Home Africa Fuel shortage adds to the pain of Covid-19

Fuel shortage adds to the pain of Covid-19

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A Galp forecourt in Eswatini. Government is now squeezing out non SACU fuel sources.

A fuel shortage has gripped Eswatini in the middle of its corona-2019 pandemic crisis. Fuel stations began noticeably running dry of both petrol and diesel towards midweek, sending motorists helter-skelter in the midst of the festive season. 

Government this afternoon assured motorists that the problem is being resolved. 

Minister of Energy Peter Bhembhe in a statement unusually on a Sunday blamed the shortage on an array of problems ranging from a breakdown and fire incident at one of the refineries in Durban (he did not say which) to Covid-19 border delays and the Christmas and Boxing Day holidays.

“The Ministry of Natural Resources and Energy notes the continued shortage of fuel in a number of retail stations and is in constant contact with the designated oil companies concerning the cause of the fuel shortages. Three primary causes of the shortage have been identified being:-

(a) congestion of loading zones at refineries at Durban due to an unforeseen and unfortunate incident where one of the refineries is none functional due to a fire incident that occurred early December, 2020,

(b) Covid 19 protocol delays at our border posts that all truck drivers aswell as their vehicles need to adhere to.

c) closing of the Clearing Agents at Durban loading zones during Christmas and Boxing day.

d) Closure of the Lavumisa border on the RSA side which has since been opened.”

e) even though Mahamba border has now been also closed where some of the trucks are coming through we managed to have cleared a few trucks.”

“The Ministry would like to assure the nation that the oil industry has confirmed that the fuel shortage problem shall be rectified shortly, in the next 12 hours, as the transportation delays are improving and fuel trucks have started coming through for deliveries in Eswatini.”

Mr. Bhembhe said three of the four fuel companies serving the country are in the process of ending the problem. The established fuel suppliers in the country are Galp with the largest footprint of forecourts in all four regions, Engen, Puma and Total. “As we speak, we confirm that about 25 trucks for two (2) oil companies are coming through the borders today. Three (3) other trucks, for another oil company, will be coming through tomorrow.”

Supply chains

Meanwhile, a significant contributor of the shortage is a major disruption in the logistics of the country’s biggest fuel company, Galp which inherited Shell Oil business when the Dutch company exited Eswatini at the turn of the Century. Unlike other fuel oil companies, Galp is not a member of the South Africa based fuel cartel that owns and manages the fuel refinery, distribution and retail forecourts. 

The Portugal owned company instead imported and distributed refined fuel stock from international suppliers shipped through the Mozambique port of Maputo and transferred by truck tankers through the 24 hour Mhlumeni border.

The Covid-19 epidemic not only sickened and killed people but also infected paralyzed global business and imposed disastrous effect on national economies that were forced into lockdown in April and May in efforts to stop the virus from ravaging populations. 

Broken economies also cuts the money governments can make from taxes. An Economics Association of Eswatini (ECAS – UNDP) rapid assessment on the socio-economic impact impact of Covid found that the economy would contract by between -1.9% to- 6.2% and cause significant social and economic disruptions across all sectors. As Government teams began preparing the 2021-22 budget, the negative effects of the pandemic on the fiscus loomed large. 

Eswatini relies for as much as 40% of its annual budget on SACU revenues. Over the years this revenue source has been eroded by an increasing level of imports entering the country direct, without going through South African ports of entry which manage SACU duties collection. As Covid-19 impacts have sharply reduced other options for budget revenue for the 2021-22, SACU revenues have stood out as one of the only reliable sources of funds.

Earlier this year the minister of finance cracked down on grey imports, especially of used cars commonly called Dubai’s. Officials say the growth of Dubai imports over the years has increased the depletion of Eswatini’s share of SACU revenues.

In squeezing out non-SACU sources of imports, Government has its eye on fuel imports.

This week Galp released a pained statement that expressed its hurt.

“Galp Eswatini wishes to notify its retailers, commercial customers and other stakeholders that fuel supplies into the country continue to be affected negatively by changes in the country’s regulatory framework” the company said in an undated statement released last week.

The regulatory authorities have recently introduced a quota on all our oil imports from Mozambique and this quota is being affected through a 5% reduction of volumes every month from August 2020.

Galp also says Government has introduced a 25000% hike in taxes for oil imports from outside South Africa. 

“The regulatory Authority has recently, without engaging stakeholders further hiked non-SACU fuel imports stamp duty significantly. This hike of 25000% is crippling to the operations of Galp Eswatini and other oil companies that import product from Mozambique.” 

For survival, the company is being forced to the difficult choice of returning to source fuel in South Africa.

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