The energy minister came under fire from MPs on the fuel levy, the disarray of the Road Accident Fund and the impact of policies on the rand.
South Africa is looking to Algeria, Equatorial-Guinea and South Sudan for crude oil sources closer to home as the country experiences its highest fuel prices in history, Energy Minister Jeff Radebe says.
“We are looking very aggressively to other countries, Equatorial Guinea, Algeria, South Sudan,” he said in a briefing to Parliament’s portfolio committee on energy today.
“If things go well we believe it can also add to resolving the challenges we are facing,” the minister added.
Radebe mentioned the three oil producing nations after he was asked by MPs why South Africa did not make a concerted effort to import more oil from other parts of the continent, on the assumption that it would prove cheaper because of geographical proximity.
Angola and Nigeria already count among the main sources of South Africa’s crude oil imports. However, 49 percent comes from Saudi Arabia, according to figures given by Radebe.
Department of energy deputy director-general Tseliso Maqubela confirmed the approaches to African oil producers, with a view to securing better prices but added that state shareholding in a refinery would help the state’s efforts to do this and to be able to pass on savings to consumers.
“Exporters tend to give allocations to people who have refineries because they know that they will buy more,” he said after the briefing.
Radebe told reporters that government had seen keen interest from Saudi Arabia and Kuwait to build new refineries in South Africa and said securing investment in this regard will be given high priority when the government hosts an investor summit in October, as it would reduce the country’s need to import refined fuel.
He sought to assure MPs that a task team of ministers would at the end of September table a report on what government could do to mitigate fuel prices and their impact on the economy, but cautioned that there was limited scope as South Africa was reliant on imports for crude oil, and prices were determined by factors out of its control.
This included the price of crude more than doubling in 24 months.
The minister then came under fire from MPs who challenged him on the fuel levy, the long-term disarray of the Road Accident Fund and the impact government policies had on the strength of the rand, which tumbled after President Cyril Ramaphosa signalled he would push ahead with plans to amend the Constitution to allow land expropriation without compensation.
“It is not clear from your presentation what government is going to do to mitigate this problem,” Democratic Alliance MP Gavin Davis said, after departmental officials poured cold water on proposals to review the fuel levy.
The department said it felt it could not review something which Parliament had approved as part of the national budget this year.
Davis argued that it has the opportunity to do so in October when Finance Minister Nhlanhla Nene tables the medium-term budget policy statement and expenditure adjustments, which also require approval by the legislature.
Committee chairman Fikile Majola also appeared impatient, and said the minister and his delegation had been invited to give a clear indication of what action they would take to contain the fuel price, suggesting: “If there is enough will government can change the price.”
Radebe defended his decision to give background on how the fuel price, which is adjusted monthly and exceeded the R16 a litre mark in August, was set.
“With the proper info you are able to design popular intervention… We are as concerned as every citizen.”
Some opposition MPs had mooted deregulation of the industry but Maqubelo cautioned that this could trigger large-scale job losses.
“If you deregulate, owners could opt for self-service and we would lose those 50 000 jobs overnight. From where we stand we don’t think that is a sustainable position. There is also no guarantee that the price would come down.”