News Room


Date Published: 15 Jun 2022

Deputy Speaker of the National Assembly, Mr Lechesa Tsenoli
Honourable members
Three major factors impacted the global energy system in the last two years.
First, the Covid-19 pandemic, which affected supply across all sectors.
Second, increased prices of natural gas in Europe in 2021, causing increases in oil prices as alternatives were sought. Prior to the sanctions Russia was the dominant supplier of diesel to Europe.
Third, the geopolitical conflict in Central Eastern Europe, resulting in increased prices of crude oil and petroleum products in the last five months.
The conflict has since morphed into a global economic war involving the West. Sanctions by the USA, more particularly the EU, on Russian Oil and petroleum products have resulted into major imbalance in the demand and supply, thus prompting high fuel prices. Other casualties of this situation, in South Africa and globally, are cooking oil, grains and other basic food items. The UN Secretary General lamented the high cost of wheat and the potential increase of shortages of basic food items.
The use of energy as an economic weapon affects developing countries disproportionately. Angela Merkel, a highly respected leader in the world, cautioned against actions that could make life more difficult for many people around the world.
To cut off the Russian Federation from global petroleum supply, a country that accounts for 11% of global production, exposes developing countries to unaffordable price increases. Our economies are laid bare to imported inflation and high interest rates that could, ultimately, cause recession throughout world economies, adversely affecting developing and under-developed ones. Imbalance in petroleum product supply may also lead to fuel shortages as Europe competes for alternatives.
This bleak outlook extends to the re-emergence of China from lockdown, which will significantly increase the price of crude oil. Airlines in the continent are already

experiencing difficulties, which they will not survive, if the situation is sustained beyond six months from now.
The economic and social strife that could arise pose a real threat to many democracies.
It, therefore, begs the question, if – as we are told, the conflict is one of democracy versus authoritarianism; why are fledgling democracies of developing countries subjected to untold misery?
Western countries should be reminded that the economic war they have unleashed disproportionately impacts South Africa, and countries like ours.
Honourable Members
Our government is committed to explore numerous possibilities to assist the economy adjust to this geopolitical turbulence.
Recently our Ministry, together with the Treasury, reduced the fuel levy by R1.50 cents per litre to cushion motorists and the economy from the high diesel and petrol prices. There will be a further 75 cents reduction in the fuel levy in July. Added, Government released the strategic stocks to fund this support. The stock we refer to are the 10 million barrels which we were alleged to have lost through corrupt means. These interventions are at a cost of R10 billion to the State. Sadly, we have an opposition for opposition sake, which fail to see positive strides of Government.
Our country’s response to these challenges is in line with industrialised and industrialising countries. For example, the United States has opted to sell a million barrels a day, for six months, to moderate crude oil prices. Despite this, crude oil prices continue to run away. South Korea, India, Germany, United Kingdom and Vietnam, among others, chose to temporarily reduce fuel taxes.
Presently, South Africa benefits from the sale of coal at high prices. This is the same coal we are told to jettison. But as Mr. John Kane Berman – former head of Institute of Race Relations and leading liberal, told you, “(Mantashe is right), the DA is wrong”.

The global geopolitical risks we live with require an adept and participatory State in the economy. This means a State that harnesses tools at its disposal, working together with social actors – business, labour, and broader society, to ensure economic growth and development.
In this regard, South Africa should, as we have stated before, explore oil and gas on her shores. Having our own petroleum resources will reduce our dependency on foreign oil and cushion our economy, in particular our citizens as consumers, against imposed whirlwinds. Continued polarisation of this debate is inimical to our progress.
Yesterday the price of crude oil stood at US $121, determined elsewhere and not by us. Yet some in the EFF think the solution is to dish out pamphlets and mobilise people to protest increasing petrol prices. If indeed you are anti-imperialist as you claim, you would join and support us in our drive for oil exploration, and when we defend our country against climate imperialists – or so-called green lobby, supported by external government and non-government institutions.
Government intends to invest in a new refinery. This is necessary for the country and critical for the needs of the SADC countries that remain highly exposed to unstable global supply markets.
Currently, the South African Petroleum Industry is undergoing major changes. The PetroSA refinery is not operational due to feedstock challenges. The Milnerton refinery is scheduled to reopen later this year. Sasol and Total are manufacturing petroleum products. Engen has applied to NERSA to invest in a Terminal by converting their refinery. SAPREF, owned by BP and Shell, scheduled for an extended shutdown whilst the owners look for a buyer, was also heavily impacted by the floods.
We should also invest in terminals and ports to ensure diversity of supply points. Therefore, present efforts by my colleagues in the Ministries of Transport and Public Enterprise, Public Works and Infrastructure – specifically the Infrastructure Programme, including work through the Presidency’s Vulindlela, is critical.
We will accelerate our work on biofuels as another form of energy, using the sugar industry as a base.
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Furthermore, transition to electrical vehicles needs to be accelerated.
Honourable Speaker
Indeed, challenges forced upon us present greater difficulties. Yet, at the same time, provide us endless opportunity.
Present reality suggests that the policy framework must adapt to the changing environment. Nevertheless, in the short-term, our tinkering with the regulatory framework is a temporary relief sure to fail against a sustained conflict.
Clamouring for deregulation in the middle of a global economic war is ill advised. We must focus on the threat to sustainable supply occasioned by high product prices. Even if we were to deregulate now, we do not foresee implementation of a self-service given its threat to jobs in an economy of mostly unemployed semi-skilled and unskilled economically productive job seekers.
The problem with the opposition to the ANC, is that it holds on to binary, myopic, ideological constructs devoid of understanding complexities brought on national realities by international pressures. The free-market only DA worships before the altar of neoliberal triumphalism that is anti-localisation and state participation in the economy. Sadly for you, even Fukuyama has since realised that the end of history was a fallacy.
The demagogic populist EFF, no matter what conditions prevail and whatever the nature of the challenge, thinks that it is all about state intervention. Even one of the foremost developmentalist scholars, Ha-Joon Chang will tell you that, too much government can be cause for disaster.
It is time the opposition dealt with facts and present reality, as opposed to being relics of a by-gone era resonant with binaries of the yesterday’s Cold War. A new cold war is upon us, and we must not be found wanting.
Honourable Members,
We are also beginning to notice an adulteration of fuel.
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This is confirmed by samples picked up at service stations and noticed in the increased importation, coupled with demand, of Illuminating Paraffin.
Those who mix diesel with paraffin and sell to unsuspecting customers must stop this practice. It is illegal. Service stations found with adulterated diesel will face immediate closure and prosecution. Together with the South African Revenue Service (SARS) we are investigating a marker to ensure greater traceability of paraffin in diesel.
Furthermore, we also support the law enforcement agencies and Transnet in their efforts to catch and prosecute those involved in Fuel theft, especially theft from the Transnet pipeline.
Honourable Speaker,
Honourable Members,
In the present, the only sustainable solution to our energy crisis is the end to the conflict in Central Eastern Europe, (no matter who is involved and who is fuelling it).
Our responsibility as Government is to continue to implement measures to mitigate against undue burden on the consumer.
Thank you.