Two years ago the Central Energy Fund bought a refinery for one rand. On Wednesday it set out what it intends to do with it, in the same week petrol was set on course for an October record.
A refinery is the step between a barrel of crude and a litre of petrol. The more of that step a country does at home, the less of an offshore price it imports with the fuel. South Africa has been going the other way for years. Imports now cover about 61% of the country's petroleum products, against about 22% in 2019. Two crude refineries are left, processing roughly 208,000 barrels a day between them. Sasol's Secunda plant makes another 150,000 a day out of coal.
What one rand bought
Sapref, south of Durban, was the biggest of the plants that stopped. Shell and BP paused it in 2022 while they considered its future, and the KwaZulu-Natal floods damaged it that April. In 2024 the Central Energy Fund took the precinct off them for R1: the refinery site, the tanks, the process units, the pipelines and the crude import infrastructure, though not the Island View terminal alongside it.
Wednesday's plan has three phases. First, use those tanks and transfer lines to import finished fuel and earn something from the site. Then rebuild refining, at about 400,000 barrels a day. Then, if the investment and the approvals arrive, push towards 650,000. “South Africa cannot afford to lose sight of the strategic importance of domestic refining capacity,” chief executive Tshepo Mokoka said. The fund named no funder and no date, and the refinery is still a development project.
What happens in October
The pump price is not waiting for any of it. Brent crude went above $100 a barrel on Wednesday for the first time since July, after the US destroyed five Iranian tankers and Iran said it had struck ten ships near the Strait of Hormuz.
That arrives here next month. Early-month Central Energy Fund data points to about R2 a litre more on 95 unleaded, which would put Gauteng at R28.92 and the coast at R28.05, past the records both set in June. Diesel is going up by rather less.
Treasury has already pulled the one lever it has. It cut R3 a litre from the fuel levy in April and May, then put it back in June and July. It puts the cost of that relief at R17.2 billion in revenue it did not collect between April and June. Asked in Parliament what it would do this time, Finance Minister Enoch Godongwana said government cannot fully insulate consumers from a sustained rise in international oil prices, particularly as South Africa is a net importer. Permanently offsetting the increases through the budget, he wrote, would shift the cost to taxpayers or push up borrowing. Fiscal policy involves trade-offs.
A separate review of how wholesale, retail, storage and distribution margins are built into the fuel price is due to finish in March 2027.
