SA’s Dirty Fuel

The Financial Mail has depressing SA facts, some of which we knew but some of which were new to me.

  • Still no movement after seven years on a R38bn programme to produce clean automotive fuel. A new target date could be 2025 or later?
  • Most of our diesel is still 500parts per million sulphur whereas in developed markets the norm is 10 and moving to 5ppm. Crude oil is roughly 200,000ppm
  • Modern car engines are designed for 10ppm and cannot be imported. [My recollection was that, alternatively, they are detuned.]
  • SA is at risk of being marginalised regarding new investment, being regarded as an old technology market.
  • SA manufacture and stocking are complicated by the need to fit two very different engine generations for the local and export market.
  • The current refinery upgrade cost could be R80-100bn. Pravin Gordhan has hinted at accelerated tax depreciation allowances for this capex.
  • Government assistance could be forthcoming via grants or increases in the regulated price, more likely the latter. [When will we finally get an unregulated dispensation and self service at pumps? Yes, pump attendants may become redundant but the lower price will increase spending, activity and employment in a host of other activities. It works in supermarkets.]

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