
Supplies were already running low by late June, when BOL’s CEO Meshack Tshekedi told reporters that o cials in Gaborone were taking steps to stave o shortages. He explained that Botswana’s government had authorised the with- drawal of 8mn litres of fuel from the national reserves and had also given BOL permission to purchase petroleum products from other coun- tries, including Mozambique and Namibia.
New problems
Despite these efforts, though, shortages have emerged.
is is partly the result of developments in South Africa – speci cally, a truck drivers’ strike. is ongoing labour action, which began on July 7, has led to further reductions in deliveries of fuel to Botswana. But it is also related to a public health policy requiring truck drivers to go into quarantine for 14 days a er crossing the border into Botswana. is mandate has helped curb infection rates in that country, but it has also created serious bottlenecks along cross-border transportation routes.
In the meantime, many government offi- cials in Gaborone say hoarding and panic buy- ing have made the shortfalls more acute. As Minister of Mineral Resources, Green Tech- nology and Energy Security Lefoko Moagi told Botswana Daily News in a recent inter- view: “We have recently experienced a supply/ demand mismatch caused by panic buying by motorists, which worsens the situation. I want to advise Batswana that they should only fuel
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w w w . N E W S B A S E . c o m Week 28 16•July•2020