THE South African petroleum industry has said it is not in a position to make the investments required for SA to move to cleaner fuels.
The industry’s inability to make the investments will delay SA’s conversion to cleaner fuels for environmental reasons. Lack of investment in refineries has in the past put the industry on a collision course with the government.
In its annual report, released this week, the South African Petroleum Industry Association (Sapia ), which represents the seven major oil companies in SA, said the local industry had taken strain from the lower crude oil prices, constrained refinery margins and the stronger rand.
The body said the global crisis had prompted its members to scale back on capital expenditure, curtail their expenses and tighten control on working capital. “Major capital programmes including refinery investments, both in crude and coal- based facilities, are going to be difficult to justify economically and more difficult to fund than before the economic crisis,” Sapia said.
“While clean fuel specifications are vital for addressing environmental concerns, it is very costly. It will cost oil refiners in SA between R20bn and R40bn to implement the changes. Presently, the oil refineries in SA are not equipped to meet the requirements commensurate with the envisaged changes and developments in fuel and vehicle technology,” Sapia said.